Scarce Strategic Mineral Alternatives Likely To Leave US Supply Chain at Risk Over Next 3-5 Years

Scarce Strategic Mineral Alternative Sourcing Likely To Leave US Supply Chain At Risk Over Next 3-5 Years IIS
MU, Fall 2012
Scarce Strategic Mineral Alternative Sourcing Likely To Leave US Supply Chain At Risk Over Next 3-5 Years
Institute For Intelligence Studies at Mercyhurst University
A report on strategic minerals by the INTL 650: Collaborative Intelligence graduate class, Fall 2012
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Inside Cover
About This Document

The eleven students of the Collaborative Intelligence class assembled this document. Students researched and analyzed findings over the 2012 autumn term at Mercyhurst University. The class split into three teams with each team responsible for a specific topic. Four students were assigned to research national security issues, four were assigned to research business issues, and three students were assigned to research law enforcement issues. All three teams were tasked to answer the following question: What are the likely US national security, business and law enforcement implications over the next 3-5 years of trends in critical or strategic minerals? Teams collaborated to establish definitions and create a list of critical strategic minerals. This report identifies the following as critical and strategic minerals for US national security, businesses, and law enforcement: Antimony Aragonite Arsenic (trioxide) Asbestos Barite Bismuth Calcite Cesium Chalcocite Chalcopyrite Chromium Cobalt Copper Gallium Germanium Gold Indium Iodine Lithium Magnesium metal Manganese Nickel Niobium Nitrogen (fixed), ammonia Peat Perlite Phosphate rock Platinum-group metals Potash Quartz crystal (industrial) Rare earth elements Rhenium Rubidium Scrap Selenium Strontium Tantalum Tellurium Thallium Thorium Tungsten Vanadium
Overall analytic confidence is moderate. All groups agreed on moderate analytic confidence for each set of group findings. Source reliability varied from medium to high, and sources could be successfully corroborated.
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Overall Key Findings

Question: What are the likely US national security, business and law enforcement implications over the next 3-5 years of trends in critical or strategic minerals? Answer: Due to lack of alternative strategic mineral sources, susceptibility to supply chain vulnerabilities likely to persist in next 3-5 years: The biggest risk the US faces is likely supply chain vulnerabilities: US imports 80 percent of all strategic minerals. US imports 28.4 percent of strategic minerals from China. Strategic minerals highly likely to remain essential for key industries, including defense, electronics and energy. National mining likely presents opportunity to reduce import dependence. One US company currently pursuing strategic mineral mining in the Arctic. Legislation to quicken mine opening unlikely to pass Congress. Arctic likely opportunity to reduce dependence: US abuts Arctic region, allowing for undisputed access to resources. US federal government issued call to explore Arctic region for strategic minerals. China is likely to continue expanding its mining operations outside its mainland to include Africa and the Arctic. Greenland, with growing access due to ice shelf melt, is likely an opportunity for domestic mining; however, little is being pursued presently. Law enforcement highly likely most at risk: Dependent on businesses and federal government for critical supplies, making its supply chain likely at high risk for potential disruptions. State-by-state legislation likely impedes proactive, unified response to supply chain risk. Metal theft likely to remain top strategic mineral priority for law enforcement. Page 2
Table Of Contents
About This Document Key Findings Scarce Strategic Mineral Alternative Sourcing Likely To Leave US Supply Chain At Risk Over Next 3-5 Years Business Findings While US Businesses Likely To Decrease Dependence On China, Overall Import Reliance Creates Supply Chain Risk National Security Findings International Issues Likely To Prevent US From Controlling Its Strategic Mineral Access Over Next 3-5 Years Law Enforcement Findings Supply Chain Complications Likely Makes Law Enforcement Most Susceptible To Strategic Mineral Issues In 3-5 Years; Legislations Likely Required In Order To Provide Law Enforcement With Prominent Role In Strategic Mineral Decisions Annexes Information Snapshots Methods and Process Contact Information Endnotes 1 3 4
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44 70 71 81 83 84
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Scarce Strategic Mineral Alternative Sourcing Likely To Leave US Supply Chain At Risk Over Next 3-5 Years
Executive Summary:
Due to a lack of alternative strategic mineral sources, the US likely will remain susceptible to supply chain vulnerabilities over the next 3-5 years. For US businesses that use strategic minerals, the largest supply chain risk is likely its dependence on imported materials. The US obtains 80 percent of its strategic minerals from imports, with 28.4 percent of that originating in China. Key US industries, including defense, electronics and energy, rely on strategic minerals to manufacture items like laser sights, wind turbines, permanent magnets, optics, and electrical conductors. To combat the heavy import reliance for strategic minerals, the US is actively pursuing alternative sources including mining operations within the US and the Arctic. However, Congress is unlikely to pass new legislation that would aid mining interests with easing or quickening the permitting process. While, the Arctic is likely an opportunity for the US to reduce its dependence on imports, domestic mining companies are not quickly establishing stakes in the area, even though the US federal government issued a call to explore the region for strategic minerals. The US abuts the Arctic region, which would allow for undisputed access to the resources found in the area. In contrast, China is likely to continue expanding its mining operations outside its mainland to include Africa and the Arctic, including vast stakes in Greenland. With the thinning ice shelf and lax mining regulation, Greenland is likely to continue as a prime location to survey and mine strategic minerals.
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Because strategic minerals are key components in many of the products utilized by law enforcement, that group is highly likely to be most at risk for supply chain disruptions. Law enforcement is dependent on businesses and the federal government for critical supplies, making its supply chain likely at high risk for potential disruptions. State-by-state legislation is likely to impede any proactive, unified response to supply chain risk, while metal theft is likely to remain the top strategic mineral priority for law enforcement.
Discussion:
Business US businesses are likely to continue relying on strategic minerals, particularly in the electronics, chemicals, industrial and motor industries. In order to decrease its dependence on China for rare earths, the US will look to utilize the opening of new mines in California, Australia and Brazil. In addition, the US is likely to continue economic assessments and find alternate sources, so it can cut down imports of Chinese rare earths. Unfortunately chances are better than even that non-passage of legislation will slow down attempts to find and utilize other sources of strategic minerals. The US will remain reliant on the strategic minerals, especially in electronics, chemicals and motor industries. These industries added 7.2 percent to the US gross domestic product in 2010 while assuming the risks associated with depending on imported materials. Each of these industries utilizes rare earths (100 percent imported), lithium (80 percent imported) and platinum-group (88 percent imported). The largest amount of imports for rare earths come from China, with additional imports arriving from Brazil, Finland, France, India, Japan, Malaysia, and the UK Lithium is imported from Argentina, Chile, China and Zimbabwe. Platinum-group minerals are imported from Russia, South Africa, UK, Canada, Colombia, Germany, Norway and Zimbabwe.
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The opening of new mines will give the US the chance to import strategic minerals from countries other than China. This will give US businesses a stronger position when negotiating prices for strategic minerals, as China is currently very dominant and is able to dictate prices as supply is low and demand is high. There are currently six rare earth assessments being conducted worldwide, outside of China. The US, though currently dependent on China in terms of imports, would prefer not to be. Therefore, the US is looking at increasing domestic production (Mountain Pass, CA) and searching for new sources. Current economic assessments include; Bear Lodge in Wyoming, Diamond Creek in Idaho, Elk Creek in Nebraska, Hoidas Lake in Canada and Kipawa in Canada. Further afield; Australia, Malawi and South Africa are being assessed for their resources and potential viability as alternate providers. In addition, domestic mining operations continue to positively impact the US economy, employing 625,000 people in 2010 who earned nearly 120 billion USD. Awareness of strategic minerals and their importance is on the rise - hence the attempts to pass new legislation to speed up the opening of new mines. H.R Bill 4402: National Strategic and Critical Mineral Acts passed the House of Representatives on July 12, 2012. The intent of this bill is to ease mining regulations. The bill has not been scheduled for Senate vote.
National Security It is likely that critical international events will prevent the US from improving its access to critical and strategic minerals over the next 3-5 years. The US is unlikely to reduce its mineral dependence, particularly on China. It is likely that the Chinese will obtain a larger share of mining rights throughout the world and will control larger shares of strategic mineral reserves in emerging economies. The US is highly unlikely to diversify its mineral import portfolio by exploiting new domestic strategic mineral deposits. It is likely the South African mining strikes will affect US strategic mineral supply. Foreign industrial mineral research will likely reduce mineral availability for the US.
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Currently, the US imports over 80 percent of its supply of critical and strategic minerals and has no alternative resources for many of these minerals. It is unlikely the US will reduce mineral import dependence despite domestic resources. White House officials strongly oppose relaxing domestic mining permit restrictions despite legislation that has already passed in the US House of Representatives. Despite increased multinational exploration and exploitation activity in the Arctic, the US is unlikely to take advantage of Arctic resources, as it has failed to take the initiative and has lost a chance to reduce reliance on countries such as China for strategic minerals. While countries from Australia to Canada have made mining commitments Greenland, the US has not made long-term plans to do so. Other countries such as China are moving in to expand their influence further. The South African mine strike, which has disrupted the US supply chain of select strategic minerals, is likely to further raise prices of those minerals. It has increased the price of platinum and reduced the output of gold. South Africa produces 75 percent of the worlds platinum and manganese. The US is increasingly dependent on Chinese imports of strategic minerals. The US will likely rely on Chinese mineral imports to a greater extent in the next three to five years, as Chinese state-owned enterprises are aggressively expanding mining operations worldwide. As strategic minerals are increasingly controlled by a single entity, import-dependent countries will be increasingly in danger of supply disruptions. China will increase its leverage over import-dependent countries in future political or economic disputes. Ongoing research abroad is likely to divert international supply away from the US due to ongoing research abroad. India renewed its initiative to restructure its power grid, emphasizing thorium-fueled nuclear generation. Currently, India is proceeding with plans to utilize thorium for power generation on a large scale. China is also currently conducting
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research on thorium nuclear power, which will likely reduce the amount of thorium available for the international market. Law Enforcement Due to a lack of control over its supply chain, law enforcement is likely vulnerable to strategic mineral issues in the next 3-5 years. Additionally, due to a lack of federal legislation, policy, and domestic production, law enforcement is not likely to have a prominent role in strategic mineral decisions. However, it is likely law enforcement will continue to focus on crimes related to the theft of products comprised of these minerals, such as catalytic converter theft. Law enforcement will likely expand their involvement to the private sector in order to address problems with strategic minerals, especially with the use of social media. It is likely that federal legislation, as currently proposed, will aid in reducing nationwide over the next 3-5 years. Dependence upon government for its budget and business for equipment makes the law enforcement supply chain vulnerable. A drastic change in prices or sudden unavailability of a strategic mineral could force law enforcement to operate without vital equipment. It is likely that legislation will be required in order to provide law enforcement with a more prominent role in strategic mineral decisions. Law enforcements focus concerning strategic minerals in the next 3-5 years will likely be confined to crimes related to strategic minerals, specifically the theft of products made with these materials. Currently, legislative measures to combat metal theft vary from state to state and no federal structure is in place to centralize law enforcement. However, in its current form, the recently proposed Scrap Metal Prevention Act will likely aid in reducing crimes related to the strategic minerals over the next 3-5 years.
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Law enforcement will likely expand their involvement to the private sector in order to address problems with strategic minerals, especially with the use of social media. Based on social network analysis of Twitter and YouTube networks, it is clear that a disconnect exists between law enforcement and businesses concerning scrap metal legislation and metal theft. In order to spread social awareness of this problem, law enforcement is likely to become more socially active online to spread awareness of this problem.
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Business Findings
While US Businesses Likely To Decrease Dependence On China, Import Reliance Creates Supply Chain Risk US Key Industries Likely To Continue Dependence On Rare Earths, Tellurium, And Platinum-Group Metals Chinas Rare Earth Dominance Highly Likely To Push US Toward Alternative Sources In Next 3-5 Years Despite Extensive Legislation, US Mining Operations Likely To See Slow Growth Health And Environmental Concerns Of Future Rare Earth Processing Plants Likely To Trigger Public Protests In Concerned Countries, Curbing Business Reliance On China Dodd-Franks Bill Unlikely To Heavily Affect US Businesses Despite Trade Disputes Between US And China, US Legislation Unlikely To Pass Significant Import Restrictions On Strategic Minerals Despite Introduction Of Congressional Strategic Mineral Bills That Would Likely Spur Job Growth, Passage Unlikely 11
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While US Businesses Likely To Decrease Dependence On China, Import Reliance Creates Supply Chain Risk
Executive Summary:
Despite current reliance on Chinese imports, it is likely that the US business industry will decrease its dependence on China for strategic minerals in the next 3-5 years. Businesses are likely to continue relying on strategic minerals, particularly in the electronics, chemicals, industrial and motor industries. It is highly likely that the opening of new mines in California, Australia and Brazil will allow the US to decrease its dependence on China for rare earths. The US is likely to continue economic assessments and find alternate sources, rather than continue its high dependence on China for rare earths. However, chances are better than even that non-passage of legislation will slow down attempts to find and utilize other sources.
Discussion:
The electronics, chemicals, industrial and motor industries constitute the primary industries that utilize a large number of strategic minerals that are primarily available through importation.1 Each of these industries contributes to increases in the US GDP and share risks associated with materials needed for manufacturing.2 It is highly likely that the opening of new mines (in California,3 Australia,4 India5 and Brazil6) will allow the US to decrease its dependence on China for rare earths. The US mine in Mountain Pass, California, is the biggest mine outside of China and produces both light and heavy rare earths.7 The re-opening of this mine is highly likely to allow the US to diversify its sources for rare earths.8 The Brazilian mining company, World Mineral Resources, recently announced the discovery of approximately 28 million tons of light rare earths that is a comparable size of Chinese light rare earth resources.9 The US industries identified rely on imports for strategic minerals including rare earths, as well as; lithium, copper, and platinumgroup minerals.10 Other than the rare earths, the strategic minerals utilized in these industries are available both domestically and from countries with which the US has trade affiliations.11 Even though rare earths were primarily imported from China in 2011, domestic sources, along with allied-country resources, have come online in the
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last two years.12 These additional resources are likely to encourage the US to continue searching for alternate sources and decrease its dependence on Chinese imports. However, non-passage of legislation will slow down attempts to find and utilize domestic sources. US mining permit delays are the most significant risk to mining in the United States. Under current federal legislation it would take approximately seven to ten years for mine development to begin.13 New legislation getting passed and awaiting Senate approval would streamline the process of domestic mineral exploration and reduce mine permitting development to 30 months.14 However, in 2009-2010 just 29 percent of all House of Representatives bills that were favorably reported by committee were enacted.15
Analytic Confidence:
Analytic confidence for this assessment is moderate. Source reliabilities range from medium to high, sources were corroborated, analysts had low expertise and worked together. The subject is highly complex and the time available for the task was adequate.
Authors:
Dean Atkins, datkin26@lakers.mercyhurst.edu Leslie Guelcher, lguelc84@lakers.mercyhurst.edu Ivan Nemeth, inemet60@lakers.mercyhurst.edu Karen Omniewski, komnie62@lakers.mercyhurst.edu
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US Key Industries Likely To Continue Dependence On Rare Earths, Tellurium, And Platinum-Group Metals
Executive Summary:
Businesses are likely to continue to rely on strategic minerals, particularly in the electronics, chemicals, industrial and motor industries. Additionally, the US is likely to continue economic assessments and try to find alternate sources, rather than continue its high dependence on China for rare earths.
Discussion:
The USGS, in its Mineral Commodities 2012 report, identifies key industries that use the myriad minerals it tracks. Many of the minerals are 80-100 percent imported from around the world for domestic use. The industries that rely on imported minerals have added supply chain risk that can impede price and supply stability.16 Strategic industries can be defined by its reliance on imported materials, sourcing of the imported minerals, and the economic impact of the industry as it relates to US GDP. These sectors include electronics, chemicals, industrial, and motor industries. The primary critical minerals used across these industries are rare earths, lithium, platinum-group, copper, and the copper derivatives, selenium and tellurium.
Key strategic industries impact on US gross domestic product, as a percent of total US GDP. Page 13
The location where the mineral deposits are mined and produced adds to business risk-levels. Currently, 15 of the 84 minerals on the USGS list are 100 percent imported to the US. Of those 15, only rare earths are used across a wide-variety of industries. The US imported 97 percent of its rare earths from China in 2011. However, in 2012, imports from China are likely to have decreased because new mining operations, both domestically and in other foreign locations, have begun. The Mountain Pass, California mine reopened17 as did mines in Brazil,18 India19 and Australia.20 In addition, seven rare earth economic assessments are underway in North America with another six assessments being conducted world-wide, outside of China.21 The combination of domestic and foreign-held rare earth
Social networking analysis chart showing the import locations of key strategic minerals for electronics, chemicals, defense, and motor industries. The colors relate to the World Banks Ease of Doing Business Ranking with green as easy to do business with and red as difficult.
mining operations is likely to enable US businesses to decrease its dependence on China for rare earths. One of the other key strategic minerals, copper and its derivatives selenium and tellurium, are mined and produced primarily within the United States, with only 35 percent imported from South
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America, Central America and Canada.22 Both China and Japan export small amounts of the copper derivatives.23 Similarly, both lithium and platinum-group minerals are mainly imported from countries identified by the World Bank as ranking higher on its ease of doing business ratings.24 In other words, these countries, which include Canada, Finland, France, Australia and Germany, are highly likely to continue to export minerals to the US. Currently the only key mineral for which US businesses are highly dependent on China is rare earths.
Analytic confidence for this assessment is moderate. Source reliability is high and sources did corroborate. The analysts expertise is medium and the analyst worked alone. Subject complexity is high and the time available for the task was adequate. Structured analytic methods were not used.
Author:
Leslie Guelcher, lguelc84@lakers.mercyhurst.edu
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Chinas Rare Earth Dominance Highly Likely To Push US Toward Alternative Sources In Next 3-5 Years
Executive Summary:
Due to the expanding use of rare earth minerals in US industry, is highly likely that improved sustainability and availability measures need to be implemented. Because rare earth minerals are 100 percent imported, it would be prudent for the United States to reopen its mining operations for use in, among other areas, manufacturing of high technology, alternative energy, and defense applications. It is also advisable to invest in research to find substitutes and sustainability measures for rare earths since they are a finite resource.
Discussion:
Environmental and policy factors in the US have allowed China to maintain dominance of the rare earth mining industry. In June of 2010, the Rare Earth Supply Technology Resources Transformation (RESTART) Act was introduced to promote domestic rare earth production.25 However, the National Mining Association stated that although the United States has 6.2 trillion USD of mineral resources, it has the slowest permitting processes in the world for new mines, taking from seven to ten years.26 Recently, the Metal Service Center Institute suggested that simplifying and reducing taxes, less strict regulations that will still protect the environment, and improved energy policy would likely improve the availability of rare earths from domestic mining.27 According to Forbes, North America is finally waking up to the consequence of Chinas rare earth monopoly and has invested money and resources to domestic mining.28 Additionally, a new and steady source of domestic rare earth mining would likely revive the US manufacturing sector, adding jobs while reducing dependence on China.29 Currently, rare earth minerals are used in conjunction with many other scarce elements to create everything from glass/lcd30 (indium and erbium; lanthanum and gallium), to light-emitting phosphors31 (terbium and indium; terbium and gold; terbium and niobium; terbium and lithium; lutetium and indium), to fine wire for electrical conductors32 (lanthanum and tungsten; lanthanum and gold), to wavelength amplifiers for fiber optics33 (lanthanum and gallium; terbium and tantalum; erbium and germanium; lutetium and
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germanium), to permanent magnets34 (terbium and vanadium; terbium and cobalt; samarium and cobalt). Clean energy industries employ rare earths as catalysts for cleaning diesel emissions35 (lanthanum and thorium) and in solar cells36 (lanthanum, beryllium and indium). The United States Geologic Survey (USGS) conducts national mineral resource assessments, but these studies are time consuming and expensive. Several North American ventures have begun extracting and processing rare earths, including Orbite An example of current strategic Aluminae37 and Molycorp.38 mineral recycling, Robert F. Kennedy, In addition to current mining Jr. and Creative Recyclings CEO, operations, the need to find John Yob stand on the companys substitutes and sustainability E-Scrap Processing System. measures is likely critical to short-term rare earth mineral independence. Creative Recycling Systems, Inc. and GreenRock Rare Earth Recovery Corporation announced a joint venture,39 and will be recycling rare earth minerals found in consumer electronics, magnets and batteries. Rare earths are suitable for recycling because they do not degrade with use, and the elements are actually found in higher concentrations in used products than from original ores. The growth of the sustainability market will likely lessen Chinas stranglehold on the rare earth market.
The analytic confidence for this estimate is moderate. Source reliability is high and sources did corroborate. The analysts expertise is medium and the analyst worked in a team. Subject complexity is high and the time available for the task was adequate. Structured analytic methods were not used.
Authors:
Karen Omniewski, komnie62@lakers.mercyhurst.edu Leslie Guelcher, lguelc84@lakers.mercyhurst.edu
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Despite Extensive Legislation, US Mining Operations Likely To See Slow Growth

