Introduction
Supply security has been a recurring board topic since the pandemic. What is changing is its nature. Shortages look set to persist, and governments, led by China, are increasingly restricting exports of critical materials to serve their own strategic interests. New research from McKinsey, BCG and Bain shows the same picture: demand for key materials is outrunning supply, processing is concentrated in a few countries, and many industrial companies don’t know how exposed they are.
- McKinsey shows that the market is already tightening. Copper climbed past $13,500 per tonne by mid-2026 in a market running a deficit of about 10%, and rare earths face a deficit of more than 20%. At the same time, supply is concentrating with 9 of 13 critical, highly concentrated commodities now facing export barriers from a major producer.
- BCG expects the gap to widen. Demand for key critical minerals could reach 120% to 250% of forecast supply through 2040, driven by electrification, data centers and defense. Many companies underestimate their exposure because the risk sits in materials embedded in components that never show up in procurement data.
- Bain points to one response: circularity as a lever for resource security, not just sustainability. 80% of executives say circularity matters to their business today, a share expected to rise to 94% within three years. The first step is to quantify the risk exposure before choosing circular moves such as recycling or remanufacturing.
KEY TAKEAWAY
Scarce, concentrated and increasingly restricted: for critical materials, supply is no longer just a question of price.
Small Volumes, Big Dependencies
Switzerland has no commercially viable deposits of metals or rare earths, and its industry buys them mostly as semi-finished products and components, often from EU suppliers or parent companies. That masks the real dependency as many of these inputs originate in China, which refines around 90% of the world’s rare earths.
For the MEM industry, the exposure sits deep in the bill of materials: magnets in drives and motors, copper in windings and electrical equipment, specialty metals in sensors and electronics. Volumes are small, but substitution is slow, because qualifying a new material or supplier can take months or even years.
The timing matters. A pause in China’s tightened export controls on rare earths and related materials is due to expire in November, and the EU’s October talks with Beijing secured faster licensing, not guaranteed volumes. Switzerland is not part of the EU’s Critical Raw Materials Act and relies on open markets and its free trade agreements.
Bern’s position is clear: the Federal Council rejects targeted industrial policy and sees managing supply risk as a core task for companies. In other words, supply security is a management responsibility.
What This Means for Swiss Leadership Teams
Supply security becomes a leadership issue as soon as it involves trade-offs that go beyond procurement. How much supply risk is the company willing to carry, and how much is it prepared to pay to reduce it, through higher inventory, second sources or long-term contracts? That trade-off between cost and resilience belongs on the management agenda, based on a clear view of where critical materials enter the value chain.
The strongest levers also sit outside procurement, with product designs that allow materials to be substituted without lengthy requalification, pricing and contract terms that pass on material risk, and partnerships for recycling or joint sourcing.
In short: Procurement can manage supply, but only leadership can decide how much supply risk the company is willing to carry.
