The resource crisis: Closer to the edge

In 15 years time, silver will run out. In 20-25 years it’s zinc and lead – and in 30-40 years it’s copper. These are critical resources for nearly all of our beloved consumer goods, including cars, electronics and those must-have gadgets.

I’m referring to REM – but not the rock band or something our eyes do when we sleep. REM also stands for rare earth metals, the stuff we need for smart phones, flat screen TVs, iPods, computers and the like. The known and accessible reserves of REM’s like neodymium or indium (10-20 years left) are becoming very limited – and 95 percent of them are produced in China

In a world of 7 billion people, however, resource scarcity goes far beyond precious metals and rare earth metals. The per capita availability of biomass and fresh water is rapidly declining. Phosphorus and phosphate, critical to global food production, are also under pressure -- and more than half of the world’s remaining, mineable reserves of that substance sit in one country, Morocco. And some large deposits of these essential minerals are currently found in areas awash in violence and political conflict, creating other issues.

Amazingly, the scale and urgency of the resource challenge has not yet dawned on the world’s decision makers. The reality is we are in the middle of a paradigm shift from a global economy competing primarily on labor – prices, competencies, productivity – to an economy competing on resource efficiency, reuse and our ability to replace rare and expensive materials with new and recyclable stuff.

Next Page: Corporations Taking the Lead

And it is not just that the global population is headed for 9 billion. We are seeing an amazing growth in the middle class in China, India and Brazil. A wonderful thing, certainly, but it’s a shift that has huge implications for sustainability. Already today we are seeing it unfold.  During the 20^th century, technology and innovation made commodity prices fall steadily. But in the last 20 years it is the opposite pattern. Prices have risen 147 percent since 2000, according to McKinsey’s latest milestone report, “Resource Revolution," an impressive pool of knowledge on “the resource shock” (brought to us by some of the same people, including director Jeremy Oppenheim, who hugely improved the fact base on global climate change.)

A few farsighted corporations have begun to proactively to address the issue of resource shock. They will be the first in what will be a flood of private sector actors in coming years. Experts and analysts agree that this will be a strategic change similar to when the private sector discovered the climate crisis.

British-Dutch Unilever made global headlines last year with their “Sustainable Living Plan”. Their targets are high (halving the environmental footprint of all its products in 2020), but the really interesting thing is the the competitive edge in resource efficiency, optimization, material innovation, substitution and recycling. The days when a 20% reduction of CO2 emissions satisfied the shareholders are ending.

Another European giant, Denmark-based Maersk Line, the world’s biggest shipping company, is taking resource efficiency to the largest scale. Its new Triple E-class cargo ships, being built at the Daewoo shipyard in Korea. They will be the biggest mobile constructions in the history of man – 400 meters long, 59 meters wide, each carrying an amazing 18.000 steel containers – and the vessels are constructed to be close to 100% recyclable. Steel is becoming so scarce that by the time Maersk expects to sell its ships over the next 15 years it will be good business to offer the market a ship that, by end-use, can be totally dismantled and reused. The design of the ship aims at recycling of not only its steel, but also metals (in electronic equipment) and fluids. Maersk is building 20 Triple E-class cargo ships following this recipe.

Over the last 10 years corporations have realized that optimizing energy use is good for business. Soon they will discover that this was only the tip of the iceberg. Energy is one of many resources that we will need to deal with in much the same way. Maersk and Unilever are leading the way. Others will follow.