New Business Models Needed to Meet Critical Metals Scarcity

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--According to a survey by PricewaterhouseCoopers (PwC), seven core manufacturing industries could be seriously affected by a shortage of metals and minerals, and this could disrupt entire supply chains and economies over the next five years. The survey covered 69 executives from seven different industrial sectors, across three global regions: Asia Pacific, the Americas and Europe. The majority of the companies surveyed are key players globally, with annual revenues of more than $10 billion.

The sectors covered were manufacturing; chemicals; automotive; energy and renewable energy; aviation; metals; and infrastructure and high-tech hardware. The sectors where the leaders felt they will be hit the hardest were automotive, chemicals and energy.

Malcolm Preston, PwC's global sustainability leader, said, "Put simply, many businesses now recognize that we are living beyond the planet's means. New business models will be fundamental to the ability to respond appropriately to the risks and opportunities posed by the scarcity of minerals and metals."

Included in the 14 "critical" raw materials list are: beryllium, used as a lightweight component in military equipment and the aerospace industry; cobalt, used in industrial manufacturing, jet turbines and automotive rechargeable batteries; tantalum, used in mobile phones, computers and automotive electronics; fluorspar, used in construction, cement, glass, iron and steel castings; and lithium used in wind turbines and lithium-ion batteries in hybrid cars.

Minerals and metals scarcity was considered an important issue by 77% of major manufacturing companies surveyed but only 39% of the companies' customers considered the scarcity factor important.

The chemicals, energy and utilities sectors believe that they will be severely impacted through 2016. The percentage of chemicals businesses that expect to be affected by scarcity will triple over the next five years.

Scarcity will lead to supply instability and potential disruption in the coming five years, but at the same time, it will create opportunities for competitive advantage. The survey reports that 80% of automotive leaders are currently worried about reserves running out, but only 33% in aviation share the worry.

Sectors currently experiencing instability of supply are renewable energy (78%), automotive (64%), and energy and utilities. Aviation, high tech and infrastructure expect high rises in supply disruption in the five years to 2016.

For other primary concerns about scarcity, the survey reports 84% of respondents cited an increase in demand, 78% geopolitics and 72% extraction shortage.

Europeans (71%) were most concerned about scarcity, followed by Asia Pacific (53%) and the Americas (50%). In Europe, 96% of executives reported that their governments were aware of the problem, followed by Asia Pacific (58%) and the Americas (54%).

"With the need for new business models, a key challenge for business is how to draw 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," said Preston.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.