COLUMN-Leave critical minerals to the market – by John Kemp (Reuters India – December 9, 2013)

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(John Kemp is a Reuters market analyst. The views expressed are his own)

Dec 9 (Reuters) – The Critical Minerals Policy Act of 2013, backed by a bipartisan group of 18 senators, is one of those pieces of special-interest legislation that deserves to die in the U.S. Congress.

The bill (S 1600), pending before the Senate Committee on Energy and Natural Resources, directs the secretary of the interior to designate a list of up to 20 “critical minerals” based on the risk of potential supply restrictions and their importance to the economy.

The bill identifies minerals that must be imported and are therefore at risk from trade embargoes, military action, cartels and other anticompetitive behaviour, for designation, particularly if they are used in important sectors such as energy production, defence, agriculture, consumer electronics and healthcare.

The bill authorises the federal government to spend up to $20 million to compile a comprehensive national assessment for each critical mineral, including how much is produced domestically and how much is imported. It makes $8 million available to speed up the inter-agency review process for issuing mining permits on federal lands.

There is another $8 million to fund a comprehensive review of critical mineral production, consumption and recycling by staff at the U.S. Geological Survey, including one-year, five-year and 10-year forecasts.

And there is $2 million each to fund research into novel uses for cobalt, advanced lead manufacturing, lithium production, and non-traditional sources for rare earth elements, plus another $1 million to conduct a study into establishing a system for using thorium to generate nuclear power.

In total, the bill would authorise spending of up to $60 million on critical minerals-related policy, research and training – paid for by cutting a similar amount from expenditure on advanced biofuels.

There is no doubt many of these minerals are vital to modern technology ranging from aircraft engines and computer hard drives to mobile phone displays and high-resolution medical imaging.

But S 1600 fails to identify a good reason their producers should receive special help from taxpayers rather than leaving provision up to the market. Instead, S 1600 is a classic piece of pork-barrel politics.

HEIGHTENED COMPLEXITY

“A century ago, or even half a century ago, less than 12 materials were in wide use: wood, brick, iron, copper, gold, silver and a few plastics,” according to a recent article “On the materials basis of modern society” published by Yale University’s Thomas Graedel and others in the Proceedings of the National Academy of Sciences (PNAS).

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