This is the foreward to PwC’s recent report on resource scarsity: Minerals and metals scarcity in manufacturing: The ticking time bomb
Malcolm Preston is PwC’s Global Sustainability Leader and Joseph Herron is PwC’s Global Industrial Products Leader
The world’s growing population, an increase in GDP levels and changing lifestyles are causing consumption levels to rise globally – creating a higher and higher demand for resources. Governments and companies are
becoming increasingly cognisant of the scope, importance and urgency of the scarcity of both renewable and nonrenewable natural recources including energy, water, land and minerals.
The interrelationships between these resources are strong, which means that both the causes of scarcity and the solutions to it are complex. There can be a fine line between ‘just in time’ and ‘just not there’.
Policymakers are starting to take action on the issue of resource supply. The European Union is pursuing a number of initiatives to mitigate the risks of minerals and metals scarcity by using scarce minerals and metals more efficiently in applications, by recycling, and by developing substitutes. It is also pushing for trade policies that favour international open markets for scarce minerals and metals.
This contrasts with China’s imposition of trade barriers to restrict the outflow of these resources to support its domestic industries. In the U.S., the Dodd Frank Act forces companies to become transparent with respect to the use of conflict minerals. And, resource scarcity is likely to be a central issue at the ‘Rio + 20’ Conference on Sustainable Development.
Stock depletion is a factor behind resource scarcity for some commodities, but for others, badly functioning markets and the wrong policy are more important drivers.
Even when global deposits will be sufficient to meet increasing demand over the coming decades these stocks are not equally distributed over the world; they tend to be located in a limited number of countries. This causes an increasing dependency on imports which, in turn, feeds concerns about commodity prices, the new world order and security of supply.
Managing scarcity is about ensuring that the right amount of minerals and metals is present in the right place in the right form. Three dimensions play a role here: physical, economic and political. Physical scarcity relates to the availability of resources and is affected by the depletion of non-renewable reserves and the sufficiency of renewable resources and stocks.
Economic scarcity concerns the functioning of markets and the matching of production processes, raw material supplies and end-product demand. Finally, the geopolitical dimension relates to the functioning of policy and involves such aspects as trade barriers, export disruptions and national and international conflicts.
In this report, PwC has looked at the impact that minerals and metals scarcity is likely to have on seven different manufacturing industries. Through interviews with senior executives in many of the leading organisations that are central to the future growth of these industries, we have been able to gauge the importance of minerals and metals scarcity and highlight the likely impact on different regions and sectors.
We have focused our analysis on critical minerals and metals that are important to the operations and supply chains of the companies we spoke to and to the economies of the countries and regions in which they operate.
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