An alternative view: the opportunities from raw material risk

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A review of the availability risks to resources in the UK first highlighted, by Defra in late 2010, the increasing need to be more resource efficient is gaining momentum.

This is something that has been on the horizon for a while and I have been anticipating would become more and more of an issue for businesses as they face increasing costs and supply chain shocks due to ever constraining resources.

An EU consultation on resource efficiency policy found the majority believe that price of resources will increase by 2020; and in the long term Europe is likely to face shortages.

Just this week, the Commission announced, in its draft roadmap “to a resource efficient Europe”, the possibility of introducing resource efficiency targets in response to this growing concern. However this roadmap has been criticised for its vagueness.

So is this something that we really need to be concerned about or is this something the market itself will respond to without regulatory intervention?

Defra's report certainly paints a bleak picture of the future of resource availability and the risk to UK business. Not only are there shortages of some vital resources in the pipeline, but there are political risks as well, with China currently holding 97% of the world's rare earths, and continuing to stockpile.

However, with every risk, there is an opportunity to be sought. Political risk aside, increasing demand for goods and services coupled with harder-to-reach resources will always lead to demand exceeding supply. There is an opportunity to innovate to use alternative materials and resources that are more readily available and cheaper.

This is certainly an opportunity when innovation in the materials used in production give a company competitive advantage over another because they have more stable supply chains and cheaper costs.

And the sooner this is started the less painful any potential forthcoming legislation will be.

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