By Steve Bochanski, Emma Cox, and Lit Ping Low

Preparing for climate risks to key commodities: What businesses should know

  • Insight
  • 12 minute read
  • April 30, 2024

PwC research shows how heat stress and drought imperil the production of critical minerals, food crops, and industrial metals. Companies can limit disruption by acting now.

For companies that depend on crops such as rice and wheat or minerals such as lithium and iron, climate change has become a real and present threat. Rising temperatures result in more heat stress and more drought. That puts pressure on farms and mines—and, ultimately, the businesses that buy from them.

Take cobalt. As renewable-energy generation expands, makers of solar panels, batteries, wind turbines, and other hardware need more of this critical mineral. From 2017 to 2022, world cobalt demand grew 70%, and the share being used in clean energy tech nearly doubled, according to the International Energy Agency. Demand for critical minerals could double again by 2030.

Meanwhile, the world’s cobalt mines are likely to face more climate stress. Analysis for a PwC report shows that none of the world’s cobalt mines face significant or higher levels of drought risk today. But our projections suggest that in 2035, the mines that now produce 20% of all cobalt would face significant, high, or extreme drought risk—even if global carbon emissions fall substantially. By 2050, the share of current production facing these risks would climb to more than 70%.

And cobalt is just one product that could come under strain. Producers of nine commodities that we analyzed—three critical minerals, three crops that make up a large share of global food supply, and three metals used extensively in industry—can expect worsening heat stress and drought in the years ahead.

Mindful of these challenges, forward-looking companies have begun safeguarding their operations and supply lines against climate-related disruptions. Many are also exploring business opportunities and working across sectors to shape better outcomes. A climate-stressed future won’t be easy for businesses. But companies that get ready now can improve their chances of coming out ahead in challenging conditions.

Pressure points: How heat and drought could affect commodity production

Heat stress and drought pose risks to mining and farming. Heat stress makes it hard, even dangerous, for people to work outside, potentially leading to lower labor productivity and to negative health impacts. And drought can curb the supply of water for crop irrigation, agricultural processing, ore extraction, mineral processing, and dust control. Lithium mining, for example, is a particularly thirsty operation: mining one ton takes 2 million liters of water.

Knowing how powerful these effects can be, we sought to understand how they might play out in areas responsible for producing selected critical minerals (cobalt, copper, and lithium), food crops (maize, rice, and wheat), and vital metals (bauxite, iron, and zinc). To do this, we located major production sites and estimated how much of each commodity they currently produce.

Then, we mapped current and projected levels of drought and heat stress onto those sites for the years 2020, 2035, and 2050 (for more, see the sidebar “Methodology in brief”). This allowed us to calculate the shares of current global production that would be exposed to three categories of risk in each year:

Risk category


Heat stress


20% of time in severe drought, over the 20-year span centered on each year being analyzed

At least ten days per year with an average daily wet bulb globe temperature (WBGT) of 26.3°C (79.3°F)


40% of time in severe drought, over the 20-year span centered on each year being analyzed

At least ten days per year with an average daily WBGT of 28.9°C (84°F)


80% of time in severe drought, over the 20-year span centered on each year being analyzed

Each year, an average daily WBGT of 32.2°C (90°F) occurs on one or more days

“Severe drought” refers to periods when the Standardised Precipitation-Evapotranspiration Index is −1.5 or lower. Drought risk is estimated over a 20-year time frame because droughts occur episodically: some droughts last for years, and other multiyear periods may pass without any drought conditions. “Significant” does not refer to statistical significance.

Our analysis led us to three conclusions. First, many locations that produce essential commodities are likely to experience more episodes of intense drought and heat stress in the coming years. Second, some locations are already experiencing rapid changes in risk levels, suggesting that businesses must adapt quickly. Finally, even in a low-emissions scenario, major commodity-producing regions will likely see climate impacts intensify.

Critical minerals

Of the two climate hazards we examined, drought is likely to pose the greater risk to critical mineral production over the next 30 years. Our mapping suggests drought risk will rise in Australia, the Democratic Republic of Congo, Chile, and Peru—all the main centers of current production. By 2035, copper and cobalt mining locations will see drought risk rise from the present low levels. And 15 years later, under both low- and high-emissions scenarios, the situation will be even more acute: more than 70% of cobalt and lithium production and more than 50% of copper production will face significant or higher levels of drought risk.

Food crops

For rice, maize, and wheat production, our mapping shows that both heat stress and drought present rising risks—heat stress especially. Rice production already has extensive exposure to heat stress and stands to face the most widespread and serious risks of the three crops. In a high-emissions scenario, about 90% of rice production would be exposed to significant, high, or extreme heat stress risk by 2050.

Drought risk is also increasing sharply for key crops. Less than 1% of maize and wheat production currently face significant or higher drought risk, but by 2050, the proportions rise to more than 30% and more than 50%, respectively, in a high-emissions scenario.

Vital metals

Miners of the three vital metals we studied—iron, bauxite (the main ore of aluminum), and zinc—face rising risks of drought and heat stress in all of their main production sites in China, Brazil, and Australia. Our research suggests that by 2050, more than 60% of the world’s iron and bauxite production may face significant, high, or extreme heat stress risk, even in a low-emissions scenario. In a high-emissions scenario, 40% of the world’s zinc production may face significant or higher drought risk.

