However, the alternatives to fossil fuels–such as wind energy, hybrid vehicles, and energy-efficient light bulbs–could also lead to dependence on international resources. They require minerals known as rare earth elements or minerals (REEs). REEs are required for producing the magnets necessary for a variety of goods, including precision-guided munitions, computer hard drives, lasers, communication and radar systems, satellites, and color televisions.

But China has a virtual lock on the production of REEs. In response, U.S. policymakers requested the GAO produce a detailed assessment of REEs in the U.S. defense supply chain as part of the 2010 National Defense Authorization Act. At the same time, the Pentagon is changing its policies regarding acquiring and stockpiling REEs.

Demand for Rare Earth Predicted to Rise

CEO Mark Smith of Molycorp Minerals, a U.S. rare earth mining operation, told HardAssetsInvestor.com:

Today the largest use of these magnets is in hard disk drives… We believe that may be changing as hybrid cars become more popular and the use of wind turbines becomes more widespread. Clearly, on a volumetric basis, these two new clean energy technologies could easily overtake hard disk drives in terms of the volume of permanent rare earth magnets required.

Despite their name, REEs are not necessarily rare–known stocks and demand vary widely by element–but supplies of some key elements are short, reports Robin Bromby of The Australian.

China Corners the Rare Earth Market

The growing attention paid to REE supply stems more from the location of mining and production facilities rather than pure scarcity concerns. According to the GAO assessment, China produced 97 percent of rare earth oxides in 2009, and it has established economic protections on rare earth exports. The United States Magnet Material Association has estimated that China’s consumption of rare earth materials will outpace its supply between 2012-2015.

“What we need to be careful of is that we don’t unknowingly change our dependence on foreign oil to a new dependence on Chinese rare earths,” Molycorp’s Smith told HardAssetsInvestor.com. While new technologies may change the type of battery used in hybrids, “the one thing that cannot change in electric vehicles or hybrid vehicles is the use of permanent rare earth magnets in the motors and generators. There is simply no substitute for those magnets,” said Smith.

U.S. Seeks Secure Supplies

Given the lack of substitutes, the United States is attempting to secure access to REEs. Known deposits exist in the United States, Australia, Brazil, India, Canada, South Africa, and Greenland. However, in order for the United States to procure secure access to REEs, they must both acquire mines and processing facilities for the multi-stage production process, which today takes place almost entirely in China.

The GAO estimates it may take up to 15 years for the United States to produce a finished product. In that time, Chinese consumption is expected to have vastly increased and demand for certain REEs may be very high.

Washington is taking this threat seriously. As pointed out by CNAS’ Christine Parthemore, the 180-day turnaround time on the GAO’s rare earth assessment was considerably shorter than for other assessments, including a plan for operational use of biofuels.

The Pentagon is revamping its stockpiling practices, reducing bureaucratic barricades to changing quotas, broadening buying options, and growing the array of stockpiled resources, the Wall Street Journal reported, adding:

The rising competition for raw materials has sparked fears in the U.S. military that some materials that once seemed abundant could suddenly become hard to get at any price. In 2008 the military suspended or limited sales of 13 commodities it had previously considered excess. Last year it added 14 materials to its list of resources it considers for stockpiling, including specialty steels, lithium and some rare-earth elements, taking the total to 68. More additions are expected, said Ms. Stead of the Defense National Stockpile Center.

While it seeks secure supplies of REEs, the United States, and the defense community in particular, should take heed of the long history of minerals and conflicts around the world. Global demand for certain minerals has supported combatants in conflict areas; for example, control of coltan mines in the Democratic Republic of Congo, while producing only 1 percent of global supply, played a significant role in that country’s civil war.

The switch to alternative transportation fuels could similarly produce new patterns of global resource demand that spur or support conflict–a phenomena that will be explored in an upcoming ECSP event, “Backdraft: The Conflict Potential of Climate Mitigation and Adaptation.”

On the other hand, done correctly, mineral extraction could be a way to break the “resource curse” and increase cooperation rather than conflict. In Pakistan, “development and maintenance of an extractive mineral industry could revolutionize the Waziristan economy and infrastructure in the long-term,” says Natural Security, which could provide “an incentive for local cooperation.”

Ultimately, the way that the United States seeks to slake its hunger for resources will determine whether it can stockpile its way to security.

Tara Innes is a PhD student at the University of Maryland, studying conflict-environment linkages and an intern with ECSP.

Photo Credit: Adaptation of Periodic Table, courtesy Flickr user Destinys Agent