RAY SUAREZ: Among the deposits in Afghanistan are some called rare earths. There's now a global race to mine those rare earth elements.
Special correspondent Kira Kay reports on what that means for the U.S. and others.
KIRA KAY: From the air, the frozen landscape of Canada's Northwest Territories looks as remote as any place on Earth. But, in this vast uninhabited zone, there's a kind of 21st century gold rush under way.
After landing on the icy surface of Thor Lake...
Very nice to meet you.
CHRIS PEDERSEN, senior geologist, Avalon Rare Metals, Inc.: Indeed. Likewise.
KIRA KAY: ...I am met Chris Pedersen, a geologist with Avalon Rare Metals company. He's out here looking for some very valuable minerals he believes are under this lake.
CHRIS PEDERSEN: And those gray specks are rare earth minerals. I mean, they're very nondescript. They're not sparkling and shiny like gold or diamonds or anything. But they're -- they're just as important.
KIRA KAY: Rare earths are the elements at the bottom row of that periodic table studied in high schools around the world, neodymium, samarium, dysprosium, 17 in all.
Pedersen took me out to Avalon's drilling station, where machines are running day and night, pulling samples from 1,000 feet down, hoping to find proof of a large rare earth deposit.
These are gray right here, all of these.
CHRIS PEDERSEN: These are gray here. And I'm starting to -- just starting to see some of the ore minerals in this here now.
DAVID SWISHER, vice president, Avalon Rare Metals, Inc.: What do we have here?
KIRA KAY: Avalon executive David Swisher likes what he sees.
DAVID SWISHER: What we're finding is that this ore body is expanding exponentially. And it's just getting bigger and bigger. And we don't know where it ends. That's the exciting part of it.
KIRA KAY: Exciting because, while rare earths might be little known, they're becoming more crucial by the day, in particular because of the very lightweight and highly heat-resistant qualities they give to magnets.
And you would be surprised to know how prevalent magnets are.
ANNOUNCER: This is the new iPhone.
KIRA KAY: They are in our cell phones and laptops. Our military technology depends on them for missile guidance and secure communications systems.
But perhaps as important these days is that rare earth magnets are an indispensable ingredient in the so-called green technologies central to our alternative energy plans.
JACK LIFTON, director, Technology Metals Research, LLC: If you're going to make a wind turbine, you need rare earth permanent magnets. If you are going to make a hybrid car of the -- of the current type, a full hybrid, such as the Toyota Prius, you need a rare earth permanent magnet.
KIRA KAY: Jack Lifton once lived a quiet life, researching and procuring rare earths for the automotive and technology industries in Detroit. Today, he travels the globe as a consultant and key voice in a growing chorus warning about a looming rare earth crunch.
Some people have said that we could be facing a rare earth crisis in the next two or three years. You're saying it could be right now.
JACK LIFTON: Oh, I'm saying it is right now. There are a lot of my colleagues saying, oh, no, it's in the future, it's in the future. Well, no, it isn't, because developing mines takes years and years. The crisis is now.
KIRA KAY: The problem is, 95 percent of the world's rare earth supplies are mined and refined, produced soup to nuts, in just one place, China.
The giant Baiyun Obo mine in Inner Mongolia is easily recognizable on Google Earth and is the center of the industry. China used to produce rare earths primarily for export. But, as its economy booms, so does its hunger for its own mineral supply.
JACK LIFTON: The Chinese domestic economy is beginning to demand huge quantities of rare earth materials it didn't demand as recently as a decade ago. Every one of those cars has little electric motors with rare earths in them. Every Chinese person with a laptop has rare earth magnets in the hard drive or some rare earths in the display.
KIRA KAY: On top of its consumer needs, China is facing heavy pollution problems and is itself actively trying to go green.
And, so, it has quietly, but methodically cut its exports of rare earth by 6 percent a year over the last five years. Then, last summer, an article leaked word that China was considering a total export ban of the most crucial minerals.
At a recent rare earths conference in Beijing, leading researcher Zhang Anwen assured the audience his country will continue its exports,but he also told us:
ZHANG ANWEN, deputy secretary-general, Inner Mongolia Rare Earth Guild (through translator): Foreign countries should calmly and logically think about this and develop their own mines for their own needs. Our resources are diminishing. And we need these minerals for our own use.
KIRA KAY: Jack Lifton was there.
Their message is, you guys better start looking out for yourself.
