Critical Rare Earths, National Security, and US-China Interactions
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RAND documents are protected under copyright law. For information on reprint and linking permissions, please visit the RAND permissions page (http://www.rand.org/publications/permissions.html). Published 2015 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org/ To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Dedication For my father, who modeled a life defined by the rarest mix of virtues: fierce love, unbounded grace, profound gratitude, and unrelenting perseverance. Love you dad. iii Table of Contents Dedication .................................................................................................................................................... iii Abstract ........................................................................................................................................................ xi List of Figures ............................................................................................................................................ xiii List of Tables .............................................................................................................................................. xv Abbreviations and Acronyms ................................................................................................................... xvii Acknowledgements .................................................................................................................................... xxi Executive Summary ................................................................................................................................. xxiii Research Introduction ...................................................................................................................... xxiii Dysprosium Supply Risk – Politics, Economics, and Geology ....................................................... xxiii Dysprosium Material Importance: The NdFeB Permanent Magnet ................................................ xxiv Dysprosium, the Most Critical Rare Earth ....................................................................................... xxiv U.S. Policy Options for Increasing Resiliency ................................................................................. xxv Three Sweet Spot Optimal Portfolios for Three Budget Ranges ...................................................... xxv Chapter 1 – Introduction ............................................................................................................................... 1 Introduction ............................................................................................................................................... 2 Research Findings ..................................................................................................................................... 2 The Policy Challenge ............................................................................................................................ 2 Policy Solution ...................................................................................................................................... 3 Policy Relevance ....................................................................................................................................... 5 Research Contribution .............................................................................................................................. 6 Contribution 1 – Consolidated Dysprosium Narrative .......................................................................... 6 Contribution 2 – New Criticality Reduction Planning Framework....................................................... 7 Contribution 3 – Sweet Spot Portfolios for Dysprosium Criticality Reduction .................................... 7 Practical Policy Planning Benefits ........................................................................................................ 7 Dysprosium Criticality .............................................................................................................................. 8 Criticality Defined ................................................................................................................................ 8 Dysprosium Is Most Critical ................................................................................................................. 9 Roadmap of Research Chapters .............................................................................................................. 10 The Policy Challenge – Chapters 2, 3, and 4 ...................................................................................... 11 The Policy Solutions – Chapters 5, 6, and 7 ....................................................................................... 11 Chapter Summary ................................................................................................................................... 11 v Chapter 2 – The Politics and Economics of Rare Earth Elements .............................................................. 13 Introduction ............................................................................................................................................. 14 China’s Path to Rare Earth Dominance .................................................................................................. 15 China’s Geological Endowment ......................................................................................................... 15 Beijing’s Push on Rare Earths Industry Development ........................................................................ 17 Rare Earths as a “Geopolitical Lever?” .............................................................................................. 26 The Cost of Rare Earth Monopoly ...................................................................................................... 27 Beijing’s Seller’s Remorse.................................................................................................................. 29 China’s Controversial Way Forward ...................................................................................................... 31 Environmental Protection Laws 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