HardAssetsInvestor

Written by Lara Crigger  |

September 03, 2010

Jack Lifton: US Has Been 'Foolish' On Rare Earth Metals

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The renowned rare earths expert explains why the current panic over Chinese hoarding is overblown, and what steps the U.S. should take to make a rare earth metals comeback.

Is the rare earths metals hype overblown? Yes, says Jack Lifton, co-founder of Technology Metals Research, who adds that although the panic over Chinese "hoarding" is misplaced, the U.S.' dissolution of its domestic rare earth metals production has been equally "foolish."

Jack Lifton is one of the world's foremost experts on rare earth metals, and is a highly sought-after author, consultant and lecturer in the industry. With over 48 years' experience in the metals business, Lifton continues to advise institutional investors and high-tech OEM companies worldwide on the complexities of the natural resource sector.

At the recent 21^st Rare Earth Permanent Magnet Workshop in Bled, Slovenia, Lifton presented a paper outlining the steps the U.S. would need to take to reestablish a presence in the rare earths industry.

Editor Lara Crigger caught up with Lifton right before he began a two-week rare earth investing "road show" that would take him to Beijing, Shanghai and beyond. He shared with HAI some thoughts on the rare earth metals industry, including why the current rare earth panic is overblown, how China has managed to dominate the market and what the U.S. needs to do to make an REE comeback.

Crigger: Is the panic over securing our rare earth metals supply overblown? Do we need to worry about China "hoarding" rare earth elements [REEs]?

Lifton: Yes. China doesn't consider itself to be hoarding anything. They figure that they're using their own materials for their own needs. They question why we insist on using words like "control" and "hoard," because they ask, "If you needed the material, why shut your factories?"

So it's as simple as that. We really are foolish in America. We've shut down an industry that's strategic and critical, and all in the name of low cost. Now we're surprised that the consequences that are obvious in doing this have now come back to bite us. I'm not surprised, and neither is anybody else in China.

Crigger: The materials are still there, though.

Lifton: The utilities are still there. But we haven't been doing this for awhile, and people don't just sit around waiting for work. You have to reconstruct the intellectual basis of the industry, as well as the physical basis, and that's the problem.

Crigger: Are the people in this industry generally heading over to places like China, where the importance of REEs is better acknowledged?

Lifton: Well, they die. They get other jobs. If you're a chemical engineer specializing in separating rare earths, where do you think you're going to get employment in the U.S.? There's nobody doing it here. So if you're deciding what to do in grad school, you get a different specialty. Or if you were already doing this, you have to retrain yourself, or find something in the home cleaning or Slurpee-mixing fields, because what you were doing is gone.

I don't know what possesses politicians to think that they can simply invent intellectual capital. You can't. It takes time. And once you fall behind in your specialty, you are behind. You have to catch up. It's not a matter of reading the latest papers; you also have to go back to what happened between the latest papers, and when you knew how to do it.

So I find the politicians and financial minds in America seem to have no knowledge whatsoever of manufacturing or mining. They just think that money solves all problems.