Trade havoc
The global COVID-19 pandemic has been a stark reminder of the fragility of global supply chains – bringing huge delays, shortages and price squeezes to the world’s trade. And yet recently, just one ship – albeit a 400-metre-long, 220,000-ton juggernaut of a container ship – that became horizontally wedged in the Suez Canal trade artery in Egypt for nearly a week, also wreaked unexpected and unprecedented havoc.
$9bn daily delays
An estimated 12 percent of the world’s seaborne trade travels through the Suez Canal. A key transit point between East and West, 20,000 ships pass through it yearly (approximately 50 a day), carrying everything from oil and gas to machine parts and consumer goods. The impact, therefore, of the ‘Ever Given’ being blown off course by high winds and stopping vital trade from travelling the quick way was monumental. According to Lloyd’s List, more than $9 billion worth of goods each day were unable to pass through the waterway for six days running. Some of the ships ended up taking a 5,000-kilometre detour via the Cape of Good Hope in South Africa; a voyage that takes an arduous and costly week more – at least.
A global phenomenon
In the words of third party risk and compliance expert, Brian Alster, the ripple effect “will have continued ramifications for global supply chains in the weeks to come. The disaster of the moment becomes a global phenomenon, because it is yet another reminder of the interconnectedness that comes with globalization and our reliance on each other as contributors to the global supply chain.”
Closer to home?
Given the global supply chain strains of the past 12 months, it’s clear we need to lessen our reliance on far flung places for critical materials, wherever possible. For example, clean energy technologies are becoming increasingly more important by the day, as many countries make progress towards more sustainable futures. And yet, in 2019, it was estimated that China possessed 3.2 billion tonnes of phosphate rock – needed for environmentally-friendly fertilisers. It’s also the world’s top vanadium producer; vanadium makes it possible to store vast amounts of renewable energy. If Europe is to forge ahead on its ‘Green Recovery’ plans, to avoid supply chain risk, it needs to find sources closer to home. And that’s where experts like Norge Mining can play a strategically important role in the future.
‘Commodity quagmires’
In its recent ‘Tracking the Trends 2021 report’, Deloitte refers to this scenario as commodity quagmires. According to its analysis: “Geopolitics, the rise of nationalism, and cross-border supply chain risks are expected to reshape global supply chains. This could result in mining companies strengthening the resilience and agility of their supply chains and, in some cases, regionalizing the supply chains of critical inputs, to mitigate risk and drive more local employment.”
A more predictable future
Creating supply chains closer to Europe – more protected from geopolitics and unexpected fragility – is a huge priority for us, as the scale of our deposits of EU Critical Raw Materials vanadium, phosphate and titanium has now been formally verified. In the future, a greater focus is needed on more predictable trade – and more predictable operations. A pandemic and a ship blockage aside, shipping of commodities and strategic materials are vulnerable to many different threats: adverse weather, war and blockades, to name but a few. The concept that geography doesn’t matter has lost its clout, it seems. And the latest Suez fiasco is just a snapshot of the chaos that can be unleashed in supply chains that span the world.
