(FORTUNE Magazine) – During the Crusades, the most desirable swords were forged in Persia from Damascus steel. The secret of that process has since been lost, and warriors have moved on to other lethal weapons. But some sword experts think that "superplastic" steel, developed by Stanford professor emeritus Oleg Sherby in 1973, may be a rediscovery of the old cutting-edge metal. Although there are some differences, both superplastic and Damascus steel have a high carbon content and a similar molecular structure that make them harder, stronger, and easier to form than most steel today. Superplastic steel has been slow to reach the market because of the expense of figuring out how to produce it in bulk. Now a consortium of the Lawrence Livermore National Laboratory, Caterpillar, and North Star Steel in Minneapolis is close to bringing the steel to the factory floor. The metal's strength and resistance to corrosion and heat may make possible new designs for high-wear components such as engines. When processed and heated to the right temperature, superplastic steel can stretch like Silly Putty to 11 times its original length or squeeze into die molds for complicated parts like gears. Conventional steel cracks when stretched more than 50% and must be cast in larger pieces that require costly machining. Working mainly on $4 million from the Department of Energy's Metals Initiative, scientists at Livermore have concocted more than 50 variations of the steel for possible industrial uses. This summer the consortium will report on the metal's commercial viability and potential markets. North Star has made continuous castings of 40 tons, just under half the size of a typical commercial batch, and is trying to iron out minor problems that stand in the way of full production. Caterpillar, as secretive as an alchemist, says only that it is testing the steel for use in products, which could mean anything from pistons to bulldozer blades. What's the secret to superplasticity? It derives from the carbon content and a quality called fine grain size. Both Damascus and superplastic steel contain 1% to 2% carbon, vs. less than 1% in ordinary steel. The carbon hooks up with iron to form molecules called carbides, which keep large clots of iron from forming and give the steel its superplastic flexibility. When left alone, carbides organize in rigid networks, which is why the steel is so strong once set in its final shape. To break up the networks while the steel is still being worked, the metal is allowed to cool and then reheated, or kneaded by a press or rolling mill. Either process is better than one ancient forging technique: It called for beating the steel by hand and then plunging the hot sword into the body of a slave.