A new report by PwC has highlighted the growing climate risks that could disrupt the global production of six essential commodities — lithium, cobalt, copper, iron, zinc, and aluminum — critical to the global economy.
The analysis, which focuses on the Asia-Pacific Economic Cooperation economies, warns that heat stress and drought linked to climate change could severely affect production in some of the world’s largest commodity-producing countries, including Australia, Chile, Peru and China.
Climate Change Will Intensify Supply Chain Risks
According to PwC’s findings, APEC economies — already central to global supply chains — will face escalating risks in the coming decades.
These six commodities are fundamental to industrial sectors and technology, energy systems, electronics, transport and infrastructure development.
With APEC nations accounting for a significant share of global production — particularly for lithium, copper and zinc — the report emphasizes that climate-driven disruptions could have far-reaching implications for businesses worldwide.
The report reveals concerning projections for climate-related threats, particularly the impacts of heat stress and water scarcity, which are expected to increase significantly by 2050.
For instance, in the case of lithium mining in Australia, drought risks are predicted to affect 68 percent of production by 2050, up from virtually none today, even in an optimistic low-emissions scenario.
Similarly, copper production in Chile and Peru, two of the world’s largest producers, is poised for severe drought exposure, with up to 41 percent of Peru’s copper production at risk by 2050.
Australia’s Vulnerability: A Wake-Up Call for Global Markets
Australia’s role as a leading producer of multiple essential commodities, including lithium, iron, and zinc, puts it at the heart of the climate risks outlined in the report.
In a high-emissions scenario, nearly half of the country’s bauxite production could face extreme heat and humidity by 2050, a stark increase from current levels.
For lithium, the report forecasts that significant drought risk will impact more than two-thirds of Australia’s production by mid-century, emphasizing the urgent need for companies to reassess their supply chain resilience.
Chile and Peru: Adapting to Drought Challenges
In South America, both Chile and Peru are facing unprecedented drought risks. Chile, the world’s largest copper producer, could see 72 percent of its copper output exposed to significant drought risk as early as 2035.
In response, some Chilean mining companies are investing in desalination technology to mitigate water shortages.
These adaptations, while promising, underscore the urgent need for businesses to develop strategies to safeguard against worsening climate impacts.
Mexico, Canada, and the US: Escalating Drought Threats
Mexico, Canada, and the US are also projected to experience rising levels of drought risk. By 2050, up to 87 percent of Mexico’s copper production could be exposed to high drought risk, with similar threats to iron and zinc.
Meanwhile, the US faces significant risks to its iron and copper production, particularly in drought-prone areas like the Southwest and the Great Lakes region.
While some areas may benefit from increased precipitation due to climate change, much of the US will see heightened vulnerability to water shortages, especially in producing copper and zinc.
Business Leaders Must Act Now to Build Resilient Supply Chains
The report calls on business leaders urgently preparing for these climate impacts by implementing strategies to enhance resilience and reduce exposure to climate risks.
PwC outlines three critical steps for businesses: 1) identify and manage climate risks within their supply chains, 2) seize opportunities to innovate and create more climate-resilient business models and 3) collaborate with governments, communities and other stakeholders to shape systemic climate adaptation solutions.
The report also emphasizes that future emissions reductions alone will not be sufficient to shield businesses from the effects of climate change.
Even in the best-case emissions scenario, risks to essential commodity production will continue to rise, underscoring the need for proactive adaptation efforts.
Urgency in Adaptation
With climate change already disrupting supply chains across the globe, PwC’s report serves as a wake-up call for companies that depend on these six critical commodities.
Business leaders are encouraged to take immediate action to protect their operations and supply chains by addressing the twin threats of heat stress and drought, which are expected to intensify in the coming decades.
As the world shifts toward a low-carbon economy, those industries and nations that can adapt quickly to these new climate realities will be better positioned to thrive in the face of growing disruptions.
The stakes could not be higher, as the future of global commodity production depends on how businesses respond to these climate challenges today.
