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Rare-earths mining may chip away at China's hold on high-tech gear

Each new 3,000-foot hole bored into the rolling hills of southeastern Nebraska potentially drills away at a troubling Chinese monopoly.

The drills pull up cylinders of rock in search of exotic minerals like neodymium, praseodymium and ytterbium.

Those "rare earths" are critical ingredients of your car's catalytic converter and your computer's flat-screen display, of smart phones and smart bombs. They make your Prius purr and your lasers shine.

In 2010, the world mined 133,000 metric tons of rare earths. Of that, all but 3,000 tons came from China. In the United States there is one mine -- in Mountain Pass, Calif. -- responsible for the entire country's output.

"We could go without this [rare earth] stuff," said Matt Joeckel, a University of Nebraska-Lincoln geologist who also works for the state's Conservation and Survey Division, "if we cared to go back to maybe a 1940s level of technology."

Global demand for rare earths is projected to climb 8 percent a year, while the Chinese have clamped down the growth of supply at zero.

A U.S. Energy Department report last year warned that supplies are "at risk" of disruption. Limits on Chinese exports could increasingly mean that high-tech equipment made with rare earths will only be made in China.

General Electric led a small parade of American manufacturers testifying to Congress this month urging the country to spur its own production.

At stake isn't just the ability to make a better cell phone (tiny magnets make for tiny speakers) or a sharper television picture (the phosphor red in screens comes from europium). The elements are critical to oil refineries and cutting-edge medical care. And rare earths play a growing role in making our modern military more modern.

Some in Congress have suggested the country's national security is threatened if supplies run too short.

Some 50 years ago, state geologists surveying southeast Nebraska found two oddities around Elk Creek. The rocks were more magnetic than most, and were denser.

Those findings drew the attention of mining company Molycorp Minerals. It drilled holes across the landscape and pulled out 90,000 feet of core samples.

Molycorp would ultimately walk away from Nebraska. In short, the price of the stuff then just wasn't high enough to gamble on a mine.

A few decades later, a high-tech boom vaulted prices for rare earths upward. Canadian company Quantum Rare Earth Developments came looking at the core samples and reams of data left behind by Molycorp. Joeckel, the Nebraska geologist, had stockpiled it all for safekeeping.

Meantime, half a continent away, the same company that passed on Nebraska in the 1980s is cranking up production in California. Molycorp is the only producer of rare earths in the U.S. It stopped mining a few years ago so it could retool its processing plant at Mountain Pass -- a $530 million overhaul.

The new method is a greener process that uses far fewer chemicals and less water while shaving the cost of extracting the minerals from mined rock. The company expects to crank up operations in 2012 and produce up to 40,000 tons a year.

Yet even that added U.S. capacity is largely spoken for, without accounting for growing demand in the country.

"It's been a nightmare," said Donald Geissler, a purchasing manager for small wind turbine maker Bergey Windpower in Norman, Okla. His company needs rare-earth magnets, which have gone up 40 percent in the last year. "We don't know in the near future if anything's even going to be available."

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