Rare earth elements (also referred to as REEs and by the shorthand term "rare earths") include the lanthanide series of 15 elements on the periodic table, beginning with atomic number 57 (lanthanum) and extending through element number 71 (lutetium). These 17 elements are referred to as "rare" because while they are relatively abundant in quantity, they appear in low concentrations in the earth's crust and economic extraction and processing is both difficult and costly. From the 1960s to the 1980s, the United States was the leader in global production of rare earths. Since that time, processing and manufacturing of the world's supply of rare earths and downstream value-added forms such as metals, alloys, and magnets have shifted almost entirely to China, in part due to lower labor costs and lower environmental standards. A series of events and ensuing press reports have highlighted the rare earth "crisis," as some refer to it. DOD's report was released in March 2012. (3) Yttrium Oxide. Therefore, the committee directs the Under Secretary of Defense for Acquisition, Technology, and Logistics to submit a report to the congressional defense committees by February 1, 2014, on the Department's risk mitigation strategy for rare earth elements, which should include, at a minimum, the following elements: 
(1) A list and description of the programs initiated or planned to reclaim rare earth elements by the Department, along with a description of the materials reclaimed or expected to be reclaimed from such programs;
(2) An assessment of the cost of materials produced by these reclamation efforts compared to the cost of newly-mined materials;
(3) An assessment of availability of reliable suppliers in the National Defense Industrial Base for the reclamation and reprocessing of rare earth elements;
(4) A list of alternative sources of supply, such as mine tailings, recycled components, and consumer waste, that the Department has investigated or plans to investigate;
(5) A physical description of alternative sources of supply with corresponding geologic characteristics, such as grade, resource size, and the amenability of that feedstock to metallurgical processing;
(6) A description of the materials that the Department plans to obtain via the Defense Priorities and Allocations System; and
(7) Other diversification of supply activities deemed relevant by the Under Secretary. 2013 Annual Industrial Capabilities Report to Congress

In October 2013, DOD released its Annual Industrial Capabilities Report to Congress. Overall demand for rare earth materials has decreased considerably from the previous year. As a result, prices for most rare earth oxides and metals have declined approximately 60 percent from their peaks in the summer of 2011. How and Where Are Rare Earths Produced?22

In April 2010, GAO reported on the world's production of rare earths and stated that China produced 
97% of rare earth ore, 97% of rare earth oxides, 89% of rare earth alloys, 75% of neodymium iron boron magnets (NeFeB), and 60% of samarium cobalt magnets (SmCo). Recent supply chain developments by Molycorp include the acquisition of Neo Materials Technology, Inc.—a Toronto-based firm (renamed Molycorp Canada) with rare earth processing and permanent magnet powder facilities in China. Molycorp plans to ship some of its production capacity to its Neo Materials facility in China. Some rare earth observers are concerned that Molycorp's purchase of Neo Materials Technologies could potentially make it more difficult for Molycorp to supply U.S. defense needs for rare earths, given China's domination and the increased broadening of restrictions on exporting rare earth minerals. 76-117, 50 U.S.C. Policy Issues for Congress