Executive Summary:
The United States mining industry is faced with a myriad of regulations from over 20 different agencies, which is likely to impede significant increases in mining operations. While some of the strategic minerals used by US industries are produced in and exported from the country, several of the most important minerals, including rare earths, are 100 percent imported. Mining in the US has been growing over the last three years, indicating an increased awareness of both the national dependence on critical imports and the industrys impact to GDP. While regulations impede significant growth in the industry, mines will likely continue to come online as long as it is financially feasible to profit from the operation.
Discussion:
Many of the issues facing the mining industry involve environmental legislation. 80 different laws that are enforced by 20 different agencies regulate the industry.40 For example, the Environmental Protection Agency (EPA) requires a lengthy permit process41 to expand or open any mining operation within the United States, with over a dozen regulations in place. The laws42 surrounding the environment include the type and amount of toxics that can be dispersed in the air, water, or as waste. Mining operations are also required to plan for reclamation of sites that adds to the number of laws that impact the industry.43 Because of the laws and permitting requirements, new mining operations take an average of seven years to open.44 The lengthy process impacts the financial feasibility for new mines to come online to remedy the net importation of many of the countrys strategic minerals. One of the main issues surrounding the legislation, is not the law itself, but the opposition to new mines by activists that delays the permitting process.45 The vocal opposition to mining also impacts the legislation that is passed. Currently, the Mining Act of 1872 is being reviewed to potentially change the royalty payment regulations as they apply to hardrock mining, specifically gold, silver and copper.46 By changing these rules, the government hopes to save more than 500 million USD over the next ten years. While environmentalists applaud the changes, industry experts say that adding royalty
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payments to hardrock mining will place the US at a competitive disadvantage by increasing costs.47 Considering that both Canada and Australia have similar environmental laws for mining operations as the US and are able to permit and open mines faster,48 it becomes apparent that activism significantly impacts mine openings in the US. Although the US imports a significant amount of its strategic minerals, the country is able to export minerals, including large quantities of both gold and vanadium. However, from 2002 through 2010 the US moved its rare earths from an export mineral to importing all needed materials.49 Overall, the US exported 86,800 billion USD worth of minerals in 2010. Of those exports, strategic mineral accounted for just over 9 trillion USD.50 The mining industry is one of the bright points in US employment with a 16 percent increase from December 2007 to May 2012.51 Not including coal, mining in the United States directly employed over 625,000 people in 2010, while indirectly employing an additional 1,353,405.52 Employees earned nearly 120 billion USD; which, in turn, contributed to over 225 billion USD to the Gross Domestic Product (GDP).53 Mineral
Barite Copper Gold Lithium carbonite Magnesium compounds Magnesium metal Peat Perlite
Principal States
NV and GA AZ, UT, NV, NM, MT, ID, MO NV, AK, UT, CO, WA, AZ, CA, ID, MT, NM, SD NV MI, UT, FL, DE, CA UT FL, IL, IN, IO, ME, MI, MN, MJ, MY, OH, PA, WA AZ, CA, ID, NV, NM, OR
Phosphate rock Platinum-group Potash Tungsten
FL, NC, ID, UT MT NM, UT, MI CA
Top domestically mined minerals with mine and processing locations based on USGS 2012 Survey findings. Page 19
All 50 states contributed to the growth in mining through 2012. The states most directly impacted by mining of strategic minerals were Utah, New Mexico, Nevada, California and Idaho.54 Nevada is the top-ranked mining state, producing 11.6 percent of nonfuel minerals produced in the US.55 Of the strategic minerals identified in class, Nevada mines barite, perlite, gold and copper. While Utah ranks third in total US nonfuel mining, it mines the highest number of strategic minerals including copper, gold, magnesium metal, magnesium compounds, phosphate rock, and potash.
Analytic confidence for this assessment is moderate. Source reliabilities range from medium to high, sources were corroborated, analyst had low expertise and worked alone. The subject is highly complex and the time available for the task was adequate.
Author:
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Health And Environmental Concerns Of Future Rare Earth Processing Plants Likely To Trigger Public Protests In Concerned Countries, Curbing Business Reliance On China
Executive Summary:
While rare earth mining and processing companies like Australian Lynas and US Molycorp will tend to decrease their dependence on Chinese resources, they are likely to face multiple challenges. Costs are highly likely to be one of the decisive factors for the location of rare earth processing plants. However, the public opinions safety concerns are likely to remain a major challenge for rare earth companies. Moreover, social media, in countries with significant Internet access and government controlled news sources, is likely to remain one of the most effective tools for public campaigns.
Discussion:
Lynas, an Australian based company, received a temporary operating license56 for the worlds biggest rare earth processing facility in Malaysia.57 Production will begin in October 2012. Molycorp recently reopened its rare earth mine in Mountain Pass, California, which was closed down in 2002 because of low-cost Chinese production.58 It is believed that the increased activity of Lynas and Molycorp in the production of light rare-earth elements will weaken world market prices due to the growth in supply.59 Lynas will likely face the following challenges: health and safety concerns for locals, renewing the temporary license and activists trying to shut plant down after Malaysias elections.60 While Lynas Mount Weld mine is located in Western Australia, the company established its processing plant in Malaysia. According to Lynas, the main reason for this move was Malaysias lower costs.61 As the mining related costs are likely to be higher in Australia than in China, Lynas had to decrease its rare earth processing costs to remain competitive in the world market. Malaysian activist are geared up to blockade the ore shipments from Australia once it has been mined. The demonstration could be one of the biggest examples of civil disobedience in the nation. This has been sparked by major health and safety concerns for the locals. Mitsubishi mined rare earths in the 80s in Malaysias Perak State and it is thought that they
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were responsible for birth defects and leukemia among residents. However, Malaysias Prime Minister, Najib Razak, has said that the plant is factually and scientifically safe.62 It is likely that health risk related concerns about rare earth processing plants will be one of the key agendas items taken into account when planning future plants all over the world. The example of Malaysia shows the role of social media where the ruling political parties have a tight grip on traditional news sources but they were unable to handle social media so average Malaysians were able to carry out a huge protest against Lynas rare earth processing plant.63 While Lynas ultimately received the temporary operating license from Malaysian authorities, the countrys Facebook and Twitter users were able to postpone the license grant, causing financial damages to the company. Nevertheless, Lynas underestimation of the role of social media also contributed to the protesters success.64
Analytic confidence for this assessment is moderate. Source reliabilities range from medium to high, sources were corroborated, analysts had low expertise and worked in a team. The subject is highly complex and the time available for the task was adequate.
Authors:
Dean Atkins, datkin26@lakers.mercyhurst.edu Ivan Nemeth, inemet60@lakers.mercyhurst.edu
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Dodd-Franks Bill Unlikely To Heavily Affect US Businesses

