The question was clearly formulated: “How high do you estimate the risk of an export stop of critical mineral raw materials from China in the next five years?” From the around 400 participants at a congress on the subject of raw materials, to which the Federation of German Industries in Berlin had invited , 73 percent voted “very high” or “high”.
There is an alarm mood in the German economy. Since the Russian invasion of Ukraine, the consequences of dependence on imports and a lack of diversification in natural gas have become evident.
Energy prices have exploded and, in the short to medium term, will not drop back to the level that has been taken for granted for decades with cheap gas from Russia.
As natural as the supply of metals and industrial minerals was. “In the case of critical mineral raw materials such as rare earths, the dependence, especially on China, is already much greater than Germany’s previous dependence on Russian energy sources,” warned BDI President Siegfried Russwurm at the Raw Materials Congress. A delivery stop would hit German industry immediately and far-reaching.
Rare earths are found in ore deposits and include various chemical elements. The main deposits can be found in China, the USA, Russia and Australia, but also in Canada, India, South Africa and Southeast Asia.
The minerals are also called rare because they do not occur very often in the concentration and combination that make mining economical. In addition, the processes for dissolving and separating the individual elements are demanding and ecologically problematic because of the chemicals required.
Because it seemed too expensive and too dirty to mine rare earths in many countries, China has a monopoly and this is becoming a problem with technological change. “Without these raw materials there will be no energy transition, no mobility, no digitization, no Industry 4.0 – but also no infrastructure expansion and no powerful defense industry,” warns the BDI President.
An analysis by the EU Commission from 2020 shows that, for example, 65 percent of the raw materials for electric motors are imported from China. With a share of more than 50 percent, China is also the leader in the supply of raw materials for wind turbines and photovoltaic systems.
What would happen if China stopped exporting the raw materials and started consuming them itself? What if China attacks Taiwan, the West responds with sanctions, and Beijing then cuts or cuts off commodity exports?
Unlike oil and gas, there are no national reserves of metals and industrial minerals. “When it comes to raw materials, Germany can be blackmailed,” concludes the BDI President.
That is the “bitter truth” and must have consequences. Similar to the turning point proclaimed by the Federal Chancellor after the Russian attack on Ukraine, the supply of raw materials is also “strategically important for national security”.
An inventory that is definitely shared by the federal government. Federal Economics Minister Robert Habeck agreed to the analysis at the Raw Materials Congress. Siegfried Russwurm says “where we stand politically and what business and politics have to work on.”
The pressure is “so immense that the analysis is clear”. However, the strategic question of securing raw materials did not play a role for decades because it was “not demanded by the economy, did not seem to be necessary”, according to the Green politician.
But Germany, like other European countries, is a country poor in raw materials. Even if the recycling quotas were to increase, the country would remain dependent on imports. “We must intensify cooperation with countries that are rich in raw materials and have high standards, such as Australia,” Russwurm demands.
Critical raw materials should be central building blocks in trade, investment and development policy agreements. “It’s the only way we’re going to encourage more sustainable exploration and refining on-site.”
In 2019, Germany imported raw materials worth 175 billion euros. For comparison: the value of the raw materials produced in the country was only 11.4 billion euros. In addition to lignite and construction raw materials such as sand and gravel, industrial minerals are mined, especially rock salt and potash salt.
Critical mineral raw materials such as indium, which is used for semiconductors, tungsten, cobalt and platinum elements are found in Germany but are not mined.
If the BDI has its way, that should change. “Every tonne of domestic raw material extraction reduces dependence on imports and strengthens Germany’s resilience and security of supply,” says a five-point paper by German industry on raw material security.
Mining must be made possible by spatial planning, planning and approval processes must be accelerated, and mining as such must be made “socially acceptable” again.
The highly controversial fracking is also addressed in the five-point paper. Domestic shale gas production “using the most modern fracking processes with the highest standards” should make an important contribution to reducing dependence on imports and, as an affordable source of energy, secure the energy supply in Germany.
The economics minister sees things differently. Fracking is not worthwhile, the future lies in the production of hydrogen, stressed Habeck. The Green Minister also sees more problems than opportunities in mining. “We talk happily here that we should mine local minerals, although in some regions we are not even able to set up solar systems.”
Germany is very good at “saying everything we don’t want”, but not very good at enforcing what is necessary instead.
Habeck complains that the citizens often lack understanding and acceptance “of what is promoting the future viability of this country”. In order to push through something, it must be wanted by a majority in the country and accepted by the citizens affected in the region.
What that means can be seen in the development of lithium deposits in Germany. Up to 15 million tons of the substance that forms the basis for all powerful batteries have been found in south-west Germany. To get to the raw material, thermal water with a temperature of up to 200 degrees would have to be pumped up from a depth of up to four kilometers and the lithium filtered out.
However, for years there has been considerable resistance in the affected communities to the deep drilling required for this. Citizens fear pollution and earthquakes, and fear damage to their homes. It remains to be seen whether the enormous lithium find can be lifted.
Author: Sabine Kinkartz
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The original of this article “Germany’s dependence on raw materials” comes from Deutsche Welle.
