Critical Materials Assessment

and Early Warning

Paul Telleen

U.S. Department of Energy

Office of Policy and International Affairs

November 13, 2012

Outline

• U.S. Department of Energy Critical Materials

Strategy

• An Approach to Early Warning Assessment

• Conclusions• Conclusions

2

DOE Critical Materials Strategy

Project Scope

Lighting

Vehicles

Solar PV

Wind

Demand Projections: Four Trajectories

Market

Penetration

Material

Intensity

Trajectory D High High

Trajectory C High Low

Trajectory B Low High

Trajectory A Low Low

Material Demand Factors

• Market Penetration = Deployment (total annual units of a clean energy

technology) X Market Share (% of units using materials analyzed)

• Material Intensity = Material demand per unit of the clean energy technology

Trajectory A Low Low

Dysprosium Oxide - Supply and Demand Projections

2011 Critical Materials Strategy

6,000

7,000

8,000

9,000

ton

ne

s/y

r

Dysprosium Oxide Future Supply and Demand2011 Update

Trajectory D

Trajectory C

Trajectory B

Trajectory A

Demand

Short Term Medium Term

6

0

1,000

2,000

3,000

4,000

5,000

2010 2015 2020 2025

ton

ne

s/y

r

Trajectory A

Non-Clean Energy Use

Supply

2015 Estimated Supply

Plus Mount Weld

Plus Mountain Pass Phase I

2010 Supply

• Criticality is a measure that combines

• Importance to clean energy technologies

• Clean Energy Demand (75%); Substitutability

Limitations (25%)

• Risk of supply disruption

• Basic Availability (40%); Competing Technology

DOE Criticality Assessments

• Basic Availability (40%); Competing Technology

Demand (10%); Political, Regulatory and Social

Factors (20%); Co-Dependence on Other Markets

(10%); Producer Diversity (20%)

• Time frames:

• Short-term (Present - 2015)

• Medium-term (2015 - 2025)

2011 Critical Materials Strategy Criticality Matrices

Medium-Term (2015-2025)Short-Term (present-2015)

Short-Term Comparison between 2010 CMS and 2011 CMS

Outline

• U.S. Department of Energy Critical Materials

Strategy

• An Approach to Early Warning Assessment

• Conclusions• Conclusions

10

Critical Material or Mineral -- Definition

• “A material or mineral is critical if it serves an

essential function in the manufacture of a

product – the absence of which would cause

economic or social consequences – and if its economic or social consequences – and if its

supply is vulnerable to disruption.”

-- United States National Science &

Technology Council

11

U.S. Interagency Critical Materials Coordination

White House Office of Science and

Technology Policy (OSTP) convenes three

work groups:

• Criticality Assessment and Early

WarningWarning

• Long Term R&D Options

• Information Transparency

Early Warning

• Why?– Provides for timely policy decisions and research

investments related to critical materials

– Addresses issues early to ensure optimal solutions and help prevent future problems

• What data and analytical characteristics are useful?– Timely data

– Rapid, repeatable preliminary analysis

– Focus on change

– More detailed analysis to understand systems effects

13

An Approach to Early Warning

• Preliminary Screening of Materials

• In Depth Analysis

– Importance Assessment

• Economic

• National Policy

–Supply Chain Analysis

• Interpretation and Recommendations

14

Possible Preliminary Screening Indicators

• Supply Risk– Concentration of supply, production � plus

concentration change

– Trade policies

– Coproduction/byproduction

• Demand pressure– Could signal emerging technology of importance

• Other– Market volatility

15

AntimonyBarite

Bauxite

Beryllium

Bismuth

Boron

Bromine

Cadmium

CobaltCopperFeldspar

Fluorspar

GoldIndium

Iodine

Iron and steel

Iron oreLead

Lithium

Magnesium Metal

Manganese

Mercury

Mg Compounds

Mica

Molybdenum

Monazite Nickel

PalladiumPhosphate

PlatinumRhenium

Selenium

Silicon

Silver

Strontium

SulfurTin

Yttrium

Zinc0%

10%

20%

30%

40%

3-Country Concentration Ratio 2009 and Growth in 3-Country Concentration Ratio 2004-2009

of Selected Mineral Commodities

Gro

wth

in C

on

cen

tra

tio

n R

ati

o 2

00

4-2

00

9Figure 1:

