Germany needs a strategic raw materials policy

Without a secure supply of raw materials, the energy transition, e-mobility, digitalization, and Industry 4.0 simply cannot happen. Major infrastructure developments with great importance for our competitiveness – like roads, bridges, railways, as well as digital and energy networks – are equally dependent on these resources. Not to mention the required materials for our security and defense capabilities.  

High import dependencies and risks in raw materials procurement 

At present, Germany is heavily reliant on imports from China and other countries with complicated politico-economic landscapes. Over the last years, this dependency has increased. Germany will import half of its lithium products from China in 2024 – compared to 18 per cent in 2014.  

The German government has emphatically emphasized that both Russia and China are strategic competitors. Russia’s illegal war against Ukraine showed how energy can be weaponized, while China has leveraged export controls on key resources like gallium, germanium, graphite, and antimony for geopolitical reasons. Germany’s dependence on China for rare earths is now far greater than its past reliance on Russian energy. An immediate ban on the export of Chinese lithium alone could jeopardize up to 115 billion euros of added value in Germany – 15 percent of total industrial added value. The automotive industry, which relies on lithium for the ramp-up of electromobility, would face a direct loss of 42 billion euros. Indirect and induced effects in connection with the automotive sector would even increase the losses to 88 billion euros. 

Germany is vulnerable to extortion. Unlike oil and gas, there are no national reserves for critical minerals. And China often floods global markets with excess supply to undermine foreign attempts to establish production sites outside of China. 

Caught between China and the USA 

The United States is pushing hard to end its reliance on Chinese raw materials. Through legislation such as the Inflation Reduction Act (IRA) the US government aims to establish a domestic clean-tech industry independent of Chinese precursors. However, these geopolitically driven strategies risk disrupting global supply chains, which could severely impact Europe’s competitiveness. The German and European raw materials industry faces a pivotal moment. 

Raw materials security as a matter of national security 

Germany and Europe are at risk of losing out in the global competition for strategically vital raw materials, jeopardizing supply security and increasing dependency on other nations. Demand for raw materials is rising globally. Global demand for lithium, for instance, will increase 42-fold by 2040 compared to 2020. To secure future access to raw minerals, a unified effort between government, industry, and society is essential. Critical raw materials must be recognized as a core element of national security. Only then can greater sovereignty over resources be achieved. 

A strategic, comprehensive raw materials policy is needed, based on three pillars: minimizing geopolitical supply risks by boosting domestic raw materials production, securing access to imports of raw materials, and expanding recycling and circular economy practices. None of these pillars can single-handedly secure enough supply to meet Germany's or Europe’s raw material demands. The aim is to establish integrated value chains for strategic areas across Europe with reliable partners. 

The three pillars of raw material security 

To advance domestic raw material extraction, the industry is calling on the German government to facilitate mining through strategic land use planning and by speeding up approval processes. Greater political and public willingness to compromise is crucial, particularly for the mining and processing of raw materials in Germany. For instance, domestic lithium extraction, compliant with the highest environmental standards, could contribute to a reduction of import dependency. Moreover, shorter transportation routes for local lithium extraction would cut carbon emissions, benefiting both the climate and supply security. 

Germany and Europe will still need international raw materials partnerships, despite the emphasis on domestic extraction. Collaborations with countries like Australia, Canada, or Chile, known for their high environmental and ethical standards, should be strengthened. Critical raw materials should be embedded in trade, investment, and development policies. This is how sustainable exploration and refining can be ensured locally. 

The circular economy is becoming a key component of strategic raw materials policy. While Germany is a global leader in recycling, there are major gaps in recycling resources needed for future technologies. Significant quantities are lost through non-recycling. This is why circularity must be integrated at the product design stage. To promote the use of recycled materials and industrial by-products while encouraging private investment, businesses require robust frameworks along the entire value chain. Innovation in production and recycling processes should receive research support. 

Avoiding policy inconsistencies 

Supply chain laws, EU chemical regulations, and taxonomy rules must not jeopardize the necessary diversification of raw material sources. The three pillars need to work cohesively. Similarly, policies on industry, trade, security, and economic competitiveness must align more closely to strengthen resource sovereignty. 

The BDI Raw Materials Congress, in its eighth year, brought together over 400 representatives from business, government, science, and civil society at the Heeresbäckerei in Berlin to discuss a secure, comprehensive and sustainable supply of raw materials for Germany. Key figures this year included Parliamentary State Secretary Franziska Brantner, Jakob Stausholm, CEO of Rio Tinto, Carin-Martina Tröltzsch, Member of the Executive Board of K+S and Toralf Haag, CEO of Aurubis, and BDI President Siegfried Russwurm.