Supply problems for rare earths as early as 2025: Deloitte sees raw material risk facing the industry.
Management consultancy Deloitte expects shortages in the supply of gallium and germanium in the coming year, followed by rare earths in the following year, according to the 2024 outlook for the technology sector. Although there have been occasional shortages of raw materials in the past, the industries affected are now much more critical for the economy. The expected impact is correspondingly more significant. Moreover, it’s not just individual resources that could become scarce, but dozens simultaneously.
One reason for this development is the constantly growing demand for materials such as lithium and cobalt, without production capacity being able to keep pace. In addition, there are geopolitical risks, such as tensions between the West and China, the raw materials superpower. Deloitte refers to the export controls for gallium and germanium and fears that the export of rare earths could be regulated more strictly. These measures are seen as a reaction to the U.S. attempt to cut off the People’s Republic from the supply of the latest generation of computer chips.
In the long term, new mining and smelting plants can secure the supply of technology metals and rare earths. In the short term, Deloitte advises more recycling, digital supply chains that can identify supply problems early, and, finally, stockpiling strategically important resources. The management consultancy estimates the cost of a stockpile of high-purity gallium that could supply the U.S. or the EU for three years at $30 million.
Photo: iStock/Mykola Pokhodzhay