Metals and minerals scarcity

A PwC report says shrinking supplies of critical metals and minerals could seriously affect seven key industrial sectors over the next five years.

March 14, 2012   by PLANT STAFF

A PwC report says shrinking supplies of critical metals and minerals could seriously affect seven key industrial sectors over the next five years.

With booming economic growth in developing economies adding to the worldwide consumption of natural resources, some critical metals and rare minerals are running short over the next five years, which will have a serious impact on manufacturers and their supply chains, according to research from PwC.

The global consulting company surveyed large companies across manufacturing, chemicals, automotive, energy/renewable energy, aviation, metals, infrastructure and high-tech hardware to see what impact shortages would have and where. It identified seven core-manufacturing industries that could be seriously affected: renewable energy, infrastructure, energy and utilities, automotive, chemicals, high-tech and aerospace. Of these, business leaders in the automotive, chemicals and energy sectors fear they will be hit hardest.

Among the minerals and metals on the critical list include:

• Beryllium. Used as a lightweight component in military equipment and in the aerospace industry.

• Cobalt. Industrial manufacturing uses it machinery and equipment such as jet turbine engines and automotive rechargeable batteries.

• Tantalum. Found in mobile phones, computers and automotive electronics.

• Flurospar. Used in construction, cement, glass, iron and steel castings.

• Lithium. Used in wind turbines and lithium-ion batteries powering hybrid cars.

Seventy-seven per cent of the 69 executives from companies in Asia Pacific, the Americas and Europe consider minerals and metals scarcity to be an important issue for their businesses, but they’re also concerned only 39% of their customers do. PwC said the chemicals and energy/utilities sectors believe they will be severely impacted until 2016. Indeed, the percentage of chemical businesses that expect to be affected will triple over the next five years.

The report says the risk of scarcity across all sectors will rise significantly, leading to supply instability and potential disruptions in the next five years, but this will also create opportunities for competitive advantage. For example, the survey shows that while 80% of automotive respondents are currently worried about reserves running out, only 33% in aviation are.

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Renewable energy (78%), automotive (64%) and energy and utilities (57%) are all currently experiencing instability of supply. Aviation, high tech and infrastructure sectors also anticipate rising supply disruptions from now to 2016.

When asked about other concerns regarding scarcity, 84% cited an increase in demand, 78% said it was geopolitics, and 72% said extraction shortage.

PwC said prices for dysprosium (used in super magnets) and tantalum (used in electronics) have exploded in recent years. China currently supplies 97% of the world’s rare earth metals. With growing demand from its own manufacturers, it has tightened quotas for some rare metals used in high-tech products and reduced the number of companies allowed to sell abroad to 11 from 26.

Canada and other countries with rare earth metal deposits stopped mining them in the 1990s when lower-cost Chinese exports flooded world markets. With surging demand and supply shortages, many countries, including Canada, are developing these resources and some will be producing within three years.

Survey respondents identified other ways to address supply concerns, chief among them resource efficiency, followed by alliances with suppliers, supplier diversification, more R&D, more re-use and more geodiplomacy. PwC said more extraction and relocating production scored less strongly.

Malcolm Preston, PwC’s global sustainability leader, said a key challenge for business will be drawing the line between collaboration and competitive advantage. “This is where strategic decision making meets sustainability. Getting this right will define the winners and losers of the future.”

Click here for a copy of Minerals and metals scarcity in manufacturing: the ticking time bomb.

This articles appears in the January/February 2012 issue of PLANT.

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