As you have already heard, one of the problems that is weighing on the industry the most is the scarcity of raw materials, such as metals and minerals, just when the economy seemed to recover after the pandemic. And it’s a difficulty that many companies like ours are forced to face.
The causes at a glance
Behind this difficulty in finding raw materials there are several factors, not necessarily negative, but which in such a particular period as the Covid-19 pandemic, influenced the entire process. Let’s see them.
- Economy (badly) planned: unlike most European and non-European states, China has distinguished itself in organization and foresight, supplying itself at the beginning of the pandemic, when prices had dropped by 20-30%
- Simultaneous restart: all companies stopped at the same time, worldwide, but they also restarted around the same time.
- Just in time logic: companies have got used to not accumulating stocks in order to be more efficient. But if all the countries start up again, with the warehouses of every continent empty due to the closures, it is easy to understand how the demand has suddenly exceeded the supply.
- Logistics: the prices of long-distance transport have increased, also due to the new regulation approved by the International Maritime Organization which required all ships to lower the share of sulfur in fuel oil
- Everything bubble: “inflated” prices in almost all sectors, which also influence the costs of raw materials in a cascade.
- Speculation: in a moment of crisis like the one we have experienced, it was convenient to invest in raw materials, because they can be easily resold and priced in the dollar, which is currently weaker than other currencies.
- Green and digital transition: it seems paradoxical, yet the transition towards sustainability has led to the massive demand for some raw materials, little considered, such as rhodium, a “rare earth” used for electrical connections and for the construction of catalytic converters.
What solutions are there to combat the scarcity of raw materials?
A point on which far too little has been done is to enhance the recycling activity of precious metals. Many countries know how to do it with plastic, paper and aluminum, but not with electronic waste, starting with cell phone batteries, which are instead recycled for us by China, this industry leader, against a payment, moreover.
In addition, lack of foresight was also shown in the creation of the ERMA – European Raw Materials Alliance, charged with building a common foreign and industrial policy to obtain concessions for the minerals our continent is scarce of, but arrived twenty years later than other in the extraction, for example, of cobalt. Despite this, the strategy is to become more autonomous, favoring the mining of metals present in Europe with advanced technologies. It will take time, but the situation is expected to settle within a few years.
Like many other companies in the sector, even in IMIT we have suffered from the scarcity of raw materials. Our advantage was to produce most of the components internally, with 100% recovery of metal waste, benefiting from the total management of the entire production cycle, independent of intermediate companies. We also bought long-term, trying to predict market developments as much as possible. Unfortunately, as far as electronic components are concerned, on the other hand, today there are no global signals such as to guarantee accurate forecasts.
The strategies we have implemented, however, seem to have managed to contain the inconvenience for our customers, except for some understandable delays.
We are waiting, like everyone, for the situation to normalize quickly, with one consideration: reading the causes of this crisis, it is easy to think that countries like China have been able to better manage the situation, forgetting that in the entire acquisition process they are involved Countries with more permissive legislation (eg pollution regulations) or to say the least backward (eg in Congo, for the extraction of cobalt and copper, where child labor is exploited). Perhaps the real challenge for the future is not so much the easy availability of raw materials, as respect for what surrounds us.
To stay updated on the latest news from the world of thermoregulation, follow the IMIT LinkedIn page and browse our blog. To find out more about our products, browse our website or download our catalogue. For further requests, send an email to email@example.com. Our staff will reply as soon as possible.