China's Warning Shot: Will Robert Habeck's Raw Materials Fund Now Materialize?

“One for all, all for one.” The motto of the Three Musketeers would also work as the slogan for the raw materials pact between Germany, France, and Italy. The three countries aim to jointly invest in multi-billion-euro raw materials funds to become independent of metal imports from China. The fact that companies in China may only export gallium and germanium with state approval from August 1 could have been the necessary warning shot for Federal Minister for Economic Affairs Robert Habeck to follow through on his part of the agreement.

Italy and France have already launched their funds of one billion and half a billion euros respectively for mining projects outside China. Robert Habeck is running a bit behind. His raw materials fund, proposed in January of this year, has so far failed due to the austerity plans of Finance Minister Christian Lindner. However, news recently emerged from government circles that the required billion could also come from Habeck’s Climate and Transformation Fund (KTF) special assets. This would invalidate Lindner’s objections, as the budget would not be burdened. Habeck therefore expects the fund to enter the market by 2024 at the latest: “Given the paramount importance of viewing economic policy as economic security policy, I consider it likely that this will happen.”

In fact, Europe is running out of time. China’s ban on exports of technology metals could be just the beginning. Further export restrictions on rare earths are already being discussed. These are indispensable for the energy transition, particularly as magnetic metals, as they are used in wind turbines and electric cars. Europe’s own mines and, above all, refineries are also indispensable in the long to medium term. However, it could be 10 to 15 years before a planned mine goes into operation. However, the industry needs these metals now. And China can cut back its supply at any time.

Fortunately, the industry has taken precautions and stockpiled a certain amount of production-critical metals. This allows companies to continue production for at least a few months in the event of supply disruptions. They are supported by Noble BC, which, together with its investors, stores germanium and gallium for emergencies.

Only together are we strong. Full industry warehouses, forward-thinking government planning, and private raw materials storage with the prospect of attractive tax-free returns—these are the three “Musketeers” of our time!