Nearly one in four across the energy supply chain have seen projects deferred or cancelled due to critical mineral prices’ volatility – even when the project is otherwise healthy.
The survey that found this, by law firm DLA Piper, also noted that more than half of respondents described price volatility as a major constraint on investment – particularly in the UK, where energy storage is seemingly most needed to save the curtailed energy costing millions.
Oliver Wright, Energy and Natural Resources Partner at DLA Piper, said: “For years, companies have had to depend on supply chains they do not control, and recent volatility has shown how quickly pricing and supply terms can shift.
“For a lot of niche critical minerals there isn’t an index, so you can’t relay on index-based pricing. And where indices do exist they are often influenced by China. That’s why, based on our research, we expect the industry to shift what contracts are priced against, whether that is component-linked pricing, price floors or hybrid structures.
The report shows the industry is responding by bringing more of the supply chain in-house. 37% of developers are pursuing vertical integration to regain control over supply, as are 32% of mining and raw materials producers.
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