Opinion Article: What is missing from the old raw materials industry to return to the spotlight?

Article written for Sapo Tek by Sofia Fernandes, Business Development Director at BGI.

Sofia Fernandes explains in this opinion article why Europe is concerned with the raw materials industry and why Portugal can be at the forefront in this area.


Let's start at the beginning. What are raw materials? Raw materials are materials or substances used in primary production or for the production of goods such as steel, oil, corn, wood, natural gas, coal and minerals. These are sold and bought in stock markets around the world - Wall Street style. They are the basis of everything we have access to, and therefore considered factors of production, as well as labor and capital.


As the reader can already imagine, this is one of the oldest industries in the world, which makes it one of the most traditional. This is precisely where the challenge begins… Since all products need raw materials, this is an absolutely necessary industry. The extraction and transformation of raw materials is one of the most discussed topics in climate change, and therefore, Europe is turning to this industry to understand what we can do to make it more sustainable.


It is in this context that the European Commission decides to send a delegation, EIT Raw Materials, to Portugal. First, because they want to communicate existing initiatives so that Portuguese companies can start taking part in them, and secondly, they want to know the Portuguese reality and adapt the strategy to ensure that it contributes positively to the European average. And I always dare to consider: Can we, little Portugal, be in the European vanguard?


Based on the debate of several Portuguese and European experts at the EIT RawMaterials Awareness event, two aspects became clear:


The movement has already started in Portugal, and our country joined the race!


But we have to run faster…


Small and medium-sized companies (SMEs) are those that employ the most in Portugal. However, they are mostly family businesses and they do business as they did 50 years ago, when their parents or grandparents managed them. And so we cannot move forward. Is it possible to believe that the majority still think that “production waste” just has to be incinerated? Still don't use this “junk” as a base to build a second line of sale and increase profits?


On the other hand, in universities and research centers, ideas are bubbling up in our doctoral students, who write publications that are read all over the world, but when it comes to reaching the market, it doesn't happen.


Can you see the problem? These two worlds don't speak to each other.


Until the date.


According to Banco de Portugal, our country expects growth of less than 1% annually, behind the 1.4% of the European average. But we are still able to change that and stop being the ugly duckling! According to the same study, if the government provides tax incentives that help companies increase revenues, we can increase this amount by 7%. If the industry starts to innovate and create value for by-products and create more salable product lines (while decreasing the environmental impact), we achieve an estimated increase of 8.5%. Finally, if employees are trained - human capital - this figure can increase by 28%.



And I already know what you're thinking... "Here comes the idea of digitization for everyone." To date, digitization is closely linked to lay off and unemployment. It is important to highlight the successful cases of implementing digital tools in SMEs, which empowered their employees, increased revenue, and brought innovation to the company, increasing its efficiency. This is while we begin the real movement that matters: changing old industry behaviors and creating a generation of workers with new skills.


It was clear to me that this strategy is not new, and it is not Portuguese. So, to stay ahead, we have to accelerate this transition. For this, the word of the agenda is networking (network of contacts) and awareness. We need SMEs to stop having the prejudice that innovation is “inventions by those who don't understand anything about the industry” and that “positive environmental impact and circular economy are bad for business”. It is imperative to know and follow up on the success stories, and see that this not only increases revenues, but also brings international visibility. Above all, SMEs have to talk to each other, acquire and merge. Our problem is not talent, it's size, so let's make ourselves bigger.


The first steps have already been taken. But it is necessary to run. It is necessary to run fast. The only way we can do this is together: collaborate and open discussion. I invite readers to know the starting point of this race here, and to decide whether or not we can stay in the European vanguard.


Read the original article in Portuguese here.


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