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Until war erupted on 28 February with the Israeli-US bombing of Iran and counterstrikes across Gulf States, a wide range of key minerals and related products was available, according to the UN Economic Commission for Europe (UNECE).<\/p>\n
But as the conflict goes on, the pressure has increased to obtain these same raw materials, to ensure the continuing production of everything from semiconductors to solar panels.\u00a0<\/p>\n
The result has been higher prices on commodities markets and a potential pivot to new production sites where there\u2019s less geopolitical uncertainty, increasing the number of countries that can process minerals such as rare earths.<\/p>\n
\u201cThe impact of the Gulf War, it is not only in the energy market, it’s been impacting some sub-products coming from oil<\/strong>\u201d such as sulphur, helium and naphtha – said Dario Liguti, Director of UNECE\u2019s Sustainable Energy Division.\u00a0<\/p>\n All are byproducts of oil refining and used in a wide range of manufacturing applications, from fertilizers to insecticides, plastics and matches, along with cooling and semiconductor production.\u00a0<\/p>\n Naphtha is another byproduct of oil refining and a key building block of the chemicals industry.<\/p>\n \u201cThe first reaction \u2013 besides of course the increase in prices \u2013 will be industries lowering their use and therefore lowering their production<\/strong>\u2026whether it’s solar panels, whether it’s magnets, whether it’s batteries, et cetera, going forward,\u201d Mr. Liguti maintained.<\/p>\n Before the war, a full 30 per cent of the world’s production of sulphur – which is used in metals processing – transited through the Strait of Hormuz.\u00a0<\/p>\n But that was when some 140 ships per day transited the crucial trade waterway. Today, shipping is at a virtual standstill, following attacks on vessels and an ongoing stand-off between Iran and the US over use of the strait.\u00a0<\/p>\n If the conflict situation continues, shortages in key minerals \u201cwill become evident\u201d, the UNECE official continued, forcing industry \u201cto lower their production\u201d of critical minerals used in renewable energy equipment and digital technology.\u00a0<\/p>\n \u201cTherefore over time, that will have an increasing impact on prices first\u2026and then secondly on the availability of that equipment.\u201d<\/p>\n Today, industries that relied on supplies from the Strait of Hormuz \u201care using their existing stocks and they’re using the reserves and they’re ramping up production elsewhere<\/strong>\u201d, Mr. Liguti said.<\/p>\n He highlighted a \u201cdrive from many Member States around the world to secure those minerals\u201d which will result in countries increasingly building \u201cstrategic stocks\u2026to avoid a similar disruption in future.<\/p>\n \u201cSo far, the situation is being felt in some regional markets, particularly in South Asia and Southeast Asia, where there is a lot of refining and processing going on of these initial commodities. But over time, the geographical scope will become larger.\u201d<\/p>\n In addition to the massive human cost of the war, the UNECE official noted how the oil and natural gas crisis also threatens to undermine the global shift to green energy sources.<\/p>\nHunt for new suppliers<\/strong><\/h2>\n