"Race for Raw Materials" – A former niche topic reaches the mainstream and finally the Bundestag
Brokers and commodity investors, take note: The Bundestag has discovered our metals. The 35th and 36th editions of the magazine “Das Parlament” focus on critical commodities such as technology metals and rare earth elements. This educational work comes not a moment too soon, as key industries such as the transportation sector and energy production are already running out of time when it comes to their supply of production-critical metals.
Experience with vulnerable supply chains
Since the COVID-19 crisis and the war in Ukraine, various media outlets have increasingly reported on the vulnerability of our supply chains. “Security of supply” is no longer a niche topic. During these crises, we experienced firsthand what it feels like when raw materials essential for our daily lives are suddenly missing. In articles like this one, there is a growing realization that mineral raw materials are the foundation of high-tech society. This applies particularly to technology metals and rare earths, which are often aptly called the “oil of the future.”
500 kilograms of rare earths per wind turbine
Several key industries are competing for scarce critical metals, most notably green energy producers and the defense sector. For example, an onshore wind turbine contains between 300 and 500 kilograms of rare earths. However, highly sophisticated defense equipment, such as the American F-35 aircraft used by the Bundeswehr, also requires large quantities of raw materials. This fighter jet contains 400 kilograms of rare earths. Both industries are (unfortunately) experiencing a boom.
German e-car industry left behind by China
The German e-car industry is already falling behind. For instance, China’s e-car brand BYD has managed to overtake VW in China. In 2022, the company saw a 69% increase in sales and has also been active in Germany for a year. It aims to increase its market share there to 10% by 2026. The fact that BYD is overtaking VW and Toyota in the fast lane could also be due to the fact that 7 out of 9 of the critical commodities used originate from China.
Trade relations as leverage
According to the article, Germany in particular must move away from its “Not in my backyard!” mentality—the attitude of only supporting environmentally damaging raw material extraction as long as it does not take place in one’s “own front yard” or country. This stance could be maintained as long as companies could have critical metals delivered cheaply from China. However, as trade relations increasingly serve as political leverage rather than mutual wealth creation, unilateral dependency carries a rising risk. Therefore, the German government intends to hold German companies more accountable for their raw material supply in the future.
No rapid mine construction due to review processes
Furthermore, mining in European countries is to be expanded. However, it will likely take some time before the proverbial “Berggeschrey” (mining clamor) rises again. As Green Party politician Sandra Detzer explains, the long approval processes are not accidental. Due to potential severe environmental consequences, she speaks of a “tension between securing raw materials and protecting resources.” Thorough environmental impact assessments are therefore essential, and these measures “cannot be massively accelerated.”
Storage as an opportunity for private investors
One way to gain faster access to production-critical metals would be professional storage. Consequently, the government is considering state-owned stockpiling. The interesting point here, however, is that it is not only the government that has the opportunity to help in this way; private investors can also purchase metals. By acquiring them through professional firms on the open market, buyers not only contribute to the security of supply for our industry but also have the chance to achieve attractive tax-free returns.