Gas, Oil, Lithium, Steel
Germany depends so much on foreign countries
04/26/2022, 09:38 am
If supply chains are disrupted or if Germany cuts itself off from a raw materials market, as is currently the case in the Ukraine war, the domestic economy will stumble. The most important branches of industry are massively dependent on raw material supplies from the world market. An overview.
For decades, Germany benefited from free world trade, which provided access to cheap products and raw materials. The consequences of the dependency on supplies from abroad were already evident in the corona pandemic. Supply chains broke, important raw materials became scarce. The Ukraine war further exacerbated the situation for “Made in Germany”. An overview of the situation in the most important sectors:
car industry
There are many different raw materials and primary products in cars. With the light metals aluminum and magnesium China and Russia, for example, have particularly high world market shares, and the Russian group Rusal is the largest single aluminum supplier. The Russian Federation is similarly powerful as a supplier of precious metals palladium and platinumwhich are needed for catalytic converters.
Besides is stole an indispensable resource in automobile and engine construction. Conventional iron ore often comes from various major producers such as China, Brazil, Australia or India. In the case of special steels with chromium, titanium or nickel as components, the dependency on certain sources can be higher. With Norilsk Nickel, Russia has one of the leading nickel producers.
nickel is also used for numerous battery types, as well as the elements cobalt, manganese and copper. In the battery cells of electric cars, the current flows through charged particles (ions) of the alkali metal lithium, which currently comes from Australia, China or Chile. A number of other metals or metal compounds are used for batteries and power electronics in vehicles.
A central supplier product are semiconductor modules and microchips silicon– or germanium-Base. They have been in short supply in many places since the Corona crisis. Here, Europe’s industry – as with battery cells – wants to make itself more independent of the previously dominant manufacturers from Asia. In addition, cars without numerous plastics for the interior are unthinkable. Oil and natural gas mixtures are required for the production of plastics.
mechanical engineering
The product range extends from agricultural machines to forklifts and machines for the food industry. The need for preliminary products and the dependency on supplier countries are therefore very different. An important material is stole, which many companies do not purchase directly from the manufacturer, but through wholesalers. The bottlenecks on the steel market as a result of the Ukraine war are clearly felt by machine builders. “Companies that need steel for a current project are particularly affected. In some cases, they are no longer even given a price or delivery times,” reports Bianca Illner from the VDMA mechanical engineering association.
Essential for many machine builders are also microchips, which are in control elements and often come from China. According to a VDMA survey, a good three quarters of the companies are putting their supply chains to the test after their experiences with the pandemic. For example, they are targeting a broader network of suppliers. A different geographical distribution of the suppliers also plays a role in many companies.
chemistry and pharmaceuticals
The German chemical and pharmaceutical industry consumes huge amounts gas and oil: According to the German Chemical Industry Association (VCI), it uses 2.8 million tons of natural gas as a raw material and 99.3 terawatt hours of natural gas to generate steam and electricity each year. In addition, the industry needs over 14 million tons naphtha as raw material. There is therefore great concern about an energy embargo against Russia. “In all companies, crisis management teams and teams are now working daily to examine the specific situation of the energy supply, to analyze various scenarios for a reduction in the supply of natural gas and to make preparations,” said VCI Managing Director Wolfgang Große Entrup. The association emphasizes that the energy consumption per product unit has halved since 1990.
According to the latest figures from 2020, the most important importing countries for chemical products were the Netherlands, Belgium and France. Russia is in 18th place with a share of 1.3 percent. Non-fossil raw materials in the value chain are important for building a climate-neutral economy, such as rare earths, lithium, nickel or phosphorus. The industry is dependent on China (rare earths), Chile and Bolivia (lithium) and Kazakhstan (phosphorus).
electrical industry
The German electrical and digital industry is closely involved in the international movement of goods. Last year, exports worth 225 billion euros were offset by imports worth 222 billion euros, according to the ZVEI industry association. At around 80 billion euros, this includes primary products, most of which come from the EU (31 billion), Asia (24 billion) and the USA (5 billion). Preliminary products from Russia, Belarus and the Ukraine came to less than a billion euros, so that direct war losses are of little importance.
The strong dependence on semiconductors from Asian factories. The ZVEI supports funding projects to increase the production of these components in Germany and Europe. As early as November, 70 percent of companies reported in an association survey that they wanted to diversify their supply chains for raw materials. In addition, 65 percent wanted to expand their warehousing. The situation has worsened again with the Ukraine war: Currently, more than 60 percent expect that the delivery problems, among other things, for metals, wood and chemical products will worsen again.
energy
According to the Working Group on Energy Balances, around 71 percent of the energy requirement came from abroad in 2021. at mineral oil the import share was 98 percent natural gas 95 percent. The most important domestic energy sources were renewable energies and Brown coal. coal is no longer funded in Germany and must be imported 100 percent. “Germany is heavily dependent on Russian energy imports,” the Federal Ministry of Economics stated in early April. 35 percent of oil consumption, 50 percent of hard coal consumption and 55 percent of natural gas deliveries came from there in 2021.
Because of the Ukraine war, Germany now wants to become independent of Russian energy supplies. In the case of hard coal, this should be achieved by autumn, and in the case of oil by the end of 2022. Economics Minister Robert Habeck hopes that Russian natural gas will become largely independent “by mid-2024”.
Mining
Germany obtains its construction raw materials such as sand and gravel or natural stones as well as various industrial minerals such as rock salt or quartz sand from local deposits. “Even on a global scale, Germany is still an important mining country,” according to the Federal Ministry of Economics. Germany was in 2019 worldwide raw kaolin the third largest, with rock salt the fourth largest and with potash salt the fifth largest producer.
For metals and many industrial minerals, however, Germany is heavily dependent on imports. For example, iron ore for German pig iron production is exclusively imported. According to the Federal Institute for Geosciences and Natural Resources (BGR), the demand for iron alloys with chromium, manganese or molybdenum for the stainless steel industry is almost entirely covered by imports. However, dependency on imports is significantly reduced by recycling and buying in scrap and waste.