		Dependence on Foreign Sources for Rare Earth Materials

Some Members of Congress have expressed concern with the nearly total U.S. dependence on foreign sources for rare earth elements. Some have raised questions about China's near dominance of the rare earth industry and the implications for U.S. national security. Yet the "crisis" for many policymakers is not the fact that China has cut its rare earth exports and appears to be restricting the world's access to rare earths, but the fact that the United States has lost its domestic capacity to produce strategic and critical materials, and that the manufacturing supply chain for rare earths has largely migrated to outside the United States. 111-383 ) and S.Rept. 111-201 (accompanying S. 3454 , the proposed Senate National Defense Authorization Act for FY2011) required the Secretary of Defense to conduct an assessment of rare earth supply chain issues and develop a plan to address any vulnerabilities. The assessment would identify whether any rare earth materials would be:
(1) Critical to the production, sustainment, or operation of significant United States military equipment; or 
(2) Subject to interruption of supply, based on actions or events outside the control of the Government of the United States. The bill would require the Secretary of the Interior to (1) conduct an assessment of the United States' capability to meet current and future demands for the minerals critical to domestic manufacturing competitiveness, economic, and national security in a time of expanding resource nationalism; (2) conduct an assessment of the current mineral potential of federal lands, and an evaluation of mineral requirements to meet current and emerging needs for economic and national security, and U.S. industrial manufacturing needs (such an assessment would address the implications of any potential mineral shortages or supply disruptions, as well as the potential impact of U.S. dependence on foreign sources for any minerals); and (3) conduct an inventory of rare earth elements and other minerals deemed critical based on the potential for supply disruptions, including an analysis of the supply chain for each mineral. Section 843 of P.L.
Some Members of Congress have expressed concern over U.S. acquisition of rare earth materials composed of rare earth elements (REE) used in various components of defense weapon systems. Rare earth elements consist of 17 elements on the periodic table, including 15 elements beginning with atomic number 57 (lanthanum) and extending through number 71 (lutetium), as well as two other elements having similar properties (yttrium and scandium). These are referred to as "rare" because although relatively abundant in total quantity, they appear in low concentrations in the earth's crust and extraction and processing is both difficult and costly.
From the 1960s to the 1980s, the United States was the leader in global rare earth production. Since then, production has shifted almost entirely to China, in part due to lower labor costs and lower environmental standards. Some estimates are that China now produces about 90- 95% of the world's rare earth oxides and is the majority producer of the world's two strongest magnets, samarium cobalt (SmCo) and neodymium iron boron (NeFeB) permanent, rare earth magnets. In the United States, Molycorp, a Mountain Pass, CA mining company, recently announced the purchase of Neo Material Technologies. Neo Material Technologies makes specialty materials from rare earths at factories based in China and Thailand. Molycorp also announced the start of its new heavy rare earth production facilities, Project Phoenix, which will process rare earth oxides from ore mined from the Mountain Pass facilities.
In 2010, a series of events and press reports highlighted what some referred to as the rare earth "crisis." Some policymakers were concerned that China had cut its rare earth exports and appeared to be restricting the world's access to rare earths, with a nearly total U.S. dependence on China for rare earth elements, including oxides, phosphors, metals, alloys, and magnets. Additionally, some policymakers had expressed growing concern that the United States had lost its domestic capacity to produce strategic and critical materials, and its implications for U.S. national security.
Pursuant to Section 843, the Ike Skelton National Defense Authorization Act for FY2011 (P.L. 111-383) and S.Rept. 111-201 (accompanying S. 3454), Congress had mandated that the Secretary of Defense conduct an assessment of rare earth supply chain issues and develop a plan to address any vulnerabilities. DOD was required to assess which rare earths met the following criteria: (1) the rare earth material was critical to the production, sustainment, or operation of significant U.S. military equipment; and (2) the rare earth material was subject to interruption of supply, based on actions or events outside the control of the U.S. government. The seven-page report was issued in March 2012.
In October 2013, DOD released its Annual Industrial Capabilities Report to Congress in accordance with Section 2504 of Title 10, United States Code (U.S.C.). The report states that, due to global market forces, the overall demand for rare earth materials has decreased, as prices for most rare earth oxides and metals have declined since 2011.
Given DOD's assessment of the supply and demand for rare earths for defense purposes, coupled with the recent announcement of Molycorp's proposed acquisition of Neo Material Technologies, Congress may choose to use its oversight role to seek more complete answers to the following important questions:
Given Molycorp's purchase of Neo Material Technologies and the potential for the possible migration of domestic rare earth minerals to Molycorp's processing facilities in China, how may this move affect the domestic supply of rare earth minerals for the production of U.S. defense weapon systems? Given that DOD's assessment of future supply and demand was based on previous estimates using 2010 data, could there be new concern for a possible rare earth material supply shortage or vulnerability that could affect national security? Are there substitutes for rare earth materials that are economic, efficient, and available? Does dependence on foreign sources alone for rare earths pose a national security threat?
Congress may encourage DOD to develop a collaborative, long-term strategy designed to identify any material weaknesses and vulnerabilities associated with rare earths and to protect long-term U.S. national security interests.