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Imagine trying to navigate a maze with blinders on. That’s essentially what companies and nations face when navigating the murky world of critical materials, like the metals and minerals vital for everything from jet engines to smartphones. Their prices are shrouded in secrecy, supply and demand forecasts are often unreliable, and the entire market suffers from a crippling lack of transparency. This opacity fosters a breeding ground for disruptions, making it hard to predict shortages and plan accordingly.
Critical materials such as base metals (e.g., nickel, lithium, and magnesium), rare earth metals, and other minerals (e.g., cobalt and germanium) are vital to Department of Defense (DOD) operations and U.S. national security. They are also essential to modern technology. For example, metals such as cobalt and chromium are important ingredients in high-temperature alloys used in jet engines, while lithium is crucial for many battery chemistries and germanium and tin are central to advanced semiconductor manufacturing.
They are used in high-temperature alloys for jet engines and other performance applications, as crucial components of batteries, to construct magnets, and as reagents in advanced
semiconductor manufacturing. However, the extraction, refinement, and market distribution of
these commodities is primarily controlled by non-U.S. entities. International supply shocks can lead to significant and rapid critical mineral price spikes, such as a coal shortage in 2021 that directly caused a 2000% magnesium price spike. Such unforeseen supply shocks, in combination with international anticompetitive practices, have bankrupted U.S. firms and further increased the opacity of the U.S. critical material supply chain.
Yet critical materials pricing today is opaque, and supply and demand forecasts are often untimely, inaccurate, or too imprecise for operational relevance. Without transparent price, supply, and demand information, U.S. and friendly producers, consumers, and investors do not know the economic value, and are unsure of the future supply, of critical materials. Prices are a vital signal of current and future supply, demand, and capacity and are the most important source of information for market participants. Market opacity can engender supply chain disruptions, decreasing DOD readiness and imposing economic costs on businesses and consumers alike.
The Defense Advanced Research Projects Agency, in partnership with the U.S. Geological Survey, has unveiled a new program to enhance supply chain resilience and national security by increasing transparency in the global critical materials market. The Open Price Exploration for National Security program aims to develop technology that will serve as a transparent information source for critical materials producers and buyers, said DARPA.
Why is this so important? Because these materials, from lithium in batteries to cobalt in jet engines, underpin everything from our military capabilities to our modern way of life. Yet, their pricing is often opaque, shrouded in complex contracts and insider knowledge.
OPEN aims to change all that. By leveraging AI, machine learning, and advanced economics, the program will create a new generation of forecasting tools that accurately predict both critical material prices and future supply and demand. This won’t be some crystal ball, but rather a data-driven analysis of readily available information, empowering everyone from producers and buyers to investors with reliable, transparent insights.
Imagine a world where businesses can anticipate critical material shortages before they happen, adjust their supply chains accordingly, and avoid costly disruptions. Think of the national security implications of a military that can accurately predict the availability of essential materials for weapons and equipment. OPEN opens the door to these possibilities and more.
OPEN seeks to analyze commercially and publicly available information on fundamental and observable input costs to construct transparent structural price predictions, and to use advances in time series forecasting, economic modeling, and machine learning to create accurate and precise supply and demand forecasts. OPEN will not predict prices of publicly traded assets. OPEN technology may be used by critical materials producers and buyers as a transparent information source. Investors in commodities extraction and refinement enterprises may also welcome the structural prices and forecasts that OPEN aims to enable as high-quality signals of value.
“OPEN aims to solve a difficult information asymmetry challenge that has existed for decades. It’s a challenge that calls for expertise at the intersection of significant technical difficulty and global commodity insights – a challenge that DARPA is uniquely suited to take on,” said Jonathan Doyle, program manager in DARPA’s Strategic Technology Office. “We’re looking to enable a more reliable signal for buyers, sellers, and investors than is currently available.”
DARPA isn’t going it alone on this mission. They’ve partnered with the U.S. Geological Survey, tapping into their deep expertise in critical material extraction and refining. Together, they’re building a team of skilled researchers and innovators who are ready to tackle this complex challenge head-on.
In 2022, under AI for Critical Mineral Assessment Competition DARPA-led competition explored the use of AI and machine learning to accelerate assessments of the nation’s critical mineral resources. USGS partnered by providing data and expertise.
Critical Mineral Assessments with AI Support (CriticalMAAS): This ongoing DARPA effort builds on the competition, developing AI tools to automate and improve USGS’s critical mineral assessment workflow.
OPEN will be executed over a single phase consisting of a 7-month base period and two options. Performers on OPEN’s first Technical Area (TA-1) will seek to estimate actual critical material input costs, while performers on OPEN’s second Technical Area (TA-2) will aim to estimate supply and demand functions for essential materials.
OPEN performers will leverage the fact that a commodity’s market price can be
decomposed into four components: input costs, supply/demand shocks, distortions due to
noncompetitive behavior, and stochastic fluctuation. Performers on OPEN’s first Technical Area
(TA-1) will estimate actual critical material input costs, while performers on OPEN’s second
Technical Area (TA-2) will estimate supply and demand functions for critical materials. OPEN
performers will construct geospatially indexed, accurate, and unbiased price, supply, and demand
estimates that enable more efficient contracting and remove market opacity that can engender
supply chain disruptions
OPEN is just one step in a broader effort to build a more resilient and transparent critical materials ecosystem. It’s a vital step, however, one that promises to shed light on this opaque market and empower a new generation of informed decision-makers. So, the next time you hear about a shortage of vital materials, remember: DARPA’s OPEN program is working behind the scenes, building a brighter future where critical materials are no longer a mystery, but a predictable and manageable part of our world.
