Tuesday, October 04, 2011

Rare Earth Alternatives Get DOE Tech Funding

America's dependence on Chinese rare earth production is the Achilles heel of its technology base, not to mention its defense establishment.  The U.S. government's studies of the situation have produced little popular alarm as America has yet to face a rare earth element "Sputnik moment" to capture its imagination.  The scientific community is moving ahead anyway with steps to ensure this country has some kind of technologically-enabled future in the event of a Chinese rare earth embargo. 

ARPA-E has selected a plethora of research projects for funding, including proposed alternatives to existing paradigms in energy and materials.  The $31.6mm for Rare Earth Alternatives in Critical Technologies (REACT) has quite a few irons in the fire.  The projects that look for crystal and nitrite alloys could potentially obviate the need for neodymium-based magnets in motors.  The price for neodymium, for example, has gone stratospheric because demand for 4G phones and other gadgets has proven to be price inelastic.  As an aside, Amazon's (AMZN) introduction of cheap Kindle Fire tablet computers will destroy Apple's (AAPL) pricing power and render that price inelasticity moot, which means alternatives to neodymium and tantalum are an imperative if consumer electronics makers expect to meet their sales targets over the long term. 

ARPA-E's other programs look as intriguing as REACT.  The Plants Engineered To Replace Oil (PETRO) umbrella would be a windfall for owners of unbuildable urban land if they could grow camelina as a cash crop for biofuel.  That unused lot or unpaved right-of-way on a piece of commercial property can be a source of cash with some camelina for an on-site bioreactor. 

The projects under the other three energy-related umbrellas would be a boon for solar thermal producers.  Covering the Great Southwest with concentrated solar towers and mirror arrays could exploit that technology's full potential with improved transmission links to national grids and better storage methods.  Molten salt, anyone?  Not if molten glass, phase change materials, and nanostructures work a whole lot better. 

Alternative technologies (if proven viable) are good news for high-value manufacturers who won't have to relocate large plants to China.  It should go without saying that REE alternatives would be the death knell for China's long-term strategy of attracting manufacturers to its rare earth monopoly.  DOE is firing a return volley in the ongoing U.S.-China contest for world technological supremacy.  The Anglo-West's elites may have finally awoken. 

Full disclosure:  No positions in AMZN or AAPL at this time.