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Monthly Archives: December 2011

Rare earth metals scarcity: A ‘ticking timebomb’?

Rare earth metals scarcity: A ‘ticking timebomb’?

 

 

Seven core manufacturing industries could be seriously affected by a shortage of minerals and metals, which could disrupt entire supply chains and economies, according to new PwC research. PwC surveyed some of the largest manufacturing businesses across manufacturing, chemicals, automotive, energy/renewable energy, aviation, metals, infrastructure and high-tech hardware to see what impact such a scarcity would have, and where, over the next five years.

Of these, business leaders in automotive, chemicals, and energy sectors fear they will be hit hardest according to PwC’s Minerals and metals scarcity in manufacturing: A ‘ticking timebomb’, report.

·  Chemical, energy and auto industry in ‘red alert’ over disruption of supply

·  Manufacturers will struggle to keep up with demand

·  14 raw materials named as ‘critical’

PwC’s global sustainability leader, Malcolm Preston, said: “Put simply, many businesses now recognise 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.”

The report’s main author, Hans Schoolderman of PwC Netherlands, added: “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 should all be aware of the scope, importance and urgency of the scarcity of both renewable and non-renewable natural resources: energy, water, land and minerals.”

Among the minerals & metals on the ‘critical’ list are:

· Beryllium: used as a lightweight component in military equipment and in the aerospace industry. it is used in high-speed aircraft, missiles, space vehicles and communication satellites.

· Cobalt: a material used in industrial manufacturing. Used in jet turbine engines and automotive rechargeable batteries.

· Tantalum: used 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 in hybrid cars

Elsewhere in the survey, 77% of major manufacturing companies consider minerals and metals scarcity as an important issue for their business, but are concerned that only 39% of their customers do.  Chemicals and energy and utilities sectors believe they will be severely impacted until 2016 with the percentage of chemical businesses that expect to be affected by this scarcity will TRIPLE over the next five years.

Instability of supply

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

Renewable energy (78%), automotive (64%) and energy & utilities (57%) are all currently experiencing instability of supply. Aviation, high tech and infrastructure sectors are also expecting to experience high rises in supply disruption from now to 2016.

When asked about other primary concerns around scarcity overall, 84% cited an increase in demand, 78% said it was geopolitics, and 72% said extraction shortage. The report also indicated  that European companies were better prepared with policies and programmes in place to mitigate risks.

PwC’s global sustainability leader, Malcolm Preston, said: “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."

A ‘top 10’ checklist for businesses on how to identify and prevent resource scarcity is in the report which also includes advice around creating risk assessments for three main areas, geopolitical, economic and physical.

December 2011

Nonferrous Scrap: North America

Nonferrous Scrap: North America

 

Steve Solomon, Solomon Metals Corp.


The supply of copper scrap seems to be relatively consistent and buying metals is not as much a problem now. The markets have recovered from the large fall in September. Now that copper is back in the $3.50 range, material is back flowing again.

Aluminum prices aren’t changing, regardless of what the market is doing and tending to get weaker. We won’t see any kind of major movement in the aluminum prices maybe until the end of the first quarter of 2012, assuming that we get bad weather in the Northeast. For the next two months, at least going into the Asian markets, we see a definite slowdown as they slow their buying down ahead of the Chinese New Year, combined with what we believe to be less demand in the Chinese market than in previous years. It seems that there is less money available for Chinese buyers to buy, and it has become sort of a ”seller beware” situation on scrap going to China, making sure the buyers are well financed and prepared to stand up to whatever contracts you have with them. We don’t want to revisit what happened several years ago.

The amount of scrap yards that are shipping directly to China is down quite a bit. There are less Chinese buyers out there canvassing the yards, buying scrap. The bigger buyers are still out there buying scrap on a regular basis. It is important even with the larger companies that we keep a close eye on their creditworthiness. As sellers, there has been a lot of changeovers in the way they buy their scrap, especially in mixed type loads under their new regulations and what metals can be mixed in what loads. Knowing all that information and how material needs to be packaged in China now is very, very important in doing continuous business.

Domestic ingot makers are consistent. It appears the amount of material that they are buying now is in relative equilibrium to the material that is available. There does not seem to be much ingot-maker metal going overseas. Most of it is staying domestically and they are buying it at prices as they need to. They haven’t been going overboard on pricing.

Here in the Northeast, we have had very good weather. If the weather turns bad and there is a lot of snow and continued bad weather, it will slow material flow. At the moment, however, material is flowing freely. There is material to buy. The only slowdown in material is price related and that was probably occurring more so when the copper price was in the low $3 range. Now that we are back into the mid-$3 range, at the moment, material is being sold.

The aluminum secondary market is very weak. The aluminum primary market isn’t strong either. In general, aluminum prices are dull. It is the same story with stainless steel. Orders are done through the end of this year. There is not a lot of hope for the very beginning of the year. The nickel market has been very slow too.

12/5/2011
 

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