COVID-19’s impact on supply chains has brought attention to the United States’ reliance on China and other countries for manufacturing critical items using Rare Earth Elements (REE).
REE materials are needed to make hybrid car batteries, computer touch screens, and special magnets used in the defense of the nation. The issue arose from environmental regulations that begin in the 1960s to the 1980s. As costs rose to make products using REE in the United States, manufacturing shifted to other countries.
- Triple Bottom line (3 pillars): sustainability in business (Apr 8, 2014, Sustainability Illustrated)
- The Battle Over Rare Earth Metals (Oct 16, 2019, CNBC Television)
This post is based on the Supply Chain Brain article, It’s Time to Reconsider the Math on Rare Earth Elements, by Shubho Chatterjee and Joe Carson, May 19, 2020, and the YouTube videos in the Spotlight. Image source: Peter Sobolev/Shutterstock
1. What are options that the United States could consider to reshore REE manufacturing capability?
Guidance: REE manufacturing left the United States in part due to Triple Bottom Line considerations several decades ago. This is a good general discussion question. Students may argue that environmental regulations should be relaxed for REE industries or argue that sourcing should be from multiple regions of the world so that reliance on China can be reduced.
One option noted in the article is the creation of a national reserve of REE materials similar to the petroleum strategic reserve. Students should be directed to consider that manufacturing REE items is not the same as a supply stockpile of raw materials. What can students suggest to reshore some REE manufacturing without hurting the environment?
2. What difficulties will the United States have in obtaining REE raw materials from other countries that currently manufacturer REE products for the United States market?
Guidance: No country will want to lose REE manufacturing to the United States, and thus will have incentive to keep REE raw materials inside their borders to maintain the current relationships. The only way to source many REE materials could possibly be to relax environmental regulations or provide government funding to support private industry efforts to source REE in the United States.
If this is the case, how could the Triple Bottom Line be used by the government to ensure that considerations are given to environmental concerns? How might the Triple Bottom Line be used to supplement a Balanced Scorecard and would this make a difference in the safe sourcing of REE materials? These broad discussion questions illustrate the role of government in supply chain dynamics.