Report urges government to act on resource risks

Rare earth elements are among the materials considered to have supply chain risks. By Peggy Greb, US Department of Agriculture [Public domain]

A new report, ‘Materials for Manufacturing: Safeguarding Supply’, released today (8 July) by EEF, the manufacturers’ organisation, is urging the government to act upon the increasing risks to the UK’s supply of raw materials.

Echoing earlier calls from the Institute of Civil Engineers and others, the report calls for the establishment of an Office of Resource Management located in the Department of Business, Innovation and Skills (BIS) to strategically co-ordinate action across Whitehall, and for improved regulation of waste to extract the full value of materials.

The ‘end of an era’

Coming ahead of the Resource Association’s annual conference (9 July), the report highlights that the UK is approaching the ‘end of an era’ as its resource supply is put under strain by the global growth in middle-class consumers, increased demand for all commodities and ‘an over-reliance on China for strategic supplies’.

The report also raises concerns voiced by UK manufacturers that volatile material prices and security of supply pose a threat to economic growth, confirming that the UK faces ‘escalating risks.’

Susanne Baker, Senior Policy Advisor at EEF, said: “As we approach the end of an economic era we cannot afford to be left underprepared and overexposed.

“Manufacturers have sounded the alarm over the growing risks to material supply and others are now picking up the clarion call. But while competitor nations are already taking evasive action, our government is in danger of burying its head in the sand.”

UK government ‘lagging behind’

EEF’s report claims that the government ‘responded weakly’ to the increasing awareness of resource supply risks.

In May, the EU increased the list of critical materials with supply risks from 14 to 20. These materials have various end-usages in Europe including: consumer electronics and telecoms products, engineering and construction, agriculture, aerospace and steel, and aluminium production.

The EEF report states the UK is ‘lagging behind’ competitor manufacturing nations, such as Germany and the USA, that ‘have already implemented sophisticated resource strategies seeking to minimise supply risks, enhance resource productivity and regulate waste for economic value’.

Office for Resource Management (ORM)

EEF’s recommendation to create an Office for Resource Management located in BIS aimed to ‘drive a coherent vision and policy response to resource security’, with the intention for the ORM to act as ‘a central point of expertise and “resource-proof ” policy across Whitehall’.

In addition, the report specifies that the office would ‘lead on an update of the Resource Security Action Plan (RSAP)’ in order to inform policymaking and direction across government.

This may take the route of long-term planning and scenario exercises, economic forecasts, innovation and infrastructure needs assessments.

Further recommendations

Alongside the establishment of the ORM, the EEF is urging the government to act to mitigate material supply risks by: thoroughly and regularly assessing material supply risks and vulnerabilities; and providing stronger incentives for resource efficiency to help overcome market failure.

Baker added: “Resource security is dynamic and complex. It requires a flexible response working in close cooperation with industry and other stakeholders. But key to this must be a joined-up, thought-through approach across relevant policy areas. Given how crucial material supplies are to the UK’s wealth and economic stability, there is clear case for a new Office of Resource Management to act as a central hub of expertise, data and stakeholder liaison and to co-ordinate the UK’s response to these risks.”

Although the government launched the Circular Economy Task Force as part of the strategy to deliver the Resource Security Action Plan, published in 2012, the report contributes to increasing demand upon the government to take further action to improve resource security.

The Material Security Working Group, including British Glass, EEF, UK Steel, the Resource Association and Friends of the Earth, sent a joint letter to Whitehall in August 2012 calling for ‘urgent action’ to avoid raw material shortages, while more recently shadow Minister for the Natural Environment, Barry Gardiner MP, also called for improved resource security.

The global resource crisis

‘Materials for Manufacturing’ highlights that globally, the consuming middle classes are expected to swell from 1.8 billion people to 4.9 billion by 2030 with a demand for all commodities expected to rise from 30 to 80 per cent in the same time.

However, the UK’s supply of essential materials – ranging from silicon metal and rare earth elements through to coking coal – is concentrated.

The report continues to state that the 100-year decline in resource prices has reversed over the last decade as demand for commodities has surged, while the minerals and metals vital to British manufacturing are increasingly supplied by China, which produces 22 of 38 elements of strategic economic value to the UK.

European action

Following its identification of critical materials in 2010, the EU published a ‘Roadmap to a Resource Efficient Europe’ in 2011, which called for a transformation of the whole economy

The Critical Raw Materials Innovation Network (CRM_InnoNet) has also been launched to drive progress, as well as the European Resource Efficiency Platform to provide ‘high level guidance’ to member states and businesses alike.

Read more about the resource and critical materials crisis in Resource.