The Alarming Squeeze on Rare Earths: Economist Grimm Insists on a Aggressive German Strategy
Strategist Grimm advocates for a plan on rare earth elements
In a frank conversation with "Focus," renowned economist Veronika Grimm has called for a proactive, integrated approach to the impending shortages of rare earths. She advocates for an expanded function of the National Security Council, citing the crux of the issue as the slow and bureaucratic implementation of existing measures like the Raw Materials Fund and the National Raw Materials Strategy.
According to Grimm, the Raw Materials Fund from KfW, while a promising start, falls short of a comprehensive, sustainable raw materials strategy. The strategy, in her view, should account for strategic partnerships, energy trading, and trade relations, taking into consideration geoeconomic developments - all of which could potentially emerge in the context of the new National Security Council.
It is imperative to prepare for production delays or even halts if rare earth supply lines are disrupted. Rare earths are vital for high technology, electric mobility, wind power, and defense goods. China has strategically amassed control over the further processing of critical raw materials, posing a significant risk to the global economy.
Given the volatile international situation, Grimm also advocates for strengthening European purchasing cooperations, building strategic reserves for critical raw materials, and broadening raw materials partnerships with nations such as Canada, Australia, or Chile. In the trade negotiations between the USA and China, set to take place in London, rare earths are likely to be a point of contention, having been subject to restrictive Chinese export policies in the ongoing trade dispute with America.
China's Tightening Grip on Rare Earths
China holds nearly a monopoly on rare earths, contributing to about 60% of the worldwide mining and 90% of refining. The concentration of power in China has led to geopolitical risks, initially demonstrated through export restrictions and complex processes for obtaining approval for urgently needed raw materials. These restrictions have impacted German companies, causing supply chain disruptions, especially for ZF and other companies reliant on suppliers affected by China's actions.
Europe's Answer: The Critical Raw Materials Act
To address the imbalance and ensure a more resilient continent, the European Union has passed the Critical Raw Materials Act. The Act aims to boost EU self-sufficiency, targeting 10% annual mining, 40% domestic processing, 25% recycling, and capping dependence on any single third country to 65% or less by 2030.
Preparing for the Future: A German Strategy
While Germany's specific strategy remains to be seen, it is likely to align with the broader EU goals. The country could focus on diversifying its supply chains, enhancing recycling capabilities, and supporting domestic processing capacities. By adopting these measures, Germany can aim to reduce its reliance on foreign sources, ensuring a more resilient domestic industry and a sustainable future for its technology sector.
Sources: ntv.de, as/dpa
- Rare Earths
- China
- EU Critical Raw Materials Act
- Germany's Strategy
- Global Supply Chain
- Technology Industry
- Defense Goods
- Given the significant role of rare earths in high technology, electric mobility, wind power, and defense goods, and China's dominance in mining and refining these materials, it is crucial for Germany to develop a comprehensive strategy to reduce its reliance on foreign sources, which could potentially expand the functions of the National Security Council to address geoeconomic developments.
- As China maintains a near monopoly on the global supply of rare earths, impacting German companies like ZF, and with the EU's Critical Raw Materials Act aiming to boost self-sufficiency in the bloc, Germany's strategy may involve diversifying supply chains, enhancing recycling capabilities, and supporting domestic processing capacities to ensure a resilient technology sector and a sustainable future.
