Raw materials: From mine to consumer goods

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Minerals, raw materials, precious metals, and rare earth elements provide the foundation of all completed things we use in our everyday lives, from cutlery to phones and computers, electric cars to wind turbines, solar panels, and electrical cables that power our activities.

These basic commodities are becoming more important in global economies. Why? What role will they play in a carbon-neutral future, and how is the EU planning to assure access to safe and dependable supplies?

To begin answering these problems, let us define raw materials.

What exactly are raw materials?

Raw materials are unprocessed natural resources, whether metallic or nonmetallic, that are processed and utilized to manufacture finished commodities. They are critical for a robust industrial foundation as well as for international commerce and economic progress.

A typical categorization distinguishes three categories of raw materials based on their extraction process: mined (iron ore, nickel, cobalt, precious metals, and so on), plant-based (wood, resins, wheat, maize, and so on), and animal-based (milk, meat, and so on). They become important components of a product's main manufacturing process after being processed and transformed.

Another distinction is made between direct and indirect materials. While direct raw materials, such as wood for a table, are directly used by a company in the manufacturing of end products, indirect materials, such as rare earths used to manufacture permanent magnets, which are a critical component of wind turbines, contribute to the production process of a finished good. Some of these raw materials are also considered primary commodities and are traded on raw exchange markets or factor markets since they are used as production factors by specific firms.

Because most minerals have a very inelastic supply, producers cannot quickly ramp up output to match variations in demand. This can lead to price increases when demand outpaces supply. For example, lithium carbonate, a critical ingredient needed to make cathodes for electric vehicle batteries, had a 496% year-on-year price rise in 2021 due to supply problems and rising demand.

Companies are now diversifying their supply sources and investigating stockpiling and acquiring buffer inventories from suppliers to address supply shortages and limit exposure to volatility in global markets.

Increased recycling, which results in secondary raw materials, is another option for businesses. Recycling reduces mining requirements and expenses, improves waste management, and contributes to a more sustainable circular economy across numerous industries.

Raw materials utilized in the power sector are given as examples.

Among the numerous materials and minerals utilized along the electrical value chain are:

Steel of the highest quality

An alloy composed of steel and other components that improve its strength, hardness, and wear resistance. It is an important component of transformers, which are used to change the voltage of electricity from high to medium or low, allowing power traveling through transmission lines to reach distribution networks, which subsequently supply electricity to companies and people.

Copper is an electrically conductive, malleable, and corrosion-resistant metal that is used in a variety of applications, such as circuit boards, batteries, connections, and distribution cables that transport power to customers.

Aluminium

Thanks to its lightweight and corrosion-resistant properties, aluminum is widely used for wind turbine production.

These figures alone highlight the importance of raw materials for a carbon-free economy powered by clean and renewable electricity.

Why do we need raw materials for decarbonization?

Human activities, principally through emissions of greenhouse gases (GHG), have unequivocally caused global warming, with average global surface temperatures already 1.1°C above pre-industrial levels. Every increment of temperature increase will intensify multiple and concurrent hazards. While some future changes are unavoidable and irreversible, others can be staved off through rapid annual.