The drone war's demand for raw materials is affecting Bavaria's industry

Since the start of Russia’s war of aggression against Ukraine, the demand for so-called loitering munitions has skyrocketed. These are combat drones that circle over a target area until they lock onto a target and strike. According to calculations by the market research firm Project Blue, demand for critical commodities for these weapons has grown by an average of 246 percent per year since the war began. What was once considered a niche military technology is becoming a mass-produced, single-use weapon in modern warfare.

Germany is not a party to the war against Ukraine. Nevertheless, the country has long been involved in the industrial ramp-up of drone armaments. The Bundeswehr has commissioned Rheinmetall to supply the FV-014 loitering munition system. The first call-off order is worth around 300 million euros; the framework contract, valued in the billions, allows for the procurement of a five-digit number of autonomous reconnaissance and attack drones. Production is to take place entirely within the European Union. At the same time, Germany is supplying various drone systems to Ukraine and expanding the capabilities of its own armed forces. The resource-intensive nature of drone warfare does not end at the Ukrainian border. It continues in European procurement programs and factories.

What makes this unique is not just the enormous growth rate, but the nature of the consumption: A wind turbine, an electric car, or an industrial machine ties up its commodities for many years. At the end of their service life, at least some of these commodities can be recovered and reused. Loitering munitions, on the other hand, are built for a single use. Upon impact, the battery, motor, electronics, and the metals they contain are destroyed, scattered, or permanently removed from the raw materials cycle. Every use results in the loss of urgently needed commodities.

Batteries account for about 11 percent of the total weight of military drones, while electronics and semiconductor materials make up a similarly high percentage. By 2025, loitering munitions already accounted for 46.2 percent of the total demand for lithium-ion batteries in the UAV sector. Lithium and graphite are needed for the batteries, as well as gallium, germanium, indium, and tantalum for electronics and semiconductors. In addition, aluminum and various specialty alloys are required. However, all of these materials are also urgently needed elsewhere: in electric cars, semiconductors, machinery, energy technology, and communication systems. Drone warfare does not create a separate market for raw materials. It draws on the same already strained supply chains on which the civilian industry depends.

The pump manufacturer Circutec, based in Roth, Middle Franconia, illustrates just how quickly a shortage of commodities can become a problem for entire value chains. The company requires 25 to 30 metric tons of rare-earth magnets annually for its technically sophisticated industrial pumps. More than half of its revenue depends on their availability. In the fall of 2025, inventories were temporarily depleted, and production of pumps for a major medical technology customer came to a near standstill. Yet such a pump costs only 300 to 400 euros—but it is installed in a device that costs up to three million euros and cannot be completed without it. Circutec is not an isolated case: According to a survey by the Bavarian Industry Association, around 30 percent of Bavarian companies are directly affected by the shortage of rare earth elements.

The latest vbw commodity price index shows just how much pressure is now mounting across the board. It tracks the global market prices of 42 commodities and weights them based on their respective share of imports into Bavaria. In the second quarter of 2026, the index reached 205.3 points, its highest quarterly value since records began in 2015. Compared to the same quarter of the previous year, it was nearly 40 percent higher. For certain industrial metals, the increases were even more dramatic: Tungsten rose by 567.4 percent within a year, lithium by 181.2 percent, and tantalum by 137.5 percent. Compared to the previous quarter alone, germanium rose by 52.8 percent, tungsten by 44.9 percent, and tantalum by 42.8 percent.

The drone boom is not the sole cause of this trend. Chinese export restrictions, concentrated manufacturing capacity, strategic stockpiling, and rising global defense spending are further intensifying competition. For Bavarian companies, therefore, what was once a procurement issue is increasingly becoming a matter of survival: Where does the material come from, how reliable is the supply chain, and how long will their own stockpiles last? The cost of modern drone warfare isn’t borne solely on the battlefield. Part of the cost lands in the factories of the civilian industry. For this war knows no raw-material cycle. It knows only resupply. And the more material is lost after a single mission, the more valuable every metric ton that still reaches Bavaria’s factories becomes.