The impact of climate change on commodity production and trade

Metal extraction, fabrication, and trade play key roles in addressing climate change, as is the case with the electrification of things, and the goal of decarbonization. It is increasingly clear that these industries are also being impacted by climate issues that are resulting in changes in how organizations operate and plan. This thought piece will focus on just two examples impacting commodity supply chains.

The last few years have seen unprecedented wildfire risk in western Canada and the US. Since much of the North American mining capacity is also located in those specific geographies (combined in many cases with being in remote or forested footprints), companies have seen operational and infrastructure losses, disruption of critical power generation and supply, and displacement of headcount.

This situation has required firms to increasingly put more time, effort, and funding into wildfire mitigation planning. This risk analysis process can identify key assets, critical infrastructure most vulnerable in a wildfire situation, rethinking the placement of potential sources of ignition or fuel, historical weather and wind data, etc.

A second situation, also driven by climate change, is the drought conditions in Central America, causing water levels in Gatún Lake to fall significantly. What could possibly be the impact of that?

Gatún Lake is the middle passageway of the Panama Canal, and with this historical drought, shipping through the canal has dropped on average from 36 to 18 vessels per day. Of course, millions of tonnes of goods (including metals, semi-fabricated goods, and finished products) pass though this key point to ports up and down the east and west coasts of the US, Canada, Latin America, and beyond.

This overall slowing of the flow of goods is not beneficial to trade, the price and delivery of finished products, or of the efficiency of the global economy. Companies are looking at alternatives, but for maritime shipping, often there are few.

Of course, disruptions like this (or other impactful ones like regional conflicts, or natural disasters) must always be taken into account if possible when considering any future or strategic planning. MM Markets is across the drivers and factors which impact the materials world.

Thank you, and until next time!

Discover more:

MM Markets provide strategy and insight through market intelligence sourced directly from market participants. We cover trending and important issues such as recycling, substitution, competitor benchmarking, see the wide range of issues we cover?www.mm-markets.com.

If you would like to discuss a project with us, please do contact me?[email protected]?or?[email protected].