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).

"Today, however, substantial materials diversity in products of every kind is the rule rather than the exception," Graedel explained. "A modern computer chip, for example, employs more than 60 different elements.

"The materials complexity of modern products brings with it a heightened level of risk. Because each constituent is chosen to enable exquisite performance, precise physical and chemical properties essentially become requirements.

"The product thus becomes increasingly vulnerable to supply risks resulting from natural disasters, political unrest in crucial mining regions, energy restrictions, trade barriers or other causes," Graedel warned.

"Modern technology is dependent on resources from every continent other than Antarctica, a situation that increases the potential for geopolitical machinations," he added.

Graedel and his colleagues studied the availability of adequate substitutes for no fewer than 62 metallic elements.

For almost a dozen of them, they found there was no adequate substitute for the metal in its major application, and in some instances no substitute at all. In every one of the 62 cases, there were at least some applications where substitutes were significantly inferior.

"On the materials basis for modern society" expressed special concern about the lack of adequate substitutes for magnesium, manganese, yttrium, rhodium, rhenium, thallium, lead, europium, dysprosium, thulium and ytterbium, almost half of which are rare earths.

Greater supply-chain risk

The PNAS study builds on a similar approach developed in a 2007 report on "Minerals, critical minerals and the U.S. economy" published by the U.S. National Research Council (NRC).

The NRC report developed what it called a criticality matrix. It assessed criticality in two dimensions:

(1) potential impact of any supply restriction (principally from the nature of the materials' applications and the availability of substitutes);

(2) the availability and reliability of supply (including import dependence, reliance on just a few producers, thinly traded markets and existence of scrap recycling).

Graedel and his colleagues have added a third dimension: environmental implications. But the basic analysis is the same.

The NRC identified indium, manganese, platinum group metals and rare earths as among the most critical minerals it studied.

Platinum group metals are essential in automotive catalysts, mined almost exclusively in Russia and South Africa, mostly as co-products of other minerals.

Rare earths are essential with few substitutes in catalytic converters, permanent magnets and for visual displays. The market is small and fragile with little recycling.

Indium has no substitutes for flat-panel displays. Worldwide production is small and comes mostly from China, Canada, Japan and Russia, with little recycling.

Manganese has no satisfactory substitutes for hardening steel and is not mined in the United States. Niobium, used in aero-engine superalloys, likewise has only poor substitutes and is not mined in the United States.

Perennial concerns

The NRC called for the federal government to devote more resources to collecting and disseminating data on these and other minerals, and to fund research into critical minerals and materials science.

That scientists call for more money to be spent on research and data collection is hardly surprising.

But the same concerns about critical minerals and the possible disruption from supply shortages have been exercising legislators, miners and scientists for decades.

In 1980, Congress passed the Materials and Minerals Policy, Research and Development Act which declared "the availability of materials is essential for national security, economic well-being and industrial production".

It went on to warn "the availability of materials is affected by the stability of foreign sources of essential industrial materials, instability of materials markets, international competition ... the need for energy and materials conservation, and the enhancement of environmental quality".

Congress worried "the United States lacks a coherent national materials policy and a coordinated programme to assure the availability" of critical minerals.

Among other things, the 1980 act directed the president to "identify materials needs" and "establish a long-range assessment capability" as well as "encourage federal agencies to facilitate availability and development of domestic resources."

Sound familiar?

In 1984, Congress had another crack at the problem, passing the National Critical Minerals Council Act, which repeated all the previous concerns, and establishing a National Critical Minerals Council to coordinate critical minerals policies and technology.

In three decades, reliance on critical minerals has not so far disrupted the U.S. economy or national security. And to the extent there is a potential problem, congressional interventions do not appear to have solved it.

Export restrictions on rare earths, molybdenum and tungsten imposed by China in 2011 and 2012 caused concern among importers, including the United States, the European Union, Japan and Canada, prompting the United States to file a complaint with the World Trade Organization.

But the surge in rare earth prices has already called forth substantial new sources of production, notably from Australia, and the market may be headed for a period of oversupply.

There is no reason to believe markets are any worse at ensuring the supply of "critical minerals" than ensuring adequate provision of iron, copper, aluminium or any one of a hundred other items essential for modern living.

Lawmakers would do well to stop tinkering. (Editing by Dale Hudson)

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