Political interference in REE is a real issue, no doubt. Molycorp is often cited as the primary example of how China destroyed US REE producers, but the story involves a somewhat long and tenuous chain of events. Debate it all you want, but there is a much more clear example: Stans Energy. Long story short, a Canadian junior mining company secured the mining license for an epic Soviet REE mine, the Kyrgyz Government revoked it, and they are still in court for $200M+ in damages.
Given the history of government involvement in REE and recent developments in US domestic politics, it is not surprising that the US is moving towards new REE policy now. Apparently, legislation is forthcoming from Congressman Duncan Hunter from California that will provide subsidies and cheap loans to domestic REE operations. I will be keen to read the policy in full when it is available and try to understand it because the devil is in the details.
To my mind, the legislators face a tradeoff between proposing a broad policy and being seen to pick winners. A subsidy on REE prices applies broadly and lets legislators wash their hands of the results: "It is up to the markets now"; but the REE markets are complicated enough to need more help than that.
Consider a possible failure scenario for a subsidy of REE prices: several mines come online in the USA and produce REE concentrate, which ends up being shipped to China for processing. As I understand it, this could happen. It is essential for legislators to consider the downstream capacity for REE in the USA and ensure that the capacity grows proportionally to domestic REE production, itself.
Simply put, a REE subsidy may not incentivize sufficient growth downstream. Providing targeted funding to certain downstream sectors of the REE industry may help. The Government may even take a page from China's playbook and use export quotas for REE, but that is a tit-tat strategy that will not let the USA change the game.
The best way to develop a domestic REE industry is to focus on the new ways of doing things.
There are technologies developed in the USA for separating and processing REE that are not yet used at commercial scale. That is a huge missed opportunity! This failure is partly due to a lack of precedent in commercial use of the technologies and it may require heavy handed policy to coordinate the sources of supply and demand to get these technologies up and running, but you could argue that heavy-handed policy is appropriate given the interference in REE by governments globally. I hesitate to say this is “too important to leave it to the markets” because that statement echoes war-time policy, but that may be part of the way forward.
The political realities of the situation are largely beyond me, but I know that America has the technology, materials, and impetus to change the REE industry now and forever. I will be watching for signals that legislators know this and are supporting the US REE industry in a way that exploits this underused potential.
