Deutsche Welle: How can Germany break free from dependence on importing rare metals?

Copper, lithium and rare metals are among the most important raw materials imported by Germany.

These minerals, also known as rare earth elements, include scandium, cerium, promethium, terbium, and thulium, in addition to 12 other elements.

It’s not completely rare, as thulium is rarer than gold, but in small quantities, which may make its extraction and mining economically unfeasible.

A recently study conducted by the consulting firm IW Consult and the Fraunhofer Research Institute ISI, at the request of the Center for Credit and Reconstruction Studies, one of the institutions affiliated with the government Credit and Reconstruction Bank in Germany (KFW), sheds light on imports and their importance for increasing value added and employment.

The study focuses on copper, lithium and rare earth metals because they are essential and fundamental to key and future technologies.

According to the study, about a third of the total value added in the manufacturing sector depends on the production of goods that contain copper, 10% of the value added depends on the production of goods that contain lithium, and about 22% depends on the production of goods that contain rare metals, especially companies.

The automotive industry and its parts suppliers as well as producers of electrical, electronic and optical goods.

What increases dependence on imports is that the raw materials market is dominated by a small number of suppliers, who have great influence in the market.

The largest reserves of rare earths are located in China.

The reserves available in Greenland, Canada and Sweden have not yet been sufficiently verified.

About a third of Germany’s imports, which contain lithium and 19% of copper and rare earths, are at risk.

As for lithium and rare earths, the three largest suppliers dominate 80% of the global market.

For the German market, Russia is considered important for supplying copper and Chile for supplying lithium carbonate at a rate of 72%.

There will continue to be a heavy and long-term dependence on China to import rare metals at a rate of up to 84%.

This dependence in the field of rare metals is followed by Matthias Fichter of the Confederation of German Industry (BDI) with concern, and he said in an interview with DW, “The danger of dependence on many raw materials that come from China is today greater than the danger of dependence that was on Russian gas”.

He added, “what is dangerous about the matter isn’t the availability of the raw material, but rather its concentration during exploration and subsequent processing in China, and this is what exposes (Germany and others) to the risk of blackmail; By controlling the market for some rare earths, China has demonstrated its ability to exercise influence”.

As for Cornelius Bahr, senior consultant at the German Economic Institute (IW Köln) in Cologne, pointed out in his interview with DW that rare metals are in increasing demand, “such as lithium for the battery industry”.

He confirmed the concerns that were also mentioned by Matthias Fichter, that the concentration of some rare materials, gallium, germanium, or graphite, in countries such as China is extremely dangerous.

According to Fichter, the cases of non-completion and delivery of deals on time “haven’t yet reached a critical level,” but “there is no talk” of reliable supply chains that can be relied upon.

The Houthis today show “how fragile international trade is”.

Cornelius Bahr also points to political risks, for example, “trade disputes between China and the United States, and between China and the European Union as well”.

These disputes lead to an exchange of restrictions on exports, or at least the threat of imposing these restrictions”.

“The security of raw materials requires taking into account the entire production chain from mining to the import of the primary product,” is the conclusion reached by Fritzi Köhler-Geib, chief economist at the German Credit and Reconstruction Bank KFW.

He adds, “Flexible supply of raw materials involves high costs in the beginning, but in the end, it is a condition for achieving the green and digital transformation”.

“We must not deceive ourselves; Reducing dependency and increasing flexibility does not happen overnight,” says Matthias Fichter; What is crucial in this area is “diversification and building new capabilities, and enhancing local production as part of the solution… Germany, contrary to popular opinion, is very rich in raw materials”.

Cornelius Bahr warns that Germany must actively diversify supplying countries, find alternatives to scarce raw materials, and promote recycling.

In order to achieve this, several conditions must be met, the most important of which is popular acceptance.

“The lack of diversification of supply chains puts resource security at risk,” warns Matthias Fichter.

Even if the potential economic consequences of this dire scenario cannot be seriously measured, one can say that Germany’s industrial position and our well-being would be at great risk; Without raw materials, industrial companies cannot operate, and we won’t achieve our climate goals.

In turn, Cornelius Bahr says: “Without access to raw materials, there is a risk that industrial goods won’t be produced here”.

He gives an example, “Without access to lithium, batteries cannot be produced, and therefore must be imported; If they aren’t imported, electric cars cannot be produced… This means the cessation of industrial production and the evaporation of job opportunities”.