From jets to satellites: the impact of supply disruptions

From F-35s and nuclear submarines to commercial aircraft, drones and satellites, manufacturing advanced technologies typically needs high purity and quality critical minerals. For example:

• Rare earth elements (REEs) are needed to produce strong alloys used in aircraft engines and missiles.
• Lithium is needed to produce light, high-performance batteries used in unmanned aircraft and satellites.
• Silicon is used to create semiconductors which are integral to electronic systems, such as navigation, communication and flight control systems.
• Platinum group metals are used in the manufacture of rocket engines and other space technologies.

However, access to these minerals is usually through complex and volatile supply chains that are sometimes associated with environmental, social and governance (ESG) matters.

Much of this stems from the monopolies of supply. Critical minerals are extracted in a small number of often challenging jurisdictions, and only a handful of countries have built the capabilities to refine them to the quality required for advanced technologies. For example, just three nations control approximately three quarters¹ of global cobalt, REE and lithium output.

Such challenges can make the supply chain vulnerable to disruptions from geopolitical events, extreme weather, trade disputes and malpractice, and managing them is often difficult due to a lack of visibility in the supply chain. Moreover, these risks may intensify as international competition for critical minerals increases, and supply chains struggle to adapt and expand to meet the six-fold² increase in demand provoked by the energy transition by 2050.

The risk these challenges pose to the A&D sector was identified in the 2023 refresh of the Integrated Review of Security, Defence, Development and Foreign Policy.³ Securing access to critical minerals by resolving these supply chain challenges is a key pillar to developing ‘security through resilience.’

United Kingdom action to address supply chain disruptions

The United Kingdom has developed a critical minerals strategy to help secure a resilient and sustainable supply of critical minerals. This focuses on:

• Increasing domestic capabilities
• Collaborating internationally to help diversify and build new supply chains
• Enhancing international markets – chiefly by making them responsible and sustainable

Progress is already being made – a domestic rare earth separation facility and lithium refinery is being developed to help diversify the supply chain.⁴ In addition, a New Task & Finish Group on Critical Minerals Resilience has been set up to help support UK industry and key manufacturers – including those in A&D – and to help develop resilience in their supply chains.⁵

Three key considerations to help build supply chain resilience

The time is now for A&D companies to consider how they can source a robust, responsible and sustainable supply of critical minerals. Here are three key things to consider:

• Improve supply chain transparency and traceability: Mapping software and blockchain technologies could help enhance the transparency of your supply chain and traceability of critical minerals through it, while at the same time making the process simpler and more cost- effective.
• Boost ESG performance in the supply chain: Use data collected through improved transparency to help create a robust ESG data strategy and inform your compliance framework. This should help limit supply chain disruptions, keep abreast of regulatory and sustainability requirements, and have a positive impact on stakeholder engagement.
• Develop circularity: Preserve and help maximize the use of critical minerals by integrating circular design principles. This includes designing for durability, using less toxic materials to facilitate re-use, building with modularity to enable repair and maintenance, and creating a strategy to bring critical minerals back to the production stage.

To continue learning about critical minerals, what they could mean for global economies and how companies can respond to the challenges within their supply chain, check out Deloitte UK’s critical minerals article series.

Please get in contact with us to discuss how your organization can improve supply chain resilience to help secure better access to critical minerals

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