Emerging solutions: How leading businesses prepare for climate risk

More and more businesses are responding to the challenges posed by climate change. In PwC’s 27th Annual Global CEO Survey, 47% of respondents said their company had taken measures to safeguard its workforce and physical assets against climate risk—up from 17% the year before. Here, we explain how companies are progressing on three fronts.

Enhancing resilience

Resilience to heat stress and drought means being able to anticipate, manage, and recover effectively. Leading companies take a structured approach to building resilience.

To begin, these companies identify risks relevant to their business and operations, including risks in supply chains. These may extend beyond immediate climate threats to include impacts such as new regulations or changes in market prices. In 2023, for example, the price of rice exports went up after the government of India banned exports of non-basmati white rice, partly due to fears of domestic shortages caused by the El Niño weather pattern.

Once climate risks are identified, forward-looking companies plan adaptation measures and work with others to implement them. They also look for technology solutions to support production at scale and prepare for rising risk exposures.

Readiness story: Lithium mining in Chile

Chilean mines in 2020 produced 25% of the world’s lithium, according to our analysis. By 2035, many will face a high risk of drought, adding to significant levels of water stress in some communities. In anticipation of this risk, several mining companies in Chile have found a new way to source essential water supplies: through desalination of seawater. In 2023, there were 22 desalination plants running in Chile, and plans for nine more.

Capitalizing on opportunities

Mitigating the impacts of heat stress and drought is not just a strategic and operational challenge. It can also catalyze opportunities. Leading companies are investing in research, exploring innovative products and services, and collaborating to develop and deploy new solutions. In the agriculture sector, for example, technology systems (often powered by artificial intelligence) provide insights on activities such as crop planning, disease control, and nutrition.

Readiness story: Farming in India

Mahindra & Mahindra, a maker of agricultural machinery, provides farmers in India with free advisory, digital, and precision-farming solutions that can enhance productivity and climate resilience. The solutions enable sustainable practices in such areas as crop planning, seed selection, nutrient management, irrigation, disease and pest management, and weed control. They also deliver extreme weather alerts, information on seasonal shifts, and disease and insect forecasts to help farmers avoid crop damage and loss. The program serves more than 500,000 farmers, and the company plans to scale it across India.

Shaping collaborative outcomes

In a connected economy, businesses can get ahead by collaborating closely with other organizations: recent PwC research finds that companies with relatively strong profit margins and revenue growth were more likely than other companies to participate in business ecosystems. And when it comes to climate planning, increasing numbers of businesses see benefits in working with partners such as governments, investors, academics, and local communities. Such ecosystems can help discover and promote ways to build resilient operations.

Readiness story: Aluminum production and heat safety

The International Aluminium Institute, an industry consortium, is sponsoring a project to help aluminum producers understand how to mitigate climate-related risks threatening the health of their employees. The institute identified adaptation options that include providing shade or cooling, outfitting workers with protective clothing, and training employees to spot early signs of heat-related illness. It has also generated an action plan for mine owners and communities to identify and assess climate-related impacts on workers and put adaptations in place.

As greenhouse gas emissions change Earth’s atmosphere, heat stress and drought risks will pose an increasing threat to mining and farming activities. Even in a low-emissions scenario, pressure on workers and water supplies would likely rise, our research shows. And the challenge is exacerbated because production is currently concentrated in just a few locations. To counter these threats, resource producers and consumers are tasked with building resilience internally and across supply chains. Businesses that commit and collaborate can boost their chances of positive outcomes and gain advantages in the market.

  • Nine commodities: For our analysis, we chose nine commodities that are essential to the global economy: cobalt, copper, and lithium (critical minerals); iron ore, bauxite, and zinc (metals used extensively in manufacturing and construction); and maize, rice, and wheat (food crops accounting for 42% of calories consumed by people).
  • Two climate-related weather perils: We focused on drought and heat stress, both of which are potentially detrimental to production at mines and farms. We identified three categories of risk associated with drought and heat stress, as defined in the article.
  • Analytical approach: We located key production centers for the nine commodities and examined how climate-driven drought and heat stress could impact the areas where the mines and farms are located. We examined current heat stress and drought risk as well as future risk under two climate scenarios known as Shared Socioeconomic Pathways (SSPs): SSP 1–2.6, wherein global average temperatures rise by less than 2°C by 2100; and SSP 5–8.5, wherein global average temperatures rise by 4.4°C by the same date.
  • Time frame: We looked at 2020 production and risks in 2035 and 2050, aligning with time frames targeted under the Paris Agreement and by the Intergovernmental Panel on Climate Change.
  • Limitations: We mapped rising heat stress and drought at current production locations but did not make quantitative estimates of impacts on production or changes in production that could occur at these locations for other reasons. And although we considered physical risks, we did not consider changes in markets, policies, or technologies. Nor did we try to predict how adaptation measures will play out. Finally, we considered only current production sites, not sites that may become productive in the future.

For more details on the methodology, please see the full report, Climate risks to nine key commodities: Protecting people and prosperity.


Steve Bochanski

Steve Bochanski, a specialist in climate risk modeling, is a principal with PwC US

Emma Cox

Emma Cox, Global Climate Leader, is a partner with PwC UK

Lit Ping Low

Lit Ping Low, a specialist in climate strategy, is a partner with PwC Hong Kong

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