JACK LIFTON: Absolutely. That is exactly their message, correct, yes.
KIRA KAY: That they won't be able to provide anymore.
JACK LIFTON: As we used to say in the movies, look out for number one. That's their message to us, because they're looking out for themselves, and they are not looking for us.
KIRA KAY: The surprising thing is, China wasn't always the main supplier of rare earths. For decades, the largest rare earth mine in the world operated right here in the California desert.
JOHN BENFIELD, manager, Molycorp Minerals: It's very high-grade bastnasite. And you can tell about the greenish, brownish tint.
KIRA KAY: John Benfield has worked at the Mountain Pass Mine for 20 years.
JOHN BENFIELD: When I first came out, we employed over 300 people. This mine was in full operation. It was a major contributor to the rare earth supply in the world.
KIRA KAY: The deposit was discovered in the 1940s and fueled the color television boom in the U.S. The rare earth europium makes the picture red. As time passed, more and more uses were discovered.
MARK SMITH, CEO, Molycorp Minerals: America used to be just the number-one country in the world when it came to rare earth research, uses, developments, applications. We have completely dropped the ball in that regard. It's all gone to China.
KIRA KAY: Mark Smith is the CEO of Molycorp, the company that runs Mountain Pass.
MARK SMITH: We were operating pretty strong for quite some time. And in the late '90s, the Chinese really starred to figure out how much of a resource they had in their country. They had many, many people putting up small shops that were processing these rare earths and selling them, you know, wherever they could get the best price.
But they were flooding markets with these materials.
KIRA KAY: Mountain Pass found itself outpriced and ceased mining operations in 2002. But now there is a rush to get the mine and several other deposits like it, including Avalon's in Northern Canada, producing as soon as possible.
It's a risky, capital-intensive process. And, for the moment, China's prices are still hard to compete with.
MAN: This hearing will now come to order.
KIRA KAY: The U.S. Congress is now taking on the issue.
MAN: We can, in fact, be the lowest-cost producer in the world. But we do need help in that regard. I have 17 scientists and engineers that are competing with over 6,000 Chinese scientists.
KIRA KAY: A new bill known as the RESTART Act proposes reinvigorating the U.S. rare earth sector through loan guarantees and establishing a national stockpile of the minerals.
But a new Government Accountability Office review names critical defense systems that could not function without rare earths and warns it could take up to 15 years for the U.S. to rebuild a domestic supply chain.
Jack Lifton believes it's all moving too slowly.
Are you optimistic that that gap can be filled within the next couple of years? What has to happen?
JACK LIFTON: I'm optimistic, but my optimism is fading, because I'm seeing a great deal of smoke, and no fire. I'm seeing a lot of talk, congressional hearings, bills drafted, but I haven't yet seen a shovel.
KIRA KAY: And then there's the environment. Rare earth mining in the U.S. has not always had a clean record. In 1996, a ruptured pipeline at the Mountain Pass Mine leaked 300,000 gallons of contaminated water into surrounding lands. Cleanup cost millions of dollars.
This raises a conundrum for environmentalists waiting for the green technology revolution, says Jack Lifton.
JACK LIFTON: You want a green future, you want to go on the path to a green future, that path starts at a mine. The first step in the supply chain for the green world is the mine. And people who have knee-jerk reaction, well, mining is evil, mining is bad, mining is dirty, then forget green. Your world will be black.
KIRA KAY: Mark Smith says Molycorp, which acquired the mine after the leak, is now working with 18 different regulatory agencies to ensure the mine is up to environmental standards. He also points out it is the cost of doing environmentally correct business that makes U.S. operations so much more expensive than China's, where standards have been notoriously lax.
Recycling rare earths may provide some relief in the short-term, particularly for defense applications, which use smaller quantities. But Lifton and others say finding alternative technologies is a long shot because of the unique properties rare earths offer.
Molycorp hopes is Mountain Pass Mine will be producing about 20,000 tons of rare earths a year by 2012. But that is only a fraction of what it is expected to be 150,000-ton-a-year demand. The unknown here is how much China will still be producing and how much it will share.
Without these deposits, we simply don't advance.
KIRA KAY: Even in Canada's frigid Northwest Territories, geologist Chris Pedersen says he can feel the heat. It will be years of permitting and construction before any rare earths from under this frozen landscape will make it to market.
RAY SUAREZ: Kira Kay's report is part of our ongoing partnership with the Bureau for [International] Reporting.