CDP, Raw materials, analysis,

The price increases are attributable to four types of factors: economic, structural, geopolitical, speculative.

In Europe, the supply of most of the critical raw materials – those essential for the energy transition – is met by third countries.

To ensure a secure and resilient supply, it is crucial to invest in innovation, diversify supplies and strengthen the circular use of resources.

What factors have led to the sharp rise in raw material prices, what role will the energy transition play on future needs and what are the prospects for the European economy. These are the main issues on which the new brief from CDP analysts entitled? What happens to the materials? ￴ From April 2020 to December 2021, the increases in the price lists were extraordinary, both for energy raw materials and for agricultural and industrial ones: + 1,692% natural gas, + 108% soybean oil , + 89% copper.

The reasons for the increases are attributable to cyclical, structural, geopolitical and speculative factors:

among the economic factors, the analysis highlights first of all the imbalance between supply and demand but also the cuts in oil production by OPEC + countries, extreme climatic conditions and other adverse events;

the structural causes include the strong increase in the demand for commodities necessary to achieve the objectives connected with the ecological transition;

among the geopolitical factors emerge the preponderant weight of a few players, as well as the occurrence of some destabilizing events that have slowed down the global supply chains;

finally, among the speculative factors, it should be taken into account that numerous commodities act as financial assets and financial speculation has amplified the upward pressure on their prices.

In Europe, the supply of most of the critical raw materials – such as copper, nickel, lithium, cobalt or manganese – is met by third countries: over 98% of rare earths from China, 87% of lithium from Australia, 71% of the platinum from South Africa.

One option for Europe is to invest in innovation, diversify supplies from third countries and strengthen the circular use of resources, in order to ensure a secure and resilient supply of raw materials.

In particular, Italy already has a competitive advantage, being the European country with the highest percentage of recycling out of all the waste collected.

Rome, February 21, 2022

Source Cassa Depositi e Prestiti