Executive Summary: It is likely that the effects of the Dodd-Franks bill on conflict minerals will be minimal in the US business sector. Despite an estimated cost of 3-4 billion USD in the US, retailers such as WalMart are unlikely to be directly affected. It is likely that the bill will be ineffective because it only affects publicly traded companies. Companies are highly likely to take advantage of loopholes in the legislation. Furthermore, retailers are exempt from disclosing the use of conflict minerals under the new legislation.
Discussion:
The conflict minerals65 disclosures of the Dodd-Frank legislation66 are unlikely to have a heavy effect on US businesses. The conflict minerals in question are used in production in many industries, including; technology, telecommunications, automotive etc. The SEC proposed that both manufacturers and companies that contract should be covered under the bill. The SEC has estimated that 6,000 US public companies could be affected. However, it is unlikely that the figure will be that high. Retailers have already lobbied and become exempt, with a number of loopholes also available. Retailers lobbied to be exempt from disclosing conflict minerals in a range of products including; smartphones, light bulbs and footwear. Originally, the SEC said the legislation would apply to any products that are sold under the retailers brand name. But eventually this was mitigated down to exempt retailers from the legislation. While implementing the Dodd-Frank legislation will be costly67 to those who follow it, retailers such as Wal-Mart, Target and Best Buy68 will likely escape unharmed from this new bill. Still, some companies that disclose their financial statements regularly to the SEC through 10-Ks and other federal reporting tools will find loopholes to allow them to skip conflict mineral reporting. There is a gaping loophole69 which legislators have shied away from. Instead of specifying that manufacturing companies must disclose the information with no exceptions, they state that it does not apply if a company affixes its brand, mark, logo or label to a generic product. Therefore, as long as the supplier of tungsten or tantalum
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is not listed in the US stock exchange and required to report and companies source from a third party, there will be no need to disclose anything - as it is a generic product. As a result, this will mean companies can get around having to report anything at all. The idea of the reporting requirement is to have companies disclose if their use of tungsten, tantalum, tin and gold comes from slave driven mines. In disclosing this fact, consumers will surely switch to products that are not exploiting others. Because the loopholes exist and private companies and retailers are excluded; the legislation is likely to be ineffective. Therefore, the Dodd-Franks bill is unlikely to heavily affect US businesses.
Analytic confidence for this assessment is moderate. Source reliabilities range from medium to high, sources were corroborated, analyst had low expertise and worked alone. The subject is highly complex and the time available for the task was adequate.
Author:
Dean Atkins, datkin26@lakers.mercyhurst.edu
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Despite Trade Disputes Between US And China, US Legislation Unlikely To Pass Significant Import Restrictions On Strategic Minerals
Executive Summary:
Rare earth related trade disputes between US and China are likely to continue to focus on Chinese export restrictions on these elements. US legislation is unlikely to restrict imports from China or increase import duties on Chinese rare earth elements. In spite of the dominant Chinese rare earth position, the American businesses reliance on China is likely to decrease due to emerging non-Chinese supply of minerals.
Discussion:
Rare earths are exceptions in the Chinese and American trade disputes as these products are never related to anti-dumping charges. The relations between the two countries became tense because the US has levied anti-dumping and anti-subsidy duties on energy-related products. China did not hesitate to file a complaint
Selected critical minerals US net import reliance, 2010 Page 25
against the US at the World Trade Organization (WTO) claiming that the anti-subsidy measures negatively affected 7.3 billion USD in Chinese goods. Conversely, the US filed a WTO complaint against China for limiting exports of rare-earth elements and for levying import duties on American cars.70 Refined rare earth imports to the US increased from 161 million USD in 2010 to 696 million USD in 2011.71 The import tariffs on rare earths range between 0 and 5.9 percent.72 Currently, there are no initiatives to increase these tariffs or impose any import restrictions. Conversely, Chinese export restrictions affect US businesses harmfully; the US business interest is to secure the continuous flow of rare earths from China. The US Congress has called for an increase of domestic rare earth production to decrease dependence on China.73 There are new production plants like US Molycorp in California - the biggest outside China - and Australias Lynas in Malaysia.74 China accounted for 79 percent (the second place France for 6 percent) of US imports of rare earth metals, compounds, etc. between 2007 and 2010;75 however, China possesses about 45 percent of the worlds total rare earth resources. The US was dependent on imports for 100 percent of 18 minerals and it is 50 percent reliant on import on 43 minerals to meet domestic demand in 2011.76
Analytic confidence for this assessment is moderate. Source reliabilities range from medium to high, sources were corroborated, analysts had low expertise and worked alone. The subject is highly complex and the time available for the task was adequate.
Author:
Ivan Nemeth, inemet60@lakers.mercyhurst.edu
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Despite Introduction Of Congressional Strategic Mineral Bills That Would Likely Spur Job Growth, Passage Unlikely
Executive Summary:
It is unlikely that the bills addressing strategic minerals that have passed the House of Representatives in the 112th Congressional session will be enacted in the next two years. The bills that are awaiting Senate action are H.R. 4402: National Strategic and Critical Mineral Production Act and H.R. 4480: Domestic Energy and Jobs Act. Both bills had republican majority vote, and due to historical trends of enactment of House bills and democratic majority in the Senate passage is unlikely.
Discussion:
The National Strategic and Critical Mineral Production Act would streamline approval of domestic exploration and development projects by eliminating duplicative analysis, providing for timely filings for litigants, and allowing 30 months for the lead agency to prepare, consider and reach a decision on permitting for mine development.77 This bill passed the House on 12 July 2012 with a 59 percent majority vote. Additionally, The Domestic Energy and Jobs Act, which include the expected increase in domestic production of strategic and critical energy minerals from the Federal onshore mineral estate,78 passed on 21 June 2102 with a 57 percent majority vote. Both bills are awaiting Senate action. According to govtrack.us, just 29 percent of all House of Representatives bills reported favorably by committee in 2009 2010 were enacted.79 Additionally, only 9 percent and 8 percent of democrats voted in favor the H.R. 4402 and 4480 respectively. Since, democrats are the majority in the 112th Senate and according to The New York Times as of 1 November 2012 polls, the chances of democrats winning the majority for the 113th session is 91.3 percent.80 Based on the historical enactment of bills passed by the House, and the statistically likelihood of a democratic majority in the 113th Senate, it is unlikely that these two strategic bills will be enacted.
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Analytic confidence for this assessment is moderate. Source reliabilities range from medium to high, sources were corroborated, and analyst has low expertise and worked alone. Subject is complex, and the time available for the task was adequate.
Author:
Karen Omniewski, komnie62@lakers.mercyhurst.edu
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National Security Findings

