Coal Age

MAR 2019

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March 2019 35 rare earths continued tual property at risk. One such com- pany is Apple. The iPhone is "a high- ly REE-dependent device," Kennedy wrote in a recent column. With China as the sole source of finished REE ma- terials, the company moved "all of its manufacturing" to China. This fact likely isn't lost on China. Multiple proverbs from Sun Tzu's Art of War reference cutting off the ene- mies supplies to the extent that they eat their own horses and surrender hope. China is in position to do exact- ly that, Kennedy said. "China controls the price of oxides, so they are going to set the price on that," he said. "China could determine they don't won't U.S. domestic REE producers, and they would simply low- er costs below the coal miners' costs." Even if China decides it will tolerate a U.S.-based supplier of REE concen- trates, the national security implica- tions remain unchanged, he said. That raises questions about the ethics of the DOE program, Kennedy said. "Think about what these guys are doing. They are getting government funding," he said. "Let's say everything works. They are going to build a system where we can supply China with rare earth ox- ides and then depend on them for the technology metals. It is crazy." It is crazy because those metals are key to all high technology appli- cations, including fighter jets, guided missiles, and semiautomated tanks. The national security implications, Kennedy said, are staggering. "All rare earth metals, alloys, and magnets used by U.S. defense contractors and technology firms can be traced back to China," he wrote in a recent column. "According to the Pentagon's own In- spector General Report, the Pentagon is incapable of properly monitoring rare earth inputs at the component and sub-contractor level." Honaker said the concern was legit and showcased how building a domestic supply chain is not simply a technology but also a political and national security issue. "Here is a per- fect example where are you going to depend on China and Japan and Rus- sia. Do you want to continue to rely on that structure?" he asked. Recently, the Department of De- fense has been weighing in on the growing national conversation "be- cause a lot of their technologies uti- lize rare earth materials and those rare earth materials are coming from China," he said. And rightly so, Marchese said. "The DoD should be interested in developing this industry to create self-sufficiency in an area that is now controlled by, for lack of a better term, an adversary," he said. The solution is twofold, Kennedy said. First, the federal government must revise decades-old regulations on ac- tinides that ended heavy rare earth production in the U.S., specifically the sections of the United States Nu- clear Regulatory Commission's 10 CFR 40 Part 75 that dealt with the mining, plant processing, and storage of urani- um and thorium. The regulation was conceived by the International Atomic Energy Agency, and it "applied source material," meaning nuclear fuel, "reg- ulatory thresholds historically applied to the uranium mining industry to all mining activities," Kennedy wrote in a recent column. Prior to the regulation, America's supply of REEs came from heavy mineral sands, phosphate and iron deposits. "Due to the costs and li- abilities associated with source mate- rial, these mining companies diverted these rare earth resources into their mine tailings waste." Next, he said, the federal govern- ment should get behind efforts to launch a cooperative that establishes a REE value chain stateside. "The cooperative is getting by- product resources from commodity miners in some other business, even coal, if coal can do it, and it will be owned by end users of finished rare earth products, like magnets, metals, alloys, garnets," Kennedy said. "And those people are committed to pur- chase the finished product at cost. Suddenly you've got a solution to China's monopoly. This thing is im- mutable to China's influence." Proponents of American mineral resource self-sufficiency have had at least one receptive audience in D.C. for the last couple of years. In December 2017, President Donald Trump fired off the Presidential Executive Order on a Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals. While it didn't mention REEs specifi- cally, it listed some of the challenges facing American miners in general and noted how dependency on foreign sup- plies was a national security concern. It solicited ideas and plans and conclud- ed by ordering an official report on as much from the secretary of commerce and the secretaries of defense, the in- terior, agriculture, and energy, and the United States trade representative. And as the wheels of the bureau- cracy turn, players already vested in the cause dig in to vie for a piece of the action. One such player, the DOE pro- gram, continues apace. And the fruits of its labor are slowly gaining interest from coal miners. "One particular company is Alliance Coal," Honaker said. "Bob Murry's company is anoth- er company that has expressed a lot of interest," he said. "Kentucky River Properties, for ex- ample, is a company that owns a lot of mineral reserves that coal companies lease from," he added. "We are in talks about developing a significantly larger pilot plant in one of their facilities." Marchese said interest is one of the key gains from the DOE program. "I think it is great that the DOE has undertaken this research trying to help the coal industry," he said, "be- cause, remember, if you are a coal operator, profits from the sale of REEs and other materials may, in fact, prove to be the difference between having a coal mine that is operational verses non-operational."

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