Elements of a Critical Materials Early Warning System Diana Bauer U.S. Department of Energy Office of Policy and International Affairs September 12, 2012
Outline Context An Approach to Early Warning Assessment Illustrative Data Analyses Challenges and Questions
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 supply is vulnerable to disruption.
Many Recent Analyses Have Assessed and Addressed Critical Materials
DOE Critical Materials Strategy
2011 Critical Materials Strategy Criticality Matrices Short-Term (present-2015) Medium-Term (2015-2025)
Short-Term Comparison between 2010 CMS and 2011 CMS
U.S. Interagency Critical Materials Coordination Office of Science and Technology Policy (OSTP) convenes three work groups: Criticality Assessment and Early Warning Long Term R&D Options Information Transparency
Outline Context An Approach to Early Warning Assessment Illustrative Data Analyses Challenges and Questions
Early Warning Why? Gives us a context for policy decisions, research investment that may directly or indirectly relate to critical materials Addressing issues early can lead to more options and help prevent problems What data and analytical characteristics are useful? Timely data Rapid, transparent preliminary analysis Focus on change More detailed analysis to understand systems effects
There are Many Minerals and Elements Antimony Barite Bauxite/Aluminum Beryllium Bismuth Boron Bromine Cadmium Cerium Chromium Cobalt Copper Dysprosium Europium Feldspar Fluorspar Gadolinium Gallium Germanium Gold Graphite Helium Indium Iodine Iridium Iron ore Lanthanum Lead Lithium Magnesium Manganese Mercury Mica Molybdenum Neodymium Nickel Niobium Osmium Palladium Tin Phosphate Titanium Platinum Tungsten Potash Vanadium Praseodymium Yttrium Rhenium Zinc Rhodium Zirconium Ruthenium Samarium Scandium Selenium Silicon Silver Strontium Sulfur Tantalum Tellurium Terbium
An Approach to Early Warning Preliminary Screening In Depth Analysis Importance Assessment Economic National Policy Supply Chain Analysis Interpretation and Recommendations
U.S. DOD Defense Logistics Agency Analysis for Stockpile Determination Watch List Assess Demand vs. Supply Supply Chain or Market Anomaly Requirements Report (Shortfall?) Program Management Office Input Decompose Tiers Downstream Supply Chain Assessment Qualify Risk vs. Cost Business Case Analysis Develop Solution Options Determination Material Requiring Action Obtain Authorities US DLA (2012)
Common Dimensions of Criticality Supply Risk Concentration of supply, production Restrictive policies Physical availability relative to demand Coproduction/byproduction Impact of Supply Disruption Economic Importance Importance to Clean Energy Substitutability Limitations Other Environmental Impact National Research Council (2008), EC (2010), Graedel et al (2012), US DOE (2010, 2012)
Outline Context An Approach to Early Warning Assessment Illustrative Data Analyses Challenges and Questions
Possible Preliminary Screening Indicators Supply Risk Concentration of supply, production plus concentration change Restrictive policies Physical availability relative to demand Coproduction/byproduction Impact of Supply Disruption Economic Importance Importance to Clean Energy Substitutability Limitations Demand pressure Other Environmental Impact Market volatility
Concentration of Supply *Other PGMs: Osmium, Iridium, Ruthenium and Rhodium Data from USGS
Growth in Concentration Ratio 2004-2009 40% Figure 1: 3-Country Concentration Ratio 2009 and Growth in 3-Country Concentration Ratio 2004-2009 of Selected Mineral Commodities Bromine 30% 20% 10% 0% -10% Beryllium Sulfur Copper Gold Mica Boron Silicon Cadmium Mg Compounds Strontium Iron and steel Manganese Bauxite Lithium Feldspar Iron ore Magnesium Metal Silver Lead Cobalt Fluorspar Iodine Barite Indium Bismuth Molybdenum Phosphate Zinc PalladiumMercury Antimon Platinum Nickel Rhenium Selenium Yttrium Tin Monazite Zirconium Tungsten Other PGMs Vanadium Gallium Potash Chromium Tellurium Titanium -20% -30% Tantalum Graphite -40% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Concentration Ratio 2009 Source: USGS - "World production_diversity_revised_gm.xlsx" and "Processed revised_jj.xlsx"
OCED Draft Analysis of Measures Restricting Raw Material Exports Analysis of collected OECD database of trade measures Includes trade restrictions in combination with trade flow data on a material by material basis Final version of the report anticipated this fall
Co-Production, By-Production Illustration C. Hagelüken and C. E. M. Meskers, 2010
Global production relative to 1980 Demand for Materials Can Create a Pressure on Supply 1400 1200 1000 800 Indium REE Gallium Lithium Cobalt Nickel Iron & steel Specialty metals 600 400 200 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 DOE (2011)
20 Year and 5 Year Demand Pressure For Selected Commodities *Other PGMs: Osmium, Iridium, Ruthenium and Rhodium (Data from USGS)
Bollinger Bands to Analyze Market Volatility 7000 Indium price and 45 day rolling average of price within 2 standard deviations of the mean (RMB/kg) Price Mean Upper Deviation Band Lower Deviation Band 6000 5000 4000 3000 2000 1000 0
Bollinger Bands Neodymium Oxide China FOB ($/tonne) StdDev Top Mean StdDev Bottom Price # of Upper Band Exceedences During Quarter 400,000 12 350,000 10 300,000 250,000 8 200,000 6 150,000 4 100,000 50,000 2 0 1/4/2007 1/4/2008 1/4/2009 1/4/2010 1/4/2011 1/4/2012 0 (price data from Metal-Pages)
Possible Factors for In Depth Analysis Supply Risk Concentration of supply, production plus concentration change Restrictive policies Physical availability relative to demand Coproduction/byproduction Impact of Supply Disruption Economic Importance Importance to Clean Energy National Policy Substitutability Limitations Demand pressure Other Environmental Impacts Market volatility National Importance
Possible Indicators of National Importance Economic Importance Value of U.S. Consumption of Material Value of U.S. Consumption of Primary Use Value of U.S. Production of Primary Use - Growth Rate Relative Contribution to GDP US Market Share of Primary Use Importance to National Policy Standard, Regulation or Policy Goal
Example Qualitative Analysis of Rare Earth Magnet Supply Chain Market Concentration (Low to High) Mining/ Milling/ Concentration Moderate to High Separation (Oxides) Moderate to High Metal Making Alloying/ Powder Production Magnet Manufacturing Motors and Generators High High High Moderate Market Opacity (Low to High) High High Moderate Moderate Moderate Low Capital Requirements (Low to High) Knowledge/ Technical Requirements (Low to High) Regulatory Requirements (Low to High) Time Requirements: Short <2 yrs; Med 2 5 yrs; Long > 5 yrs Intellectual Property Entry Barriers (Low to High) Moderate to High High Moderate to High Moderate to High Moderate to High Low to Moderate Low to Moderate High High High High Moderate High High High Moderate Low to Moderate Low Long Medium to Long Medium Medium Medium Short to Medium Low Low Moderate High High Low (DOE, 2011)
Conclusions Existing material criticality analyses can be built upon to develop an early warning methodology Both rapid screening and in-depth analysis can contribute to early warning Tracking change in indicators over time can add insight It is valuable to consider the economic dimension in concert with the materials flow dimension We would welcome any feedback as we continue this work