The scarcity of minerals and metals is a ticking time bomb for manufacturing: PwC

Shortage of minerals and metals slows supplies for seven core manufacturing industries

TORONTO, Jan. 11, 2012 /CNW/ - A majority of industries (77%) consider minerals and metals scarcity a pressing issue causing stress for their suppliers, according to a new global study of manufacturers from PwC. The seven manufacturing industries most impacted are infrastructure, high-tech hardware, automotive, renewable energy, chemicals, energy and utilities, and aviation, with the highest concerns amongst participants from the infrastructure, high-tech and automotive industries.

The report, Minerals and metals scarcity in manufacturing: A 'ticking time bomb' surveyed 69 senior executives in seven different manufacturing industries across the Americas, Asia Pacific region and Europe. According to the survey, 83% of respondents indicate their suppliers consider minerals and metals scarcity an issue and 61% believe their customers are taking the issue seriously. In North and South America, over half of the respondents believe the government is aware of the shortage and its ramifications.

"Manufacturers recognize that the lack of minerals and metals is a serious issue, but it's not as clear whether various industry stakeholders are aware and are being responsive to the matter," says Calum Semple, Consulting partner and Leader of the Operations practice at PwC in Toronto.

Most regions and industries globally view an increase in demand as the primary cause for minerals and metals scarcity (84%), followed by geopolitics (79%) and extraction shortages (73%).

"With growing GDP levels and with the world's population surpassing seven billion people, consumption levels are rising which in turn is creating a high demand for resources," says Semple. "Raising awareness and developing new business models to help manage the urgency of this issue is a necessary task for both companies and governments."

The impact of growing demand is highest for suppliers within the infrastructure industry. Other causes for the shortage and level of impact are noted in the table below:

Causes High to very
high Impact
Growing demand 65%
Geopolitics 54%
Extraction shortage 32%
Low substitution rate 38%
Re-use rate low 36%
Over demand
(supercycle)
39%
Reserves running dry 30%
Insufficient Research and
Development (R&D)
25%

Risk is growing

Risk arising from minerals and metals scarcity is expected to increase across all industries in the next five years. Industries within the renewable energy (78%), automotive (64%) and energy and utilities (57%) sector are currently experiencing instability of supply.

"Preparedness is critical to responding to the risks associated with the scarcity of resources," says Semple. "Across different sectors, we're faced with varying levels of preparedness. The majority (73%) feel they are sufficiently prepared, but some companies do not have adequate plans in place to reduce the impact of the shortage on their business."

Areas of opportunity

Respondents from the automotive sector (82%) have the most positive outlook when it comes to finding opportunities over the next five years in the midst of a metals and minerals shortage. Overall, 43% of respondents across all industries view scarcity as a current opportunity, while 59% of respondents say the opportunity will grow in the next five years.

Europeans remain the most optimistic with 58% perceiving an opportunity at hand, whereas only 35% of respondents from North and South America sense potential for good prospects.

"Buying power, co-ordinated purchasing policy, recycling and extraction, upgrading technology and forward contracts with key suppliers are just a few of the current and potential opportunities resource scarcity presents to manufacturers," says Semple.

To read the full report, please visit http://www.pwc.com/resourcescarcity. A copy of the report is also available from the media contacts.

Follow PwC on Twitter at @PwC_Canada_LLP and on Facebook at http://www.facebook.com/pwccanada.

About PwC Canada

PwC Canada helps organizations and individuals create the value they're looking for. More than 5,700 partners and staff in offices across the country are committed to delivering quality in assurance, tax, consulting and deals services. PwC Canada is a member of the PwC network of firms with close to 169,000 people in 158 countries. Find out more by visiting us at www.pwc.com/ca.

© 2012 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved.

PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. 

 

 

SOURCE PwC Management Services LP

For further information:

Abby Yung
Tel.: 416 687 8644
Email: abby.yung@ca.pwc.com

OR:
Kiran Chauhan
Tel.: 416 947 8983
Email: kiran.chauhan@ca.pwc.com

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