The energy turnaround, the transport turnaround and the restructuring of industry are not making it any easier for companies to procure raw materials. The German Raw Materials Agency's Dera Raw Materials List 2023 helps assess the risks.
Erzberg mine in Austria: 150 billion tons of rock are mined worldwide every year to produce 65 billion tons of mineral products.
Unsplash/EMPA
A typical electric car requires six times as many mineral raw materials as a car with an internal combustion engine - mainly copper, graphite, cobalt and nickel for the battery system. A medium-sized offshore turbine contains about 67 tons of copper. To extract this amount of copper, miners have to move nearly 50,000 tons of earth and rock - about five times the weight of the Eiffel Tower. These thought-provoking ratios have now been published by the Swiss Federal Laboratories for Materials Testing and Research (Empa) ahead of two events taking place in Geneva in September: The World Resources Forum 2023 and the UNEP Intergovernmental Meeting on Minerals and Metals.
In the discussion about climate change and measures to reduce CO2 emissions, the central role played by the use and extraction of natural resources is often overlooked. Largely unnoticed, a gigantic material battle is taking place: According to Empa, 150 billion tons of rock are currently mined annually to produce 65 billion tons of mineral products. And suddenly, the decarbonization of the economy will require the mobilization of large quantities of certain raw materials that previously played a rather minor role. At the center of the new desires are particularly critical raw materials such as copper, lithium, nickel, cobalt or rare earths. According to the International Energy Agency (IEA), demand from the energy sector has been the main driver of a tripling of total demand for lithium, a 70 percent increase in cobalt demand and a 40 percent increase in nickel demand since 2017.
Supply Concentration and Country Risk Assessment
Against the backdrop of this development, which is also accompanied by turbulence on the raw materials markets, a regularly published study by the German Raw Materials Agency (Dera), in which scientists assess the supply concentration and country risk in the production of numerous mineral raw materials and their intermediates at different stages of the value chain, is becoming increasingly relevant. The Dera Raw Materials List 2023, which has now been published in German, is intended to help companies identify vulnerabilities and risks in supply chains, integrate them into risk management and, if necessary, rethink procurement strategies and develop fallback strategies for critical raw materials. To this end, the authors of the study define three risk groups from 1 (low risk) to 3 (high risk), into which they classify the raw materials and trade products examined. The weighting is based on the categories of country concentration and country risk.
A total of 36 metals, 27 industrial minerals, coking coal and 221 commercial products were considered in the current study. It was found that
- 46 percent of all mining, refining and trading products surveyed show increased potential sourcing risks in terms of weighted country risk as well as supply concentration,
- 40 percent of mine products are located in risk group 3, while only 25 percent are in the non-critical range. Steel refiners, special metals and precious metals (PGMs) are particularly affected by high risk, as are 26 percent of the industrial minerals surveyed. China is the largest mining country for 38 percent of the mine products. China ranks second or third for another 22 percent. This is a slight decrease from the last survey in 2021,
- 69 percent of refined products belong to risk group 3. China is also the largest producer of 90 percent of refined products. Brazil is the only producer of ferroniobium, Chile of rhenium and New Caledonia (French overseas territory) of ferronickel,
- 44 percent of the trade products examined are found in risk group 3. Here, too, China is the largest net exporter at 32 percent, with a slight decline compared to the 2021 figures.
China Remains an Important Partner
According to Dera, raw materials in risk group 3 react sensitively to market changes. In total, the group of raw materials with high potential sourcing risks comprises 140 products and thus 46 percent of all raw materials and intermediate products examined in the study - an indication of considerable supply concentrations and country risks.
China remains the most important mining country, producer and exporter of intermediate products, the study concludes. But countries such as South Africa (platinum) and the Democratic Republic of Congo (cobalt) also occupy dominant positions. For the first time, the 2023 Dera raw materials list distinguishes between refined products from primary and recycled raw materials. In the case of recycling, European and German producers are in the lead in many cases.
