As we move through 2015, the visibility of raw material supplies will become of increasing importance to leading companies across the value chain.
With many existing critical mineral mines long established, and in many cases depleted, the importance of bringing new resources to market is now paramount.
Emerging markets, led by disruptive technologies (smartphones, electric vehicles), advanced materials (graphene, light weight metals, advanced plastics) and renewable energy (solar, wind) will add strain to rigid supply chains that are not equipped to handle any significant change in a medium term period.
As a result of these changing dynamics, price volatility is commonplace for many minerals which is adding to the uncertainty surrounding raw material sourcing. With price volatility, it is important to stress that this does not mean consistently high cost raw materials, but the rate at which the price changes.
Volatility in the short term can be just as damaging as medium term high prices as it impedes the ability of both buyer and seller to plan for the future.
Stifling mines of tomorrow
Raw material buyers have been unwilling to commit to long term contracts in recent years owing in part to price volatility upstream and unpredictable demand downstream.
This is also stifling the mines of tomorrow that are heavily reliant on public funding to come to market. With volatile prices, new resources quickly move in and out of the economic viability window.
For the end user, supply chain visibility all the way upstream to the mine is becoming increasingly important.
Knowing not only who supplies your raw materials, but where these products are mined or created, with what expertise, at what cost and at what market price, is imperative to managing the risks to a modern day business in this field.
For example, if you are an electric vehicle manufacturer, the success of your product relies heavily on your batteries. And the success of these batteries relies on the intermediate cathode and anode products which in turn depend on steady and consistent supply of raw materials.
True understanding of how these supply chains operate and how they are interconnected can make or break a business