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Government warned to act over growing risk to material supply

15 July 2014

EEF, the manufacturers' organisation, is warning the Government to act over the growing risk to material supply as the UK approaches the 'end of an era'.

A new report – Materials for Manufacturing: Safeguarding Supply – by EEF warns the Government to act over escalating risks to the UK’s supply of essential materials. It says that the global growth in middle-class consumers, increased demand for all commodities and an over-reliance on China for strategic supplies, is leaving the UK vulnerable. But, while other manufacturing nations have strategies in place to shield their economies from resource risks, the UK is lagging behind.

Globally, the consuming middle classes are expected to swell from 1.8 to 4.9 billion people by 2030. Demand for all commodities is expected to rocket by 30 to 80% by 2030. However, the UK’s supply of essential materials – ranging from silicon metal and rare earth elements through to coking coal – is concentrated. China is the leading supplier of materials to the UK, producing 22 of 38 elements of strategic economic value. These are minerals and metals that are vital to British manufacturing. 

The report cautions that we are coming to the end of an era. During the 20th century resources became progressively cheaper and this underpinned global economic growth. At the same time, growing demand was offset by expanded supply and increases in productivity. This no longer appears to be the case – the past decade has reversed a 100-year decline in resource prices as demand for commodities has surged. 

In 2010 the EU deemed 14 materials to have supply risks. This has now increased to 20 and includes materials used in consumer electronics and telecoms products, engineering/construction, agriculture, aerospace and steel and aluminium production, to name just a few. Competitor nations, such as Germany and the USA, have already implemented sophisticated resource strategies seeking to minimise supply risks, enhance resource productivity and regulate waste for economic value. The EEF says the UK Government has so far responded weakly. 

EEF is now urging the Government to move to mitigate material supply risks by: 

•  Establishing an Office of Resource Management to strategically co-ordinate action across Whitehall

•  Thoroughly and regularly assessing material supply risks and vulnerabilities

•  Providing stronger incentives for resource efficiency to help overcome market failures

•  Regulating waste so that we extract more economic value from what we discard.

Susanne Baker, senior policy advisor at  EEF, says: "As we approach the end of an economic era we cannot afford to be left under-prepared and over-exposed. 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.

"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 a 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.”