International Issues Likely To Prevent US From Controlling Its Strategic Mineral Access Over Next 3-5 Years US Unlikely To Significantly Reduce Mineral Dependence On Foreign Imports Over Next 3-5 Years Highly Likely Chinese Mining Groups Act As Geographic Hubs To Establish Local Monopolies On Strategic Minerals US Highly Unlikely To Exploit Arctic To Reduce Strategic Mineral Dependency, Despite Wealth Of Resources The US Strategic Mineral Supply Is Likely To Be Threatened By The South African Mine Strike Asian Nuclear Research Likely To Open Door To Technology That Diverts Thorium From The International Market Over Next 3-5 Years 30
33
35
37
39
41
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International Issues Likely To Prevent US From Controlling Its Strategic Mineral Access Over Next 3-5 Years
Executive Summary:
It is likely that international issues will prevent the US from controlling its access to critical and strategic minerals over the next 3-5 years, thereby increasing its vulnerability to potential supply disruptions. The US is unlikely to reduce mineral dependence, especially on China. It is likely that the Chinese will obtain a larger share of mining rights throughout the world and will control larger shares of strategic mineral reserves. Foreign research will likely reduce mineral availability for the US. The US is highly unlikely to diversify its mineral import portfolio by exploiting new reserves. The US strategic mineral supply will likely be threatened by the South African mine strike.
Discussion:
The United States is unlikely to reduce mineral import dependence despite domestic resources. Presently the US imports over 80 percent of its supply of critical and strategic minerals.81 The US also does not have substitutes for critical minerals such as manganese to create steel or chromium to create stainless steel, both of which are critical in the production of defense equipment.82 Despite abundant domestic resources and existing legislation, the White House officials strongly oppose relaxing domestic mining permit restrictions,83 which will force the US to remain import dependent. This lack of control over the supply chain exposes the US to risks from potential supply disturbances.84 For further information see US Unlikely To Reduce Mineral Dependence On Foreign Imports Over Next 3-5 Years, Despite Known Domestic Resources. It is highly likely that Chinas two largest state-owned enterprises (SOEs) are acting on direct orders from the Chinese government to monopolize strategic mineral reserves around the world.85 With few exceptions, they avoid direct competition by avoiding operating in the same countries. China already produces 90 percent of the worlds rare earth metals supply and will likely control a larger share of other strategic minerals in the future.86 It is highly likely that the US will become more import-dependent on China for not only rare earths but also for strategic minerals like cobalt, lead, copper, zinc,
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aluminum, bauxite, tungsten, and nickel. For further information see Highly Likely Chinese Mining Groups Act As Geographic Hubs to Establish Local Monopolies on Strategic Minerals. The US is highly unlikely to attempt to diversify its critical mineral import portfolio by exploiting newly accessible regions of reserves such as the Arctic. Despite increasing Arctic mining and exploration, the US has fallen behind in the region. By failing to accede to the Law of the Sea Treaty, the US has failed to lead the international community in the Arctic.87 Foreign companies, especially Chinese, have aggressively pursued Arctic contracts and resources.88 Although other Arctic nations such as Russia are continuing recent militarization campaigns in the Arctic region,89 the US has failed to prepare.90 For further information see US Highly Unlikely To Exploit Arctic To Reduce Strategic Mineral Dependency, Despite Wealth Of Resources. The US strategic mineral supply will likely be threatened by the South African mine strike. Since the strike began on August 2012, it has increased the price of platinum by 3 percent91 and reduced gold output by 39 percent.92 The 2011 South African mine strike decreased US imports of platinum by 4 percent.93 The US imports 5 strategic minerals from South Africa. US imports of manganese and chromium from South Africa are important for national defense.94 For further information see The US Strategic Mineral Supply Is Likely To Be Threatened By The South African Mine Strike. Ongoing research abroad will likely divert international supply away from the US for select minerals. After 2012s widespread blackouts, India has renewed its initiative to restructure its power grid, with an emphasis on thorium-fueled nuclear generation.95 Although its new reactors will take years to come to full capacity, India is proceeding with plans to utilize thorium for power generation on a large scale.96 China is also conducting research on thorium nuclear power,97 which will likely reduce the amount of thorium available for the international market. For further information see Asian Nuclear Research Likely To Open Door To Technology That Diverts Thorium From The International Market Over Next 3-5 Years.
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Analytic confidence for this assessment is moderate. Source reliability ranges from medium to high. Sources could be corroborated. Analysts were of medium expertise and worked as a team. The subject is highly complex. Time available for the task was limited.
Authors:
Karl Gustafson, kgusta65@lakers.mercyhurst.edu Sara Marinello, smarin59@lakers.mercyhurst.edu Irena Lazarevic, ilazar94@lakers.mercyhurst.edu Laura Suprock, lsupro04@lakers.mercyhurst.edu
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US Unlikely To Significantly Reduce Mineral Dependence On Foreign Imports Over Next 3-5 Years
Executive Summary:
Despite exploitation of known domestic resources, the US is unlikely to reduce mineral dependency on foreign imports of critical and strategic minerals over the next 3-5 years. Key factors include an already high reliance on China and other countries, limited alternative sources for most metals, and little government interest in mining domestically for these minerals.
Discussion:
The US depends on imports for over 80 percent of its strategic minerals, including cobalt, manganese, platinum-group metals, rare earths, tantalum, and yttrium.98 The US is 100 percent import-reliant for 19 strategic and critical minerals, 47 percent of which come from China (See Annex 1).99 In 2010, China produced 97 percent of global rare earths100 despite only having 36 percent of the worlds reserves.101 US import dependence has increased significantly since 1978.102
Origin of imported key strategic minerals to the US.
There are few alternative resource substitutes for many strategic minerals. For example, manganese is invaluable for steel production and chromium is necessary to make stainless steel.103 Neither of these minerals has a viable alternative for these uses. There is no alternative source for the US to produce defense items including
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magnets, lasers, and high-end optical apparatuses, all of which require rare earths for production. The US currently has known domestic resources for most critical minerals.104 The House of Representatives passed The National Strategic and Critical Minerals Production Act of 2012, which would reduce the restrictions on mining permits in the US, but the White House strongly opposes the bill.105 With present high reliance on imports but without long-term plans to reduce it, the US is vulnerable to potential supply disturbances.106
Analytic confidence for this assessment is high. Source reliability is high. Sources can be corroborated. The analyst is of medium expertise and worked alone without the aid of structured analytic methods. The subject is moderately complex. Time available for the task was adequate.
Author:
Sara Marinello, smarin59@lakers.mercyhurst.edu
Editor:
Laura Suprock, lsupro04@lakers.mercyhurst.edu
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Highly Likely Chinese Mining Groups Act As Geographic Hubs To Establish Local Monopolies On Strategic Minerals
Executive Summary:
It is highly likely that the two largest Chinese mining State Owned Enterprises (SOEs) are acting on direct strategic orders from the Chinese government to monopolize mineral deposits in designated regions. Their geographic placements of operations almost never overlap, and they do not compete with each other in any direct way over mining rights or access to resources. With the exception of a small number of nations, most notably Hong Kong, Singapore, and Zambia, China Minmetals Group and China Non-ferrous Metal Mining deliberately avoid operating in the same countries.
Discussion:
The State-Owned Asset Supervision and Administration Commission (SASAC) monitors and manages all Chinese SOEs.107 It has the authority to approve the promotion of top executives, mergers or sales of stock or assets, and the creation of laws related to stateowned enterprises. The power of the Chinese flags represent the two largest Chinese SASAC is evident mining SOEs. Both operate as central hubs for in the geographic subordinate mining companies. Since there are distribution of only 5 points of overlap in operations, limited two major mining geographical competition is evident. SOEs; the China Minmetals Group, a conglomeration of smaller mineral commodity trading entities108 and China Non-ferrous Metal Mining, a conglomeration of mining companies seeking to mine strategic metals.109 The primary overlap of operations is in Zambia, an extremely poor country in central Africa just south of the Democratic Republic of Congo.110 Both SOEs are primarily mining copper. In 2011, China Minmetals attempted to purchase copper mines in Zambia from the
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Canadian mining outfit Equinox Minerals Ltd. for 6.5 billion USD.111 China Non-ferrous Metal Mining began operations in Zambia in 1998, and currently runs nine operations. This geographic overlap is an outlier among mining operations between these two SOEs.112 By constructing a network analysis graph of overseas mining operations of these two SOEs, evidence of premeditated planning is highly apparent. Despite the fact that both SOEs mine many of the same minerals, they rarely operate in the same geographic locations. This likely constitutes a non-compete agreement between the two SOEs, at the direction of the SASAC.
Analytic confidence for this assessment is high. Source reliability ranges from medium to high, but all sources are from respected institutions. Sources could be corroborated. The analyst had low expertise, worked alone and did not use structured analytic methodologies. The subject is moderately complex and the deadline was easy to meet.
Author:
Karl Gustafson, kgusta65@lakers.mercyhurst.edu
Editors:
Sara Marinello, smarin59@lakers.mercyhurst.edu Laura Suprock, lsupro04@lakers.mercyhurst.edu
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US Highly Unlikely To Exploit Arctic To Reduce Strategic Mineral Dependency, Despite Wealth Of Resources
Executive Summary:
It is highly unlikely that the US will exploit the Arctic region to reduce its dependency on other nations for strategic minerals over the next 3-5 years, despite abundant reserves in the region. Key factors include gross unpreparedness, a failure to lead in the international community, and loss of the initiative to China.
Discussion:
The US has failed to prepare for resource exploitation in the Arctic. Lacking Alaskan ports capable of supporting heavy traffic, the US has not prepared for an increase in Arctic activity.113 With only one icebreaker vessel, the US Coast Guard is neither equipped nor ready to respond to events in the Arctic.114 In contrast, Russia has continued a militarization campaign,115 moving military assets to the region and also building bigger, better icebreakers to supplement its existing fleet.116 Other Arctic border nations have developed national security strategies to include north of the Arctic Circle.117 The US has also failed to take an active role in mineral exploration or exploitation efforts in Greenland,118 although experts estimate
Although the Chinese control the vast majority of the worlds rare earth production, they are continuing to advance operations in the Arctic
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Greenland to have enough rare earth metals to satisfy 25 percent of global demand.119 Despite involvement in the Arctic Council, the US still refuses to accede to the Law of the Sea Treaty,120 which would establish comprehensive, international rules to govern the oceans. The far northern Arctic has no exact boundaries, and nations have begun haggling over borders.121 US officials have called the Arctic region a new frontier in our foreign policy,122 yet by continuing to resist the Law of the Sea Treaty, the US has missed the chance to establish a leadership role in the international community.123 Despite lacking Arctic Council status, China has seized the initiative in the region by aggressively pursuing resources and contracts.124 Its ability to outspend all competitors provides it with extra leverage in cash-poor areas such as Greenland and Iceland.125 Chinese companies, many with government ties, have been investing heavily in the Arctic.126 Although experts believe that the Chinese motivation stems not from foreign policy goals but economic ones,127 China already controls nearly all of the worlds rare earths production128 and this would further cement US dependence upon it.
Analytic confidence for this assessment is high. Source reliability ranges from medium to high. Sources could be corroborated. The analyst is of medium expertise and worked alone, without the aid of structured analytic methods. The subject is highly complex. Time available for the task was adequate.
Author:
Editor:
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The US Strategic Mineral Supply Is Likely To Be Threatened By The South African Mine Strike
Executive Summary:
The US strategic mineral supply is likely to be threatened by the 2012 South African mine strike. Key factors include miner wage disputes, lack of workforce in the mines, and US dependence on South Africa for manganese, chromium, vanadium and platinum.
Discussion:
The US is dependent on strategic minerals from South Africa. South Africa accounts for 75 percent of the worlds manganese, 75 percent of the worlds platinum and is the fifth largest gold producer.129 The 2012 mine strike in South Africa affected 13 mines, which produce gold, platinum, and chromium.130 The mine strike increased the price of platinum by 3 percent131 and it halted gold output by 39 percent.132 A 2011 South African mine strike decreased US imports of platinum from South Africa by 4 percent.133 The US imports 17 minerals from South Africa, and 5 are strategic minerals.134 The US imports 17 percent of platinum, 12 percent of manganese ore, 50 percent of ferromanganese, 33 percent of manganese contained in all manganese, 34 percent of chromium, 33 percent of vanadium, and 4 percent of gold from South
South Africa accounts for large deposits of manganese and platinum.
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Africa.135 Manganese is vital for national defense, because military applications require steel, batteries, ferrites, and other alloys containing manganese. The US is 100 percent import dependent for manganese. Aerospace systems and high-grade stainless steel require chromium.136 US dependence upon South Africa will almost certainly increase, even while supply chain volatility persists in South Africa. On June 18, 2012, the US and South Africa signed a Trade and Investment Framework Agreement (TIFA) to increase imports from South Africa, amending a 1999 TIFA. The two-way trade between South Africa and the United States amounted to 22 billion USD in 2011. In 2011, US imports from South Africa reached 9.5 billion USD, a 15.7 percent increase from 2010. The primary imports included vehicles, machinery, iron, steel, platinum, diamonds, ores, slag, and ash. The countries signed the TIFA before the current mine strike began.137
Analytic confidence for this assessment is moderate. Source reliability ranges from medium to high. Sources can be corroborated. The analyst is of medium expertise and worked alone without the aid of structured analytic methods. The subject is moderately complex. Time available for the task was adequate.
Author:
Irena Lazarevic, ilazar94@lakers.mercyhurst.edu
Editors:
Sara Marinello, smarin49@lakers.mercyhurst.edu Laura Suprock, lsupro04@lakers.mercyhurst.edu
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Asian Nuclear Research Likely To Open Door To Technology That Diverts Thorium From The International Market Over Next 3-5 Years
Executive Summary:
It is likely that Asian research on thorium nuclear power generation will lead to the development of technology that will divert thorium away from the international market over the next 3-5 years. Key factors include Indias renewed restructuring initiative, a lopsided US-China research partnership, and Indian and Chinese stockpiling of the mineral.
Discussion:
Worldwide there remains interest in thorium as a fuel that is not likely to diminish in the near future.138 Thorium has theoretical advantages regarding sustainability, reducing radiotoxicity and reducing proliferation risk.139 Both China and India are conducting research on thorium-fueled nuclear power generation.140 After 2012s widespread blackouts, India has renewed its initiative to restructure its power grid, with an emphasis on thorium-fueled
The USGS estimates India holds one-fourth of the worlds thorium reserves. Page 41
nuclear generation.141 India, which contains about one fourth of the worlds thorium reserves,142 views thorium as essential to its nuclear power program due to the countrys limited supply of uranium.143 Although its new reactors will take years to come to full capacity, India is proceeding with plans to utilize thorium for power generation on a large scale.144 China is also conducting research on thorium nuclear power.145 The US has entered into collaboration with China, which involves the Department of Energy giving China information and technical advice on molten salt reactors, a technology that the US researched in the 1960s--with no apparent benefit to the US.146 Both China and India, which possess large thorium reserves,147 are beginning to stockpile the mineral. India has forced private miners to stockpile at their own expense sand with monazite, the chief source of thorium, content of greater than 5 percent.148 Stockpiling the mineral rather than sending it into the market will highly likely drive the price of thorium up.
Analytic confidence for this assessment is moderate. Source reliability ranges from medium to high. Sources could be corroborated. The analyst is of medium expertise and worked alone. The subject is highly complex. Time available for the task was limited.
Author:
Editor:
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Law Enforcement Findings