Ch

an

ge

in

Co

nce

ntr

ati

on

Ra

tio

20

04

-20

09

ChromiumGallium

Graphite

Monazite Nickel

Other PGMs

Potash

Rhenium

Tantalum

Tellurium

Tin

Titanium

Tungsten

Vanadium

Zirconium

-40%

-30%

-20%

-10%

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Gro

wth

in C

on

cen

tra

tio

n R

ati

o 2

00

4

Concentration Ratio 2009

Source: USGS - "World production_diversity_revised_GM.XLSX" and "Processed revised_JJ.xlsx"

Ch

an

ge

in

Co

nce

ntr

ati

on

Ra

tio

20

04

OECD Analysis of Measures Restricting Raw Material Exports

• Analysis of OECD

database of trade

measures

• Includes trade • Includes trade

restrictions in

combination with trade

flow data on a material-

by-material basis

17

Co-Production, By-Production Illustration

C. Hagelüken and C. E. M. Meskers, 201018

Demand for Materials Can Create a Pressure on Supply

Specialty

metals800

1000

1200

1400

Glo

ba

l p

rod

uct

ion

re

lati

ve

to

19

80

Indium Cobalt

REE Nickel

Gallium Iron & steel

Lithium

0

200

400

600

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Glo

ba

l p

rod

uct

ion

re

lati

ve

to

19

80

DOE (2011)

Possible Factors for In Depth Analysis

• Impact of Supply Disruption

– Economic Importance

– Importance to National PolicyNational Importance

– Importance to National Policy

• Supply Chain Analysis

20

Possible Indicators of National Importance

• Economic Importance

– Value of U.S. Consumption of Material’s Primary

Use – Growth Rate

– Value of U.S. Production of Material’s Primary Use

- Growth Rate- Growth Rate

• Importance to National Policy

– Statutory, Regulatory or Policy Goal

21

Example Qualitative Analysis of Rare Earth Magnet Supply

Chain

Mining/

Milling/

Concentration

Separation

(Oxides) Metal Making

Alloying/

Powder

Production

Magnet

Manufacturing

Motors and

Generators

Market

Concentration

(Low to High)

Moderate to HighModerate to

HighHigh High High Moderate

Market Opacity

(Low to High) High High Moderate Moderate Moderate Low

Capital

Requirements

(Low to High)

Moderate to High HighModerate to

HighModerate to High Moderate to High

Low to

Moderate

Knowledge/

Technical

Requirements

(Low to High)

Low to Moderate High High High High Moderate

Regulatory

Requirements

(Low to High)

High High High Moderate Low to Moderate Low

Time

Requirements:

Short <2 yrs;

Med 2–5 yrs;

Long > 5 yrs

LongMedium to

LongMedium Medium Medium

Short to

Medium

Intellectual

Property Entry

Barriers

(Low to High)

Low Low Moderate High High Low

(DOE, 2011)22

Outline

• U.S. Department of Energy Critical Materials

Strategy

• An Approach to Early Warning Assessment

• Conclusions• Conclusions

23

Conclusions

• DOE Critical Materials Strategy (CMS) offers a

snapshot of material criticality in the clean

energy economy

• CMS and other existing analyses can be built

upon to develop an early warning

methodology that captures changes to

criticality over time

24

Conclusions

• Both an initial rapid screening and an in-depth analysis can contribute to early warning

• Tracking change in indicators over time can • Tracking change in indicators over time can add insight

• A more dynamic approach to criticality can help policymakers make more proactive decisions in a timely manner

25