Two Billion Euros: Germany Plans Fund to Secure Raw Materials 

April 2023 | News

Das Gebäude des Reichstags mit der Flagge der Bundesrepublik Deutschland im Vordergrund

Source: iStock/ThomasSaupe

According to a media report, the German government plans to invest two billion euros in a special fund to help supply the German economy with raw materials. The fund could be of strategic importance.

According to the Bloomberg news agency, the German government wants to help secure the future of the German economy by establishing a raw materials fund. The proposed two-billion-euro fund could create long-term access to raw materials whose extraction and processing are currently controlled by foreign companies.

Billions invested to diversify the raw materials supply

The German government wants to use the fund to invest in domestic and international raw materials projects involving the extraction and processing of rare metals, lithium, cobalt, and other raw materials, all of which are essential for the production of electric vehicles, smartphones, and other high-tech products. Germany now relies on imports for up to 90% of its supplies of these metals. For example, its rare earths come almost exclusively from mines or processing companies in China. The funding program could break this supply dependency and broaden access to these raw materials.

Germany follows the example of Japan and South Korea

Germany’s planned raw materials fund follows the example of Japan, which in 2004 created its own raw materials authority, the Japan Organization for Metals and Energy Security (JOGMEC). That organization aims to secure access to critical raw materials and promote the strengthening of the industry by investing in mineral resource exploration and supporting national raw materials companies with loans and guarantees. According to the industry portal, JOGMEC plans to launch a 105.8-billion-yen (720 million euros) fund to subsidize the supply of raw materials for the construction of EVs. South Korea has also been actively involved in securing raw material supplies since the 1960s through its Korea Resources Corp (KORES).

Potential cooperation with Indonesia

One possible concrete application of Germany’s raw materials fund is a cooperative venture with Indonesia. As reported by AP News, both countries want to enter into a raw materials partnership. Indonesia has rich deposits of nickel, which is needed for the production of batteries. According to the state news agency Antara, the country also wants to exploit its deposits of rare earths. Germany could participate in exploration and production and thus ensure access to these critical raw materials.

EU also recognizes the need for action

The importance of the issue of raw materials supply was underscored by a draft law presented by the European Commission in March of this year. The Critical Raw Materials Act aims to strengthen European sovereignty over important mineral resources. Beyond raw material extraction, local value chains need to be developed. However, in contrast to the planned raw materials fund in Germany, there are few details on the new act’s financing and possible instruments.

Das Gebäude des Reichstags mit der Flagge der Bundesrepublik Deutschland im Vordergrund

Source: iStock/ThomasSaupe