HardAssetsInvestor

Written by Tom Vulcan  |

January 19, 2012

Energy Dept. Unveils Its New Critical Materials Strategy

Details

Plan offers investors look at supply-and-demand concerns over critical materials and rare earth elements and how Feds will address them.

“Many new and emerging clean energy technologies, such as the components of wind turbines and electric vehicles, depend on materials with unique properties. The availability of a number of these materials is at risk due to their location, vulnerability to supply disruption and lack of suitable substitutes.”

Steven Chu, Secretary of Energy, Critical Materials Strategy, December 2010

Whatever one may think of the last two years’ critical material strategies from the U.S. Department of Energy, one really must give the department full marks for trying, not least because the information that they have needed to carry out their work is so fiendishly hard to find. And full marks, too, for doing what few, if any, other government departments (as far as I know) have yet done in this area: plan for the future.

We are reportedly still waiting to hear what the Department of Defense has to say about its use of rare earths, let alone any other strategic materials that are employed in defending the U.S. We will probably have to wait further.

Both the least two years’ strategy reports are sources of extremely useful and fascinating information. It is well worth digging in to them and mining some of the rich seams they contain. This is applicable equally to seasoned and neophyte investors alike in the strategic materials space.

Here, very briefly, is an indication of just some of what they contain.

The Three Pillars

Across the two years, the three central pillars of the department’s strategy remain both unchanged and just as relevant:

• “First, diversified global supply chains are essential”
• “Second, substitutes must be developed”
• “Third, recycling, reuse and more efficient use could significantly lower world demand for newly extracted materials”

And, while the 2011 report both revisits and updates much of the material (in particular, the strategic materials themselves) first encountered in the initial report, some of the most interesting sections of the latest report deal with what the DOE and others have done over the past year to address the challenges identified in 2010.

It is also interesting to note that there is now a far greater emphasis on the issues of education and training, both of which are of enormous importance if the U.S. is going to successfully navigate a way ahead.

In addition to looking, once again, at …

• Permanent magnets (in wind turbines and electric vehicles)
• Batteries (in electric vehicles)
• Phosphors (in lighting)
• Photovoltaic films

… the 2011 strategy takes an interesting, in-depth, look at:

• Fluid cracking catalysts (FCCs) in oil refining
• Technology transitions in high-efficiency lighting
• Permanent magnets in wind turbines and electric vehicles

These last three case studies are fascinating.