Enduring attraction : America's dependence on and need to secure its supply of permanent magnets

The United States is the world's preeminent military power due in large part to its technological superiority. This lead in innovative technology supporting national security also includes advances in new and green energy applications. A common ingredient enabling the production of many of these applications is a group of minerals known as rare earth elements (REEs). Two REEs in particular, the refined metals neodymium and samarium, are key components in the manufacture of miniature high-temperature resistant permanent magnets. These magnets are essential to scores of high-technology devices such as wind turbines, hybrid car engines, and computer hard drives. Moreover, they are critical for military applications including precision-guided munitions, tank navigation systems, and electronic countermeasures equipment. The world's demand for REEs is steadily increasing. Simultaneously, the supply of REEs is shrinking, or rather China, which annually produces 97% of the world market's rare earth minerals and controls some 37% of the planet's known reserves, is steadily reducing its output. China dramatically restricted its exports by 72% in the last 6 months of 2010 to satisfy its rapidly expanding national appetite for REEs. China also is progressively acquiring the industrial base to manufacture permanent magnets and their end-products at the expense of American businesses. The entire supply chain of REE permanent magnets is now in China. As the American military and industrial sectors continue their move toward increased reliance on miniaturized high-performance electronics and strive to adopt more energy-efficient technologies, there are concerns that the United States may trade its reliance on Middle East oil for dependence on REEs from China. This paper will illustrate how REEs have become a deeply ingrained need throughout the American economy and, in particular, how rare-earth magnets are now indispensible to the defense industry.