Critical import dependency
The federal government is working on state funds to secure raw materials
4/20/2023, 6:47 p.m
Germany is 90 percent dependent on imports for important raw materials. Big players in the market are countries like Russia or China. According to insiders, Berlin is planning to invest billions in more independence.
With its plans to become less dependent on imports from countries like China or Russia, the federal government will create new facts if the traffic light coalition allows it: As the US finance agency Bloomberg reports, citing insiders, the government is considering setting up a fund that will reduce to finance from raw materials. It is to be equipped with one to two billion euros.
The aim of this commodity fund would be to create access to raw materials, independent of countries like China. On the other hand, it should advance the ecological transformation in Germany. According to the insiders, the new financial instrument could be used as early as next year. The Commerce Department has confirmed that it is working on a “commodity fund to support domestic and foreign resource projects,” writes Bloomberg. The Ministry of Finance – led by FDP politician Christian Linder – said it knew nothing about the plans.
Raw materials such as cobalt, copper, lithium, silicon and rare earths play an important role in the goal of achieving climate neutrality – for example through the construction of wind turbines or batteries for electric drives in cars. According to a study by the German Institute for Economic Research (DIW), more than 90 percent of the most important raw materials in Germany are imported.
The European Commission defined a total of 23 raw materials as crucial for the production of key technologies such as battery technology, robotics and renewable energies. The Munich ifo Institute sees an urgent need for action in Germany for nine of them. A study commissioned by the IHK identified the import of cobalt, boron, silicon, graphite, magnesium, lithium, niobium, rare earths and titanium as supply chains prone to crises.
China is often a leading supplier of these critical raw materials. Since the Ukraine war and the effort to become independent of Russian natural gas, supply chains and raw materials have become a national security issue for the federal government. In the meantime, great efforts are being made worldwide to ensure security of supply independent of countries such as China or Russia.
Europe is in danger of losing important sources of raw materials
The US has come a long way with its US Inflation Reduction Act (IRA) with a large-scale industrial plan. Meanwhile, companies in this country are still waiting for a corresponding funding mechanism. The most recent legislative initiative by the EU Commission in March on critical raw materials drew heavy criticism from business.
The plans for a “Critical Raw Materials Act” fell “expressly far short of expectations and needs,” said Hildegard Müller, President of the German Association of the Automotive Industry (VDA), in March. The demand for a European agency for strategic raw materials projects would be ignored, as would the establishment of a raw materials fund to finance the projects. “This means that two central demands from experts and industry are being ignored – and a great opportunity is wasted,” complained the VDA President.
Months ago, BDI President Siegfried Russwurm pointed out that the dependence on critical mineral raw materials – especially from China – is much greater than that on oil and natural gas. “The race for strategically important raw materials is in full swing. Germany and Europe are in danger of losing important sources of raw materials in competition with other countries. The result: dependencies are increasing,” says Russwurm. Without raw materials there will be no energy transition, no e-mobility or digitization.
Whether the traffic light coalition will agree to the project remains to be seen. Chancellor Olaf Scholz and Economics Minister Rober Habeck support the plans for the fund, Bloomberg quotes its sources as saying. Finance Minister Christian Lindner and his Free Democrats still have to be convinced.