Global Supply Chain Management of Rare Earth Metals in the United States

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Chapter 1: Introduction

Problem Statement

The general problem is that U.S. defense systems rely heavily on a steady production and supply of REMs for continued mission success. China currently controls the world's supply of REMs that are critical to thousands of technological applications in U.S. public and private organizations (Lifton, 2010a); thus, the specific problem is that the U.S. is completely dependent upon China for its REM imports. U.S. public and private sector organizations import all requirements for REMs from China to include lanthanum, cerium, and neodymium, which are used in the manufacture of aircraft engines, military electrical communications, sensors, and anti-missile defense systems (Hunt, 2010).

Despite an annual growing 6% annual demand for REMs, China has been reducing exports since 2008 (Newsfront, 2010). Reduction in the supply of these metals has resulted in the consumption and consequent reduction of existing stocks of these metals in the U.S. Hunt (2010) argued that such shortages could affect the production of important defense items and have adverse consequences upon the country's security because viable substitutes for these materials are not currently available. A review of the literature failed to reveal any publication that was an assessment of the problems that will occur with the U.S. military establishment as a result of a reduced supply of REMs.

Purpose of the Study

The purpose of the proposed study will be to assess the problems that could occur to U.S. defense capabilities because of the slowdown of supply of REMS from China, which would include the production of jet fighter engines, aircraft electrical systems, electronic counter-measures, antimissile defense systems, and other high profile advanced technology capabilities. Further, potential ways and means public and private sector leaders might implement to overcome these challenges will be explored, particularly with reference to resource management and technology development.

With defense system production vital to national security, the existing supply chain of REMs is increasingly a matter of national concern (Hunt, 2010). The results of the proposed study may contribute to social change by providing information to public and private sector leaders that will enhance their understanding of the implications of the supply problem of REMs. In addition, the proposed study may assist policymakers, technology experts, and students to explore further the ways and means that might be used to improve the supply management of these materials. The objectives of this study are as follows:

1. To assess the effects of the reduced supply of REMs on public and private organizations engaged in producing systems and processes that are critical to the military defense of the U.S.

2. To assess the measures leaders in the public and private sector should consider with which to develop ways and means to mitigate the reduction of REM supplies.

Nature of Study

The proposed quantitative study concerns the forecasting of trends concerning the availability and usage of REMs, and the examination and statistical interpretation of significant amounts of numerical data. Adoption of interpretative or qualitative methods was deemed inappropriate for the purposes ...