Is the “Metal NATO” coming now?
A good 4 days before China’s export controls on rare earths (now it’s only 3 days left), Western nations are establishing an international financial network for securing raw materials. Development banks and credit insurers from partner countries are to join forces with the private sector to become more independent from individual countries like China through projects for mining, refining, and recycling critical metals such as dysprosium oxide. Specialists are calling it a “Metal NATO.”
Alternative supply chains for metallic raw materials
Members of the Minerals Security Partnership (MSP) presented the new financing network at the UN General Assembly. Financial experts see it as a good way to diversify supply chains for metallic raw materials such as gallium and neodymium oxide. The MSP, of which Germany is also a member, was founded in 2020 as a US-initiated alliance of 14 countries and the EU. Its goal was and remains to ensure security of supply for raw materials important to the energy transition, such as gallium, for which the alliance is seeking new sources independent of market leader China. To date, the MSP is supporting 10 projects, including the Dubbo rare earths project of the Australian company Strategic Materials, which could supply rare earths for 20 years.
Huge sums of money for mining and refinery projects
Only recently, the German government set up a raw materials fund worth more than one billion euros. (We reported)
While this fund was relatively modestly endowed with “only” one billion euros, the new international financing network could channel huge sums into mining and refinery projects. Although there are no precise figures yet, experts speculate that incredible amounts are to be made available across the entire organization. According to the Federal Ministry for Economic Affairs and Climate Action, the financing network is to operate in parallel with the raw materials fund.
Important despite the risk: exploration projects
Germany is participating through the state development bank KfW and the credit insurer Euler Hermes of the Allianz Group. They could decide for themselves whether financing a specific project is an option for them or not. This could particularly benefit young exploration and mining ventures that would not be taken into account by the raw materials fund. While Beijing has been building up important exploration projects worldwide in many countries for several years, the German government has often considered such investments too risky. Whether that will change in the near future remains to be seen. And even with successful exploration, it can take up to 15 years before rare earths such as terbium oxide can be mined and made available to the market. Western countries have an immense need to learn and catch up here, but at least something is happening.