Supply Chain Complications Likely Makes Law Enforcement Most Susceptible To Strategic Mineral Issues In 3-5 Years; Legislation Likely Required To Give Group Prominent Role In Strategic Mineral Decisions Law Enforcement Likely Vulnerable To Strategic Mineral Issues Due To Reliance On Supply Chain Federal Legislation Likely Required For Law Enforcement To Become Involved In Strategic Mineral Concerns Increased Legislation And Cooperation Between Public And Private Sectors Likely Needed To Curtail Metal Theft In The Next 1-2 Years Passage Of Federal Act Would Likely Curtail Metal Theft Epidemic In 1-2 Years Despite Legislative Efforts, Metal Theft Likely To Persist In Next 1-2 Years
44 47 49
51 53 55
State And Local Law Enforcement Likely To Reduce Total Number Of Metal Thefts In Next 1-2 Years Through Public Education And Close Working Relationship With Local Recyclers 58 Catalytic Converter Theft Likely To Rise With Metal Prices Chances Better Than Even Social Media Will Increase Public Awareness Regarding Scrap Metal Theft 61 64
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Supply Chain Complications Likely Makes Law Enforcement Likely Most Susceptible To Strategic Mineral Issues In 3-5 Years; Legislation Likely Required To Give Group Prominent Role In Strategic Mineral Decisions
Executive Summary:
Due to a lack of control over their supply chain, law enforcement is likely to remain vulnerable to strategic mineral issues in the next 3-5 years. Additionally, due to a lack of federal legislation, policy, and domestic production, law enforcement is likely to not have a prominent role in strategic mineral decisions. However, it is likely law enforcement will focus on crimes related to the crimes related to the theft of products comprised of these minerals, such as metal theft. Law enforcement will likely expand their involvement to the private sector in order to address problems with strategic minerals, especially with the use of social media. Though the success of preventative measures taken by states is unknown, federal legislation, as currently proposed, would likely help reduce metal theft nationwide over the next 3-5 years.
Discussion:
Law enforcement will likely remain vulnerable to strategic mineral issues in the next 3-5 years due to a lack of control over their supply chain. Law enforcement entities face a twofold problem in strategic minerals issues: the lack of control over their budget and their dependency on businesses for equipment. Should a strategic mineral experience a drastic increase in prices or become unavailable, entities may be forced to carry out their work without the item that is impacted by the mineral. This could because their budgets do not allow for the drastic increase in prices or because businesses are unable to create the equipment required by law enforcement. It is likely that law enforcement will not have a prominent role in strategic mineral decisions in the US due to a lack of federal legislation, policy, and domestic production. Despite sourcing concerns and a dependency on China, the only implemented legislation regarding critical or strategic minerals is Section 1502 of the Dodd-Frank Act,149 which requires some companies to publish if their supply chain contains conflict minerals from the Democratic Republic of Congo. Several other proposed pieces of legislation
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that would have addressed strategic mineral concerns failed to pass Congress,150 leaving the United States law enforcement without a clearly defined strategic mineral policy. Additionally, very few mines151 are producing strategic minerals in the United States, making law enforcement efforts local to only those areas. It is likely that law enforcement will focus on theft of products and materials comprised of critical and strategic minerals over the next 3-5 years. Due to the lack of a national, strategic plan, law enforcement instead must focus on the end products made using or comprised primarily of strategic minerals. With metal prices rising in recent years, metal theft is a problem on a national level. Catalytic converters are worth 50 to 200 USD at scrapyards, as they contain platinum and other valuable metals, and take around a minute to steal from a car.152 Thieves are targeting copper from pieces of national critical infrastructure such as wiring and pipes for resale to scrapyards. Currently, states handle this issue individually, as federal legislation is pending introduction in Congress.153 Because of inadequate data concerning metal theft, there is no way to determine the efficacy of each states metal theft laws. It is likely that engaging the public via social media platforms such as Twitter and YouTube will increase public awareness and help limit scrap metal theft. It is highly likely that law enforcement is not sufficiently engaging the public on social media platforms. Currently, law enforcement in the United States does not share a consistent vision regarding theft of scrap metal, especially concerning critical infrastructure. The correlation between existing regulations and scrap metal theft is likely very weak, but existing evidence regarding the effectiveness of legislation unclear. The efficacy of state attempts to curb metal theft is difficult to ascertain. Currently, reporting of metal theft varies across the nation, and the consequences of this type of theft are not tracked at a federal level.154 Although many states are in the process of enacting metal theft legislation, there is no correlation between legislation in a state and the frequency of metal theft. It is likely that the Metal Theft Prevention Act proposed by Sen. Charles Schumer (D-NY) will expand the scope of law enforcement relating to critical and strategic minerals, providing them with more data to assess the impact of techniques used to combat copper and scrap metal theft.
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The likelihood of being caught and facing a punishment are greatly increased with this comprehensive national legislation.
Analytical Confidence:
Analytic confidence for this assessment is moderate. The analysts did not utilize structured methods of analysis for this report. Source reliability is high and the sources corroborated each other. The analysts expertise is low and the analysts worked in a group. Subject complexity is medium and the time available for the task was adequate.
Authors:
Chad Los Schumacher, clossc80@lakers.mercyhurst.edu Peter OMalley, pomall01@lakers.mercyhurst.edu Shawn Ruminski, srumin25@lakers.mercyhurst.edu
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Law Enforcement Likely Vulnerable To Strategic Mineral Issues Due To Reliance On Supply Chain
Executive Summary:
Due to law enforcements reliance on their supply chain, it is likely that law enforcement is vulnerable to strategic mineral trends in the next 3-5 years. It is likely that the dependence on businesses for equipment and supplies, and on the national government for ensuring these businesses receive a supply of strategic minerals will remain unchanged in the next 3-5 years. In the event US lost its external sources of strategic minerals, law enforcement is likely to risk losing operational and tactical effectiveness.
Discussion:
Law enforcement in the United States is heavily dependent on its supply chain and equipment in order to carry out everyday police work. Strategic minerals play a direct and indirect factor in this supply chain. Law enforcement relies heavily on equipment to aide in everyday police work.155 Police cruisers, computers, cameras, radios, and weapons156 are some of the equipment law enforcement uses,157 all of which contain strategic minerals.158 This equipment allows officers to communicate with each other, reduce amount of time it takes to organize and find information, assist in apprehending Police rely entirely on businesses for all of the criminals, protect equipment found in patrol cars and on their themselves with respective level of government for funding. weapons, and a number of other day-to-day tasks.159 Since law enforcement purchases these items, many of which require irreplaceable minerals,160 from businesses, law enforcement likely faces a great vulnerability to its supply chain should businesses experience difficulty in obtaining the necessary minerals to build the equipment needed in police work.
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Susceptibility to strategic mineral pricing and availability are likely an additional vulnerability for law enforcement. Law enforcement entities receive their budgets from their respective level of government. The economic situation in the United States forced budget cuts to law enforcement, making it difficult to operate and purchase equipment.161 In the event that strategic mineral prices rise, it is likely that certain law enforcement agencies will be unable to purchase more expensive equipment vital to law enforcement due to lack of budgetary funds. This supply chain vulnerability is likely to force certain law enforcement agencies to conduct operations with out-of-date, broken, or a lack of equipment, creating issues with operational and tactical effectiveness. Indirectly, international relations impact law enforcements access to equipment. Because the US imports a majority of its strategic minerals, law enforcement must rely on the federal government to ensure that strategic minerals vital to their equipment are available. Should the federal government fail to secure strategic minerals,162 law enforcement is likely affected, as the price of equipment would go up or it would become unavailable.
Analytic confidence for this assessment is moderate. The analysts did not utilize structured methods of analysis for this report. Source reliability is moderate to high and the sources corroborated each other. The analysts expertise is low and the analysts worked in a group. Subject complexity is medium and the time available for the task was adequate.
Author:
Chad Los Schumacher, clossc80@lakers.mercyhurst.edu
Editor:
Peter OMalley, pomall01@lakers.mercyhurst.edu
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Federal Legislation Likely Required For Law Enforcement To Become Involved In Strategic Mineral Concerns
Executive Summary:
It is likely that federal legislation related to strategic minerals is likely required for law enforcement to become involved in strategic mineral concerns. A lack of federal legislation pertaining to strategic minerals, both at a source level and an end-product level are likely reasons that law enforcement is unaffected by trends in critical and strategic minerals.
Discussion:
Though the United States faces many sourcing concerns related to strategic minerals, no federal legislation adequately addresses the problems, specifically the role of law enforcement. The only federal requirement regarding sourcing issues related to strategic minerals and law enforcement are in the Dodd-Frank Act, Section 1502,163 which requires companies that meet certain criteria to publish if any part of their supply chain uses conflict minerals from areas in or around the Democratic Republic of Congo. However, the punishment for failing to adhere to this is unknown.
Molycorp recently invested in opening a rare earth mine in California.
Congress continues to introduce strategic mineral bills164 that would spur strategic mineral mining in the United States by addressing cost and timeliness issues, while requiring minerals be sourced
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domestically rather than overseas. With such legislation, it is likely law enforcement would be required to ensure that affected companies were adhering to such an act, in addition to overseeing the indirect effects spurred from the mines such as security. Currently, few strategic mineral mines exist165 in the United States, requiring little additional action by law enforcement. It is unlikely this will change in the next one to three years, as environmental regulations make opening a new mine take nearly a decade166 or more, and Congress passed none of the proposed strategic mineral bills. Because law enforcement lacks the necessary federal laws to act upon these issues in a strategic manner, it is unlikely that involvement in strategic minerals will be significant. Instead, law enforcement will likely address the tactical and operational issues presented by security and regulation of the few existing mines in the United States.
Author:
Editors:
Peter OMalley, pomall01@lakers.mercyhurst.edu Shawn Ruminski, srumin25@lakers.mercyhurst.edu
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Increased Legislation And Cooperation Between Public And Private Sectors Likely Needed To Curtail Metal Theft In The Next 1-2 Years
Executive Summary:
Theft of scrap metal provides an excellent opportunity for thieves because it is a low risk and high reward crime. Law enforcement efforts to curb this threat will likely focus on simultaneously increasing the risk and decreasing the payoffs for offenders. Depending upon developments and strategies implemented at all levels of government, it is likely that metal theft on the whole will decrease in the next one to two years.
Discussion:
Law enforcement addresses crimes by raising the stakes for perpetrators. In the case of metal thieves, this involves increasing the risk of committing theft and reducing the rewards. In order to increase the risk, law enforcement will incorporate holistic techniques,167 addressing both the theft and the resale of stolen metal on all government levels, starting with the federal level.168 Due to a lack of regulation on scrap yards and inadequate criminal charges, it is likely that a federal law would curtail the growing metal theft epidemic. With strict federal regulations169 and the creation of a special felony charge for metal theft, it is likely that scrap yards would work harder to not purchase stolen metals and metal thieves would be greatly deterred by more severe punishments. Efforts by legislators to curtail metal theft through new laws at all levels of government are likely to be moderately successful. However, there is a chance of failure for them to cut back on metal theft over the next one to two years. They will, however, be crucial to increasing the risks of committing these crimes. North Carolina recently passed comprehensive legislation170 for the state designed to curb this problem. Additionally, California recently developed an online reporting tool171 for scrap metal theft to ease law enforcement efforts at spotting irregular sales patterns. This trend will likely expand to other states if the Metal Theft Prevention Act172 is passed. Pending the forthcoming federal legislation, state and local law enforcement agencies best chances to reduce the number of metal
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thefts comes from educating the public on deterrent techniques and by working closely with local scrap and recycling yards. The Arizona Department of Transportation (ADOT) produced a report on methods173 to prevent and reduce copper wire theft. Other tools174 are available to facilitate collaboration between retailers and authorities. While legislation often centers on the resale of illicit metals, these techniques focus on decreasing175 the likelihood that thefts will actually occur. In Georgia, this collaborative effort was very successful.176
Authors:
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Passage Of Federal Act Would Likely Curtail Metal Theft Epidemic In 1-2 Years
Executive Summary:
Due to a lack of regulation on scrap yards and inadequate criminal charges, it is likely that enacting a federal law would curtail the growing metal theft epidemic. With strict federal regulations and the creation of a special felony charge for metal theft, it is likely that scrap yards would work harder to not purchase stolen metals and metal thieves would be greatly deterred by the heavy punishments. It is also likely that a lack of federal intervention is this matter is contributing to metal theft, as each state handles metal theft differently.
Discussion:
Currently, metal theft and scrap yard regulation is not well addressed177 at a federal level. Each state178 handles the matter differently, though almost all states179 have some form of law designed to help deter and catch metal thieves, done mostly by requiring scrap yards to keep varying amounts of Senator Charles Schumer (D-NY) documentation for every is sponsoring the Metal Theft transaction. Should a thief Prevention Act with co-sponsor be caught, prosecution of the Amy Klobuchar (D-MN). individual varies greatly180 as the offense typically falls under local and state laws, though it is possible for these cases to be prosecuted under domestic terrorism laws.181 This lack of baseline national laws and regulations is likely a major contributing factor to the overall metal theft problem. The issue may be addressed at a federal level. Senator Charles Schumer (D-NY) introduced a bill182 in October 2012 called the Metal Theft Prevention Act. This bill includes measures such as: proof of ownership required for metals being sold to scrap yards.
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requiring scrap yards to keep detailed records. limiting amount of cash paid out to 100 USD in any one transaction. the creation of a federal statute that makes metal theft from critical infrastructure a felony.
This proposed act is not the first183 to address metal theft.184 Should a federal statute be passed, it is likely that the amount of metal theft cases across the United States would decrease, as the likelihood of being caught and facing a punishment are greatly increased.
Analytic confidence for this assessment is moderate. Source reliability is medium to high. Sources did not conflict. The analyst had moderate expertise, worked alone, and did not use structured analytic methods. The subject is easy and the deadline was easy to meet.
Author:
Editors:
Peter OMalley, pomall01@lakers.mercyhurst.edu Shawn Ruminski, srumin25@lakers.mercyhurst.edu
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Despite Legislative Efforts, Metal Theft Likely To Persist In Next 1-2 Years
Executive Summary:
Efforts by legislators to curtail metal theft through new laws at all levels of government are likely to be moderately successful. However, there is a chance of failure for them to cut back on metal theft over the next one to two years. Because of high profitability, a low risk of getting caught, and an abundance of metal, law enforcement likely must incorporate other methods in addition to their legislative efforts. Though it is likely that legislative efforts will slow the epidemic by deterring both scrap yards and thieves, criminal rings will likely continue to operate as long as metal prices remain high.
Discussion:
The theft of scrap metal is very prevalent because of the payoff to thieves. In some states, even with improved legislation,185 some departments are unable to keep up186 with enforcement because the problem is so rampant. Therefore, it is likely that metal theft will continue to be a problem as long as the above factors continue to be favorable to criminals. In many cases the risk of detection is low, and increasing prices for scrap will likely be a sufficient motivator to continue this trend. The catalytic converter comes free of the vehicle after two cuts along the exhaust line using a battery operated saw and thieves can accomplish this in under a minute.187 Thieves prefer vehicles that sit higher off the ground, such as SUVs and trucks,188 as they are easier to maneuver under. The National Insurance Crime Bureau reported an increase in the theft of catalytic converters beginning in mid-2008.189 In the public sector, copper theft is an increasingly difficult problem190 for law enforcement. Thieves target infrastructure, such as power lines and pipes, which in some cases are difficult to secure.191 Although the value of these products may be in the hundreds of dollars, the costs to municipalities are often numbered in the thousands.192 In order to combat this threat, it is highly likely that law enforcement will continue to develop their strategic and tactical tools to punish thieves and purchasers. As discussed previously, Senator Schumer proposed an act to increase penalties for scrap metal theft at the
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federal level. Until this legislation is acted upon, states will need to address the problem on a more localized level. North Carolina recently passed comprehensive legislation193 (Full Text194) for the state designed to curb this problem. The bill empowers law enforcement with a permitting process195 for scrap yards to better track large purchases and potential thieves. In addition, the legislation sets a limit of 100 USD on cash purchases to ensure that a paper trail is available for law enforcement to follow. California is making a concerted effort to address steadily increasing theft of copper infrastructure. They recently developed an online reporting tool196 for scrap metal Thieves often steal copper wire from electrical substations and city lights. theft, to ease law enforcement efforts at spotting irregular selling patterns. Unfortunately, law enforcement efforts thus far have not succeeded. In Los Angeles,197 illicit scrap metal yards periodically pop up to take advantage of the large black market in scrap metal, circumventing the permitting process, and therefore thwarting law enforcement efforts. Complicating this problem is the steady rise in scrap and precious metal values. Since prices dropped dramatically in the fall of 2008, both platinum198 and copper199 prices have steadily rebounded. Futures prices200 for these two metals indicate that chances are better than even that this trend will continue. This valuation for these metals translates to favorable prices for thieves. Catalytic converters are worth anywhere from 50 to 200 USD from scrap metal dealers.201 According to scrapmonsters.com, #2 scrap copper202 traded at 3.34 USD per pound on 26 September 2012, an 11 percent203 increase since 15 August 2012. In the event that a federal law204 is passed and laws are better enforced, it is likely that metal theft will instead become a practice of criminal rings. Members of these rings work together to steal precious metals from specific targets205 and then fence the metals,
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with scrap yards sometimes knowingly206 or unknowingly taking them. In some cases, the scrap yard owners are in cahoots207 with metal theft rings. Metals stolen by these rings are likely to come from a variety of sources,208 such as copper from houses, construction equipment, metal from cars, railroad tracks, and many more. Like any other sort of ring and despite laws designed to stop them, there will always be a market, making it likely that metal theft will continue, though likely at a lesser extent, in a black market manner operated by crime rings.
Analytic confidence for this assessment is moderate. Source reliability is medium to high. There is no conflict amongst sources. The analyst had moderate expertise, worked alone, and did not use structured analytic methods. The subject is easy and the deadline was easy to meet.
Author:
Shawn Ruminski, srumin25@lakers.mercyhurst.edu
Editors:
Chad Los Schumacher, clossc80@lakers.mercyhurst.edu Peter OMalley, pomall01@lakers.mercyhurst.edu
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State And Local Law Enforcement Likely To Reduce Total Number Of Metal Thefts In Next 1-2 Years Through Public Education And Close Working Relationship With Local Recyclers
Executive Summary:
Despite the influx of recent metal thefts driven by rising metal prices State and Local law enforcement agencies are likely to reduce the number of scrap metal thefts over the next 1-2 years by educating the public on deterrent techniques and by working closely with local scrap and recycling yards.
Discussion:
In 2009, the Arizona Department of Transportation (ADOT) produced a report209 on methods to prevent and reduce copper wire theft throughout the State. Within the report ADOT provides several suggestions that are likely to reduce the amount of scrap metal theft, specifically copper wire. Several companies reported to ADOT these successful techniques:210 Using Copper Keeper, a wire locking device that can be installed in conduit, installing tamper-resistant units on cabinets, poles, and pull boxes. Performing security assessments on key locations and taking hardening measures, including apprehending thieves instead of chasing them off. Limiting the storage of copper to service centers and not using outlying facilities. Placing guards on job sites. Installing wiring and security devices on all job sites. Burying pull boxes. Installing alarm systems in the pull boxes.
A&A Midwest recycling also released a metal theft prevention guide211 for its customers in order to educate the public on prevention techniques and to provide victims with guidance of who to contact after a theft occurs. According to the guide the Institute of Scrap Recycling Industries Inc.212 is the forerunner of metal theft prevention and every year the group holds a theft prevention presentation where it provides businesses with techniques to
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prevent theft. A&A reports that in order for the number of thefts to decrease that the public, law enforcement, and recyclers need to work together. One such tool that facilitates this collaboration is ScrapTheftAlert.com213 which victims can use to report stolen materials. The website then emails appropriate law enforcement officials and recyclers in a 300 mile radius, in essence hindering the perpetrator(s) from selling the stolen goods. In November 2006, the Local Police Department in Macon, Georgia formed the Macon-Middle Georgia Metal Theft Committee.214 Comprised of scrap processors, energy and utility companies, homeowners associations, law enforcement officers, and prosecutors this committee met every 6-8 weeks to share information on recent thefts in the area and determine courses of action to take to reduce the number of thefts. During the first two years of its creation the number of metal theft cases in the area dropped from 84 in December 2006 to 8 in November of 2008 (see Annex 2). Soon after the This is another technique companies use Macon, GA report to deter copper theft came out the State created a joint task force215 in the surrounding areas of Augusta-Richmond, GA to combat the problem. Other agencies and groups, such as the Center for Problem Oriented Policing (CPOP),216 provide reports to close the gap between the victims and law enforcement. In one report,217 the CPOP found that by simply painting the copper used at work sites (see figure above) and relaying this information to local recyclers the number of thefts in that area dropped. In addition, by paying metal sellers in cash
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recycling companies likely reduce thefts as many perpetrators steal metal for quick and easy cash.
Analytic confidence for this assessment is high. The analyst did not utilize structured methods of analysis for this report. Source reliability is high and the sources corroborated each other. The analysts expertise is medium and the analyst worked alone. Subject complexity is moderate and the time available for the task was adequate.
Author:
Editors:
Chad Los Schumacher, clossc80@lakers.mercyhurst.edu Shawn Ruminski, srumin25@lakers.mercyhurst.edu
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Catalytic Converter Theft Likely To Rise With Metal Prices

