Michael Wurmser

Founder

Nyheter

Davos 2024: An air of urgency on supply security

30/01/2024

I’ve attended many World Economic Forums (WEF) before. However, this year, a heightened atmosphere of concern about supply security was undeniable. This, given the backdrop of conflicts in the Middle East. As the talks were held, global supply chains faced severe disruption once again – with the world’s biggest shipping companies diverting journeys away from the Red Sea. A vital route from the south to reach Egypt’s Suez Canal further north.

Global food security

In addition to this – the ongoing Russia-Ukraine war. Following the invasion, many nations imposed sanctions on Russia. But, together with Belarus, the country is one of the largest sources of mineral fertilisers. In 2023, shortages were compounded by export restrictions imposed by China, which accounts for 30% of global phosphate fertiliser supplies. Phosphate security equals food security. And any tightening of access to this vital commodity is therefore an urgent challenge for countries to grapple with.

Mega trends challenges

It’s unsurprising, then, that as business and political leaders met in Switzerland, supply chain security has become one of the greatest challenges – influencing geo-politics and therefore strategic partnerships. I’d go as far as to say security was the word of this year’s WEF – underscoring the importance of international cooperation to build a resilient and sustainable future for global agriculture, as well as power storage capacities. The need for responsibly sourced, pure-grade phosphate (an EU Critical Raw Material) is certainly shaping what we do with our deposits in southern Norway – of what’s often called ‘white gold’.

Only as strong as your weakest link

Amid the surging need for phosphate fertilisers for food security, the European Union is seeking to reduce its dependency on foreign supplies as part of the EU’s Critical Raw Materials Act. Phosphate is also used in Lithium Iron Phosphate batteries for Electric Vehicles. Attending the WEF, Diego Pavia the CEO of the EU-backed European Battery Alliance, InnoEnergy, explained, «Any value chain is as strong as the weakest of its links and today the weakest of the links is the upstream.»  This rings true for all supply chains – whether for battery or agri-industries.

‘Biggest task ahead’

Meanwhile, Vice-President of the European Commission Maroš Šefčovič said in a statement that securing raw materials was «the single biggest task ahead”. And this was certainly a hot topic of discussion throughout my time at Davos.

The EU’s Critical Raw Materials Act is due to come into force soon. This will usher in new targets for the minerals and metals Europe needs both in terms of food security and another, concurrent global mega challenge – the energy transition.

‘Painful lessons’

With this in mind, the Critical Raw Materials Act (CRMA) is designed to empower Europe and reduce its reliance on China for such products and the key minerals they contain. It follows ‘painful lessons the EU has learned during the COVID-19 pandemic, when the supply of essential goods dried up”. As Russia’s invasion of Ukraine demonstrates, supply chain fractures can affect a raft of food commodities, not just fertiliser ingredients – for example, sunflower seed oil, barley, maize and wheat.

Shifting supply chains

Collaboration and partnerships between government, industry, business and civil society are the very purpose of the World Economic Forum, while globalisation used to be its raison d’être. And yet, verticalisation of supply chains is now the focus for greater supply security in the future. Western economies will undoubtedly continue to see supply chains shift wherever possible, and as quickly as possible. It’s also increasingly clear that Norway will become more strategically important than ever regarding Europe’s supply security and ability to meet Net Zero.