Infrastructure projects lead to soaring demand for the world’s most used natural material
The rising cost of a grain of sand is inflating the price of materials such as glass and cement even as energy bills flatten out, highlighting its importance for everything from jam jars to global infrastructure projects.
Sand is the world’s most used natural material, mainly in construction and in fracking for oil and gas, as well as some industrial processes such as memory chips owing to its high quartz content. Sand is the primary raw material for glass, accounting for about three quarters of the ingredients.
Vast land reclamation projects such as Singapore’s Tuas mega port, due to be completed in the 2040s, have caused demand for sand to soar in recent years, even as awareness has grown that dredging it from river flood plains, beaches and seabed can lead to coastal erosion and flooding.
Sand miner US Silica Holdings plans to raise the prices of sand products used in glass, building and chemicals by up to a fifth from June to offset higher labour, transport, materials and manufacturing costs, it said last month.
“Higher-than-average price increases” for sand used in urban construction are expected in 2023, according to the US Geological Survey. Although sand and gravel is “plentiful” across the world, environmental regulations, geographic distribution and quality concerns can make production “uneconomical”, it warned in January.
Sales of sand and gravel extracted in the US for industrial purposes rose 78 per cent in value last year, well above the 30 per cent rise in volumes, according to the US survey. This was driven by glassmaking, as well as fracking and cement.
In Germany, the price of glass bottles, windows and jars rose 27 per cent in January from a year earlier, according to latest data from the country’s statistics bureau.
Saint Gobain, the French glassmaker and building materials company, told investors in a call earlier this year that higher prices for sand and other materials continued to drive its costs up in the first three months of 2023, cancelling out the effect of lower than expected energy prices. The group’s raw materials and energy costs rose 30 per cent last year to €13bn.
This year it plans to raise prices enough to overcompensate for inflation in raw materials and labour, after increasing prices 10 per cent last year. “Whenever we have opportunities to push up prices, we do it,” chief executive Benoit Bazin said.
The higher price of raw materials such glass and cement has given construction companies an excuse not to pass lower energy costs on to consumers. “There’s a bit of lag, an unwillingness by producers to slash prices,” Andy Murphy, head of industrials at London-based investment research company Edison Group, said.
China is driving the largest increase in demand for sand globally, while the African continent is driving the fastest increase, because of demographic pressures and road, hospital and school-building projects, according to research by Pascal Peduzzi, an environmental scientist at the UN Environment Programme Initiative.
Much of this demand is met by illegal sand mining. “Sand is easy to grab, you have a shovel and truck and improvise as an entrepreneur . . . but it can only be replaced by geological processes that can take hundreds of thousands of years to produce,” Peduzzi said.
“Things on the ground are getting worse,” he added, highlighting that Indonesia, Malaysia, Vietnam, Thailand and Cambodia have previously banned or limited exports of natural sand amid fears about the environmental and social impacts of extracting it from waterways.
The UN is helping build a satellite detection system to monitor the tell-tale side-to-side movement of sand dredging vessels in the North Sea, southeast Asia and along the US coast, and is in discussions to create a global sand observatory to bring transparency to international supply chains.