Executive Summary:
Catalytic converter thefts will likely continue to increase due to rising metal prices. In addition, it is likely that law enforcement agencies will continue to struggle with these crimes, as stealing a catalytic converter takes under a minute to commit, is hard to trace, and yields high returns. Increasing awareness for motor vehicle owners, working with scrapyards, and implementing various deterrents are likely to aid law enforcement agencies in reducing the number of these crimes committed.
Discussion:
Every new vehicle sold in the United States must meet specific emissions standards.218 In order to achieve these, automobile manufacturers use a catalytic converter to reduce harmful emissions into more benign ones. Manufacturers construct catalytic converters with metals that include platinum, rhodium, palladium, and, increasingly, gold,219 in order to reduce carbon dioxide emissions. The significant increase220 in prices for these metals in the last decade, coupled with the ease of removing and selling221 these parts for scrap, will The above picture shows the location of a likely contribute to the catalytic converter on a vehicle. rising number of thefts. Theft of catalytic converters is difficult for law enforcement to detect and stop. The catalytic converter comes free of the vehicle after two cuts along the exhaust line using a battery operated saw and thieves can accomplish this in about a minute.222 Thieves prefer vehicles that sit higher off the ground, such as SUVs and trucks,223 as they are easier to maneuver under. In addition, catalytic converters are worth anywhere from 50 to 200 USD from scrap metal dealers.224 The National Insurance Crime Bureau reported an increase in the theft of catalytic converters beginning in mid-2008.225 Due to the low risk of
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apprehension, coupled with the high payoff for a quick job, it is likely that this trend will continue to rise. Once a catalytic converter is stolen, thieves take converters to scrapyards. Scrapyards then typically resell the catalytic converters to plants that are designed to recover the metals.226 With rhodium worth approximately 9,500 USD an ounce and platinum worth approximately 2,000 USD an ounce,227 and the value of the metals only increasing, it is likely that the number of thefts will continue. Recently, scrapyards try to deter catalytic converter thefts refusing to buy them directly from individual sellers.228 The number of catalytic converter theft cases are plentiful nationwide. For instance, on 16 August 2012, the Ventura Police Department in Ventura, California issued a public warning229 to city residents to be aware of an increase in thefts of catalytic converters from vehicles since 1 July 2012. Police said that over the course of the two month investigation, criminals stole converters from 13 vehicles, all Toyota SUVs. Milwaukees Journal Star230 reported an increase in thefts beginning in May 2012, and the NY Daily News231 reported that, across the country, the black market resale of the converters has increased thefts. Because of the increase seen across the country, the concern for law enforcement agencies on all levels will likely increase. Police agencies attempt to combat the problem by issuing a series of public warnings, like the case in Ventura, CA, and raising awareness. Unfortunately, the nature of the crime negates the possibility of truly combatting criminals. Law enforcement authorities efforts are mostly focused on prevention. The Ohio Department of Insurance Fraud Division, along with Nationwide, sponsored an Etch and Catch232 event in Columbus to help motorists protect their vehicles catalytic converters from being stolen. Gary Bush, the National Law Enforcement Liaison and Director of Theft Prevention at the Institute of Scrap Recycling industries said that a lack of communication233 between victims, law enforcement and recyclers can cause thefts to go unsolved. Adding to the difficulty, thieves often mix stolen items with legitimate ones, making it difficult for scrapyards to tell the difference.
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Authors:
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Chances Better Than Even Social Media Will Increase Public Awareness Regarding Scrap Metal Theft
Executive Summary:
Chances are better than even that engaging the public via social media platforms such as Twitter and YouTube will increase public awareness and help deter scrap metal theft. It is highly likely that law enforcement is not sufficiently engaging the public on social media platforms. Currently, law enforcement in the United States does not share a consistent vision regarding theft of scrap metal, especially concerning critical infrastructure. The correlation between existing regulations and scrap metal theft is likely very weak, but existing evidence regarding the effectiveness of legislation unclear.
Discussion:
State law enforcement234 and researchers235 agree that an integral part of reducing the number of occurrences of metal theft is increasing the amount of public exposure it receives. In a report236 from the State of New York Division of Criminal Justice on Car theft and related crimes, the policy makers determined that one course of action to reduce the number of car and related thefts (this included catalytic converter theft) was to set up several educational programs with the sole purpose of teaching the public the techniques used by criminals to commit these crimes so that the The two images show two YouTube public can take preventative communication networks of Metal measures. A&A Midwest Theft (left) and Larceny (right). The recycling also released a metal Analyst used ORA Netscenes to construct theft prevention guide237 the networks using data obtained from a for its customers in order NodeXL video title network search. to educate the public on prevention techniques and to provide victims with guidance of who to contact after a theft occurs. According to the guide the Institute of Scrap Recycling Industries
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Inc.238 is the forerunner of metal theft prevention and every year the group holds a theft prevention presentation where it provides businesses with techniques to prevent theft. A&A reports that in order for the number of thefts to decrease that the public, law enforcement, and recyclers need to work together. If law enforcement begins engaging the public via social media platforms such as Twitter and YouTube, chances are better than even this will increase public awareness and help limit scrap metal theft. A YouTube search conducted on 29 October 2012 for metal theft returned 853 videos, with 637,059 total views. Data obtained from NodeXL using a video title search showed 71 unique comments between users. However, a search for larceny returned almost five times the number of videos (4,000 total) and 32 times as many unique comments made between users (also using NodeXL; 2,345 unique comments). It is highly likely that law enforcement is not sufficiently engaging the public on social media platforms. When examining data from Twitter, this disparity is also clear. A search conducted 30 October 2012 reveals the following network of tweets for three different search terms, Metal Theft, The purple nodes represent the videos and the red nodes Catalytic represent the users that either commented or posted the Converter videos. The light blue (left) and green (right) lines represent Theft and the comments made by the user to a specific video. Note: the Copper Theft. larceny network represents only 200 individual comments When the out of 2,345. tweets are organized by country of origin, it is very clear that United States law enforcement is not sufficiently engaging the public via social media platforms.
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Furthermore, only 16 states currently endorse strong partnerships between businesses and law enforcement, and only nine states support proactive measures to limit metal theft. Currently, law enforcement in the United States does The above image illustrates the United Kingdoms not share a engagement in metal theft on Twitter as compared to consistent the United States. The analyst utilized ORA NetScenes to vision produce the network using data obtained from NodeXL. regarding theft of scrap metal, especially concerning critical infrastructure. Legislation varies across the country, from very strong regulations, such as in California, to very weak, such as in Alaska.239 The correlation between existing regulations and scrap metal theft is likely very weak, and causation between regulation and the theft is ambiguous. Federal legislation will likely help this problem, but will not substantively impact law enforcement in the next five years.
Authors:
Shawn Ruminski, srumin25@lakers.mercyhurst.edu Peter OMalley, pomall01@lakers.mercyhurst.edu
Editor:
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Annexes
Annex 1A: Business Snapshots Annex 2A: National Security Snapshots Annex 3A: Law Enforcement Snapshots Annex 3B: Reported Copper Theft Incidents: City Of Macon, GA Annex 4: Methods And Process Annex 5: Contact Information Annex 6: Endnotes 68 70 71 76 77 79 80
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Annex 1A: Business Snapshots

