Will The U.S. Ever Build A Strategic Metals Reserve?

Added October 1st, 2011 by Anthony David

In late August, Michael N. Silver, president and chairman of the board of American Elements—a company that manufactures engineered and advanced materials—suggested that the United States should build a Strategic Metals Reserve (SMR) in an effort to protect its manufacturing and defense interests in case of an embargo by any nation, especially China. He pointed out that earlier this year China had already used its strategic position in the rare earths market against Japan.

Silver said that Congress should structure the U.S. SMR along the lines of the U.S. Strategic Petroleum Reserve (SPR). The SPR was set up in 1975 in response to the 1973–74 oil embargo.

He said, “These metals are very precious to the health of our nation. So precious that U.S. manufacturing would grind to a halt within months if cut off. The SMR is exactly the type of action the federal government should take to assure our long term competitiveness. In manufacturing, the nation that has the raw materials, wins.”

Silver pointed out that the cost of key strategic metals has increased by 25 times over the last year. He said, “Two years ago neodymium metal sold for $35–45 per pound. Today it is $900 per pound and climbing. All rare earth metals have risen similarly. Had America created a reserve 48 months ago, we would have experienced a windfall of epic proportions.”

He said that should the SMR be created, the U.S. would not be the first country to do so. China, which controls 97% of the rare earths market, reportedly built a reserve of over 100,000 tons beginning last year. The EU, Japan, South Korea and UK are all laying out plans to build strategic reserves. In fact the EU has already begun building its reserves by sourcing rare earths from countries other than China.

On June 24, 2011, President Barack Obama launched the Advanced Manufacturing Partnership (AMP), which is a consolidated effort to bring together universities, the federal government and industry to invest in emerging technologies that will help create high quality manufacturing jobs. Silver suggests that a part of the $100 million planned to be used to “develop and deploy advanced materials” should be set aside to fund a study group that will explore the feasibility of an SMR.

Meanwhile, university and business partners have joined federal agencies and taken concrete steps to enhance the nation’s advanced manufacturing sector. Plans for 2012 have already been laid. Stanford University is one of the six universities selected to be part of the AMP. Universities have been included in the partnership so that they can cultivate an environment that promotes innovation and produce skilled workers and tools required to transform the manufacturing sector.

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