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China's control of high-tech magnet industry raises U.S. alarms.

Article Excerpt
Reports of China's impending decision to restrict exports of rare-earth minerals has suddenly awoken the U.S. government to its dependence on China for virtually all of the permanent magnets and rare-earth materials used throughout the defense industrial complex. China controls more than 95 percent of the world's supply of rare-earth permanent magnets.

High-profile articles in major newspapers describing China's intention to restrict or end exports of rare-earth minerals have thrust a critical light on the Pentagon's policies that have embraced cheap global production and that downplayed or ignored the potential negative national security implications of the loss of U.S. industrial capabilities.

Executives working in the U.S. rare-earth metals industries have been warning the Pentagon for years that the country no longer had the ability to produce the powerful magnets that are used in virtually every weapon system and a vast array of consumer and industrial goods. The rare-earth magnet industry is the most vulnerable, since the U.S. has lost almost its entire production capability over the past six years.

Congress has perked up, barely and belatedly, calling for a study. In the Senate version of the Defense Authorization Bill for 2010 (S-1390), Sen. Evan Bayh (D-Ind.) has requested a report from the Pentagon's Defense Science Board to determine the extent to which weapons systems are currently dependent upon rare-earth materials "by sources that could be interrupted." He wants the Pentagon to describe the risks involved in U.S. dependence on foreign sources of these materials, and any steps the Department of Defense has taken or plans to take to address risks to national security.

According to those in the industry, it won't be any time soon before the United States rebuilds an extensive and technically complicated supply chain for rare-earth minerals, especially for the powerful neodymium-iron-boron permanent magnets used throughout the...

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