Critical Mineral Substitutes
UK (AZOM) - Supply constraints on critical elements needed for industries ranging from communications to healthcare are characterized by a fragmented and uncoordinated input from end users and policy makers. A new report by Cientifica and Material Value, Simply No Substitute, takes a critical look at the current technology and policy landscape in this vital area, and attempts to develop substitutes for critical materials. The report looks at advances in life sciences and nanotechnology to engineer a way around current bottlenecks.
Source:
Simply No Substitute? Realistic Alternatives to Key Strategic Materials And Rare Earths: http://www.azom.com/news. aspx?newsID=34095. (Reliability: High)
Comment:
Critical mineral use will likely continue to increase and with finite sources, engineered alternatives seem like a proactive method to increase supply.
Author:
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Rare Earth Source Unlocked In Malaysia

SYDNEY (WSJ)Australian company, Lynas Corp., won their battle to open a strategic minerals processing plant in Malaysia. The Malaysian Atomic Energy Licensing Board (AELB) statement approving a two-year temporary operating license for a rareearth refinery in Pahang was released on 3 September 2012. The processing of rare earths from Western Australias mines is planned to begin next month. The AELB held off final approval of the project after protests concerning the perceived radioactive waste hazard.
Source:
Rare Earth Boost From Lynas Win http://online.wsj.com/article/SB1 0000872396390443819404577636112922431648.html (Reliability: High)
Comment:
Shares in Lynas closed up 41 percent a share on Thursday. Lynas intends to produce one-sixth of the worlds supply of rare earths after reaching full capacity.
Author:
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Annex 2A: National Security Snapshots

Minerals US Is 100 Percent Import Dependent
This chart is a snapshot from the US Department of the Interior and the US Geological Survey, Mineral Commodity Summaries 2012. This shows the 19 minerals the US is 100 percent import dependent upon along with the major import sources.
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Annex 3A: Law Enforcement Snapshots

N.C. Scrap Metal Buyer Permitting Law Goes Into Effect 1 October 2012
KINSTON, NC (FREE PRESS & JONES POST) --In order to address the steady increase in the theft of scrap metals, especially copper, the North Carolina General Assembly recently passed House Bill 199, the Metal Theft Prevention Act. On 1 October, the Act went into law. Now, any business involved in the purchase and recycling of metals must apply to the local sheriffs office for a permit to be in compliance with the act. The permits are available free of charge and are valid for 12 The act aims to cut down on theft by months at fixed sites in the adding to the paper trail for the sale county of issuance, according of scrap metal; N.C. now has a cap on to the LCSO. The law applies cash purchases of metal at 100 USD. to purchasers of ferrous and nonferrous metals. Nonferrous metals such as copper, aluminum not used in cans and stainlesssteel beer kegs do not have large amounts of iron and steel in them. The law also limits cash payments for metals, buyers of nonferrous metals cannot pay cash for copper, and any purchase of other nonferrous metals worth more than 100 USD must be paid by check, cash card or money order. A nonferrous metals purchaser shall not make more than one cash purchase per day from any individual, business, corporation or partnership, the law states. Scrap yards already had to keep detailed records of customers who brought them scrap metal, even taking their fingerprints if they brought in catalytic converters, air conditioning condensers or evaporator coils, but the new law also requires them to obtain a permit from the sheriffs office and get a photo or video of the seller with the materials.
Source:
New Metal Theft Law Takes Effect Today http://www.kinston. com/news/local/new-metal-theft-law-takes-effect-today-1.20510
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(Reliability: High)
Comment:
This is just one example of the legislature taking action against the increases in copper theft in the US. Law enforcement is attempting to take proactive steps to address these thefts. The permitting process in North Carolina and increased paper trail will likely discourage large-scale theft of copper in the state.
Author:
Shawn Ruminski, srumin25@lakers.mercyhurst.edu
Editor:
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Dodd-Frank Wording Creates Unfairness Amongst Competitors

NEW YORK (WSJ) -- The Security Exchange Commission (SEC) recently adopted section 1502 of the Dodd-Frank Act which requires companies that meet certain criteria to publish if conflict minerals are used in any part of the supply chain for the company. These minerals come from the Congo and surrounding areas, and the proceeds are used to fuel wars and other conflict in the region. GM must comply with Section 1502 of Industries impacted by section the Dodd-Frank Act, but competitors 1502 include automobile, like Volkswagen AG and Daimler AG do jewelry, electronics, aerospace, not, creating unfairness in the market. and others. These industries stated that the section will add to company costs and the section is difficult to comply with, as their whole supply chain will have to be audited and new minerals will have to be sourced if it is found that conflict minerals are used. However, even if a company does not have to comply with section 1502, there is a growing movement of corporate responsibility, in which many businesses are removing conflict minerals from their supply chains in order to maintain a favorable reputation.
Source:
Nuances in Conflict Minerals Rules Creates Uneven Playing Field http://blogs.wsj.com/corruption-currents/2012/10/05/nuancesin-conflict-minerals-rules-leave-uneven-playing-field/ (Reliability: High)
Comment:
Section 1502 was created to cut off funding to warlords in and around the Congo. It will be years before an assessment can be made to determine if the rule had the desired outcome.
Author:
Editor:
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Fords New Batteries Reduce Rare Earth Mineral Use

DEARBORN, MI (PRNEWSWIRE) -- Ford Motor Company is replacing its nickel-metal-hydride batteries with lithium-ion batteries in its newest hybrid. The current nickelmetal-hydride batteries use the rare earth minerals: cerium, lanthanum, and praseodymium. The batteries replacements result in Fords decreased use of rare earth metals by up to 500,000 pounds 2013 Ford C-Max Hybrid annually. Dysprosium is Fords most expensive rare earth mineral. It is currently used for magnets employed by the hybrids electric mechanism. Dysprosiums use is reduced by approximately 50 percent in the new lithium-ion batteries. The importance of rare earth mineral reduction is two-fold comprising both financial and physical advantages. The 50 percent lighter batteries with a 25 to 30 percent size-reduction results in better fuel efficiency. Additionally, the cost will be reduced by 30 percent, making Fords new C-MAX Hybrid more affordable for customers.
Source:
Fords New Li-Ion Batteries Reduce Use of Rare Earth Metals, Enable Superior Fuel Economy for Fusion, C-MAX Hybrids http:// media.ford.com/article_display.cfm?article_id=37087 (Reliability: High)
Comment:
Due to the rising metal prices and the rarity of these minerals thieves are likely to seek out these vehicles to obtain the parts comprised of rare earths to sell them to chop shops or on the black market.
Author:
Editor:
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Nevadas Safe Bet On Gold

LAS VEGAS (Las Vegas Review Journal) -- While Nevada is famous for its tourism, it is little known that the state makes just as much off of its mining industry. Gaming and mining bring in approximately 10 billion USD a year, each. Most of the money brought in from mining goes into state coffers to support many social programs. In 2011, Nevada processed approximately 24 million USD in gold each day, helping make the United States the third largest gold producer behind China and Australia. It is estimated that Nevada has 15 years of gold reserves left and is continuing to search for more throughout the state. Production of gold in Nevada is of critical strategic importance, as the United States strives to become less dependent on foreign countries for its minerals.
Source:
Nevadans Have Long Bet Their Lives, Fortunes On Mining http:// www.lvrj.com/business/nevadans-have-long-bet-their-livesfortunes-on-mining-170876681.html?ref=681 (Reliability: High)
Comment:
Nevada acknowledges that mining has its booms and busts, and so it is continually searching for new places to mine, replenishing resources, and being strategic in its operations to make the industry last well into the future.
Author:
Editor:
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Annex 3B: Reported Copper Theft Incidents: City of Macon, GA
Reported Copper Theft Incidents in Macon County, Georgia from September 2006 to November 2008. From the National Crime Prevention Council article* on the Macon-Middle Georgia Metal Theft Committee . * Scrapping the Metal Thieves National Crime Prevention Council. (n.d.). Retrieved November 4, 2012, from http://www.ncpc.org/ programs/catalyst-newsletter/catalyst-newsletter-2008/volume-29number-1/scrapping-the-metal-thieves
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Annex 4: Methods And Process

In order to create this report, the team worked on two objectives simultaneously: completing their final reports with their respective subgroups and contributing to the final brief and report. For the final brief and report, the team signed up for different roles based upon their strengths (editing, presenting, etc.). Using the overall conceptual model, the team and subgroups created final reports that answered the overall question. The team worked in both physical and virtual meetings for full team meetings and sub-groups. Tools used in both cases included Google Docs, Google Hangout, phone calls, SMS, email, and Facebook messaging. While all members had individually defined roles, members often stepped up to fill roles of tasks that were not originally foreseen and to provide assistance when other portions were larger than originally estimated. These roles were assigned on an ad-hoc basis. However, this did not change any of the other meetings or tools used by the team. On the following page is a matrix of all contributions done by each team member.
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Annex 5: Contact Information

Business Team
Dean Atkins Leslie Guelcher Ivan Nemeth Karen Omniewski datkins26@lakers.mercyhurst.edu lguelc84@lakers.mercyhurst.edu inemet60@lakers.mercyhurst.edu komnie62@lakers.mercyhurst.edu
National Security Team

Karl Gustafson Irena Lazarevic Sara Marinello Laura Suprock kgusta65@lakers.mercyhurst.edu klazar94@lakers.mercyhurst.edu smarin59@lakers.mercyhurst.edu luspro04@lakers.mercyhurst.edu
Law Enforcement Team

Chad Los Schumacher Peter OMalley Shawn Ruminski clossc80@lakers.mercyhurst.edu pomall01@lakers.mercyhurst.edu srumin25@lakers.mercyhurst.edu
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Annex 6: Endnotes
1. US Geological Survey. (2012). Mineral Commodity Summaries 2012. Washington, DC: US Government Printing Office. Economy Watch. (2010, June 30). Risks in International Trade. Retrieved September 2012, from Economy Watch: http://www. economywatch.com/international-trade/risks.html US Geological Survey. (2012). Mineral Commodity Summaries 2012. Washington, DC: US Government Printing Office. Aarnio, M. (2012, September 4). 3 Rare Earth Companies Ramping Up Productions. Retrieved October 2012, from Seeking Alpha: http://seekingalpha.com/article/844511-3-rare-earth-companiesramping-up-productions Mukherji, B.; Wright, T. (2012, August 13). India Bets on Rare-Earth Minerals. Retrieved October 2012, from The Wall Street Journal: http://online.wsj.com/article/SB1000872396390443437504577546 772533972202.html Pearson, S. (2011, May 30). Brazils Vale Gears Up for Rare Earths. Retrieved October 2012, from Financial Times: http://www.ft.com/ cms/s/0/0503bcdc-8aec-11e0-b2f1-00144feab49a.html Onstad, E. (2012, September 19). Analysis: Rare earth prices to erode of fresh supply, China. Retrieved October, 2012, from Reuters: http://www.reuters.com/article/2012/09/19/us-rareearthsoutlook-idUSBRE88I0O020120919 Perkowski, J. (2012, June 21). Behind Chinas Rare Earth Controversy. Retrieved October 2012, from Forbes: http://www. forbes.com/sites/jackperkowski/2012/06/21/behind-chinas-rareearth-controversy Jamasmie, C. (2012, April 9). $8.4 billion rare earth deposit discovered in Brazil. Retrieved October 2012, from Mining. com: http://www.mining.com/us8-4-billion-rare-earth-depositdiscovered-in-brazil/ US Geological Survey. (2012). Mineral Commodity Summaries 2012. Washington, DC: US Government Printing Office. 2.
3.
4.
5.
6.
7.
8.
9.
10. Page 80
11. 12.
Ibid Aarnio, M. (2012, September 4). 3 Rare Earth Companies Ramping Up Productions. Retrieved October 2012, from Seeking Alpha: http://seekingalpha.com/article/844511-3-rare-earth-companiesramping-up-productions Mineral Industries Advisors. (2012) 2012 Ranking of Countries for Mining Investment: Where Not to Invest Behre Dolbear Group, Inc. Retrieved from http://webmail.neo.rr.com/do/red irect?url=http%253A%252F%252Fwww.dolbear.com%252F_ literature_125436%252F2012_Ranking_of_Countries_for_ Mining_Investment Hensarling, J. (2012) Legislative Digest Retrieved from http://www. gop.gov/bill/112/2/hr4402 govtrack.us (2012). Congress Bills H.R. 4402. Retrieved from http:// www.govtrack.us/congress/bills/112/hr4402# Economy Watch. (2012, June 30). Risks in International Trade. Retrieved October 2012, from Economy Watch: http://www. economywatch.com/international-trade/risks.html US Geological Survey. (2012). Mineral Commodity Summaries 2012. Washington, D.C.: US Government Printing Office. Pearson, S. (2011, May 30). Brazils Vale Gears Up for Rare Earths. Retrieved October 2012, from Financial Times: http://www.ft.com/ cms/s/0/0503bcdc-8aec-11e0-b2f1-00144feab49a.html International Finance Corporation. (2012, June). Doing Business. Retrieved October 2012, from The World Bank: http://www. doingbusiness.org/rankings Aarnio, M. (2012, September 4). 3 Rare Earth Companies Ramping Up Production. Retrieved 2012, from Seeking Alpha: http:// seekingalpha.com/article/844511-3-rare-earth-companies-rampingup-production US Geological Survey. (2012). Mineral Commodity Summaries 2012. Washington, D.C.: US Government Printing Office. Page 81
13.
14.
15.
16.
17.
18.
19.
20.
21.
22. 23. 24.
Ibid Ibid International Finance Corporation. (2012, June). Doing Business. Retrieved October 2012, from The World Bank: http://www. doingbusiness.org/rankings US Congress. (2010, March 17). H.R. 4866: Rare Earths SupplyChain Technology and Resources Transformation Act of 2010. Retrieved October 2012, from Open Congress: http://www. opencongress.org/bill/111-h4866/text Reisman, L. (2012, July 27). US House Passes Critical Minerals Bill to Streamline Permitting Process. Retrieved October 2012, from Metal Miner: http://agmetalminer.com/2012/07/27/us-housepasses-critical-minerals-bill-to-streamline-permitting-process/ Engel, J. (2012, August 9). Senate candidate Hovde addresses Milwaukee manufacturing summit. Retrieved October 2012, from The Business Journal: http://www.bizjournals.com/milwaukee/ news/2012/08/09/wisconsin-senate-candidates.html?page=all Martyn, P. (2012, June 8). Rare Earth Minerals: An End To Chinas Monopoly Is In Sight. Retrieved October 2012, from Forbes: http:// www.forbes.com/sites/ciocentral/2012/06/08/rare-earth-mineralsan-end-to-chinas-monopoly-is-in-sight/ Bushong, S. (2012, July 6). Analysts say US should revise rare earth mining policy. Retrieved October 2012, from Windpower: http:// www.windpowerengineering.com/policy/business-issues/analystssay-us-should-revise-rare-earth-mining-policy/ (2003, June 3). Grey glass composition including erbium. Patent US6573207. Retrieved October 2012, from Google Patents: http:// tinyurl.com/cqnef5e (2012, June 19). Phosphor and light emitting device. Patent Application. Retrieved October 2012, from Google Patents: http:// tinyurl.com/d82qz46
25.
26.
27.
28.
29.
30.
31.
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HALSTEAD-ACHARYA, L. (2010, September 12).Muffler mining: Stillwaters expanded recycling facility boosts recovery of metals from catalytic converters read more. Retrieved from http://billingsgazette.com/article_8f93ba50-be1e-11df-a291001cc4c002e0.html Nationwide Mutual Insurance Company. (2012). Business alert: Catalytic converter theft. Retrieved from http://www.nationwide. com/catalytic-converter-theft.jsp WTOV. (2010, June 22). Scrap yards try to curb catalytic converter thefts. Retrieved from http://www.wtov9.com/news/news/scrapyards-try-to-curb-catalytic-converter-thefts/nJKR4/ KABC. (2012, August 12). Police report catalytic-converter thefts rising in city of ventura. Retrieved from http://abclocal.go.com/ kabc/story?section=news/local/ventura_county&id=8776650 Barrett, R. (2012, June 22). Catalytic converters prove to be easy targets for thieves. Retrieved from http://www.jsonline.com/ business/catalytic-converters-prove-to-be-easy-targets-for-thieveso65r6i5-160082775.html?page=1 Max, J. (2012, February 12). Catalytic converter thefts a continued nuisance. Retrieved from http://articles.nydailynews.com/2012-0215/news/31065023_1_converter-thieves-converter-thefts-catalyticconverter Ohio Department of Insurance. (2009). The confidential informant. Department participates in Etch-n-Catch event, Retrieved from http://www.insurance.ohio.gov/newsletters/ informant/Documents/Winter_2009_archive.pdf McCarty, A. (2011, April 26). Catalytic converter thefts on rise. Retrieved from http://usatoday30.usatoday.com/money/ autos/2011-04-25-catalytic-converter-thefts.htm Detection, Prevention, Deterrence & Reduction of Motor Vehicle Theft & Related Crimes - STATE OF NEW YORK. (n.d.). Retrieved November 3, 2012 from http://www.criminaljustice.state.ny.us/ ofpa/pdfdocs/2012mvtplanofoperation.pdf
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Scrap Metal Theft - Waste Management World. (n.d.). Retrieved October 18, 2012, from http://www.waste-management-world. com/index/display/article-display/3646245558/articles/wastemanagement-world/volume-13/issue-4/analysis-trash-talking/ scrap-metal-theft.html Detection, Prevention, Deterrence & Reduction of Motor Vehicle Theft & Related Crimes - STATE OF NEW YORK. (n.d.). Retrieved November 3, 2012 from http://www.criminaljustice.state.ny.us/ ofpa/pdfdocs/2012mvtplanofoperation.pdf A&A Midwest Recycling. (2012). Guides. Retrieved from http:// www.aamidwest.com/recycling/guides/ Institute of Scrap Recycling Industries, Inc. (2012). Home page. Retrieved from http://www.isri.org/ ScrapLaws.com. (2012). Homepage. Retrieved from http:// scraplaws.com/
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Thank you Kristan Wheaton and Cathy Pedler For demonstrating the use of social network analysis and giving the class the opportunity to learn and use NodeXL, ORA, Google Drive, Blogger, Blurb, Scribd and other collaboration and publishing tools.
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Scarce Strategic Mineral Alternatives Likely To Leave US Supply Chain at Risk Over Next 3-5 Years

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Scarce Strategic Mineral Alternative Sourcing Likely To Leave US Supply Chain At Risk Over Next 3-5 Years IIS

MU, Fall 2012

Institute For Intelligence Studies at Mercyhurst University

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About This Document

Overall Key Findings

Despite Extensive Legislation, US Mining Operations Likely To See Slow Growth

Phosphate rock Platinum-group Potash Tungsten

FL, NC, ID, UT MT NM, UT, MI CA

Dodd-Franks Bill Unlikely To Heavily Affect US Businesses

Selected critical minerals US net import reliance, 2010 Page 25

National Security Findings

Origin of imported key strategic minerals to the US.

South Africa accounts for large deposits of manganese and platinum.

Law Enforcement Findings

Molycorp recently invested in opening a rare earth mine in California.

Catalytic Converter Theft Likely To Rise With Metal Prices

Annex 1A: Business Snapshots

Rare Earth Source Unlocked In Malaysia

Annex 2A: National Security Snapshots

Annex 3A: Law Enforcement Snapshots

Dodd-Frank Wording Creates Unfairness Amongst Competitors

Fords New Batteries Reduce Rare Earth Mineral Use

Nevadas Safe Bet On Gold

Annex 3B: Reported Copper Theft Incidents: City of Macon, GA

Annex 4: Methods And Process

Annex 5: Contact Information

National Security Team

Law Enforcement Team

22. 23. 24.

125. 126. 127. 128.

169. 170. Page 96

174. 175. 176. 177.

213. Page 100

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