The world is watching dependencies, we are taking action! Andreas Kroll answers questions from the Berliner Zeitung
The trade war between the USA and China strictly operates according to the English idiom “Tit for Tat.” This translates to “move by move” or “as you do to me, so I do to you.”
In the Berliner Zeitung, raw materials expert and financial analyst Andreas Kroll discusses the US-Chinese “sanctions ping-pong” and the necessity of a new German mindset.
Critical metals are in all key technologies
Technology metals such as gallium and rare earths such as dysprosium oxide are used today in all promising key technologies: energy policy and green electricity, nuclear fusion, superchips, AI, quantum computers, and medical technology. For this reason, the press is increasingly becoming aware of our Freeport Berlin-Brandenburg raw materials warehouse. During the press appointment, raw materials expert Andreas Kroll explains how demand from the defense industry has also risen sharply since the Russian invasion of Ukraine. The reason: without these metals, no war can be won and no country can be defended today.
Those who have rare earths can defend themselves
Anyone who knows this also understands that dual-use raw materials, such as the metals gallium and germanium regulated by China, are becoming increasingly hard-fought. Those who have them are capable of defending themselves; those who do not are defenseless. Indium, gallium, and germanium, as well as rare earths like neodymium oxide, are indispensable both for the computer technology behind precision weapons and for radar-based missile shields. Both the USA and China are aware of this. The sanctions war between the two superpowers is therefore becoming increasingly intense.
China could "starve" the American defense industry
With their dependence on critical commodities from China, the USA has taken on a high security risk. Theoretically, China could “starve” the American defense industry. China demonstrates this to the USA when, for example, the latter attempts to block Chinese access to high-end chips. Even if the USA can keep China away from high-end microchips, the commodities for them still come from the Middle Kingdom. And every time the USA has imposed tariffs or introduced other sanctions, China has responded with export controls for critical metals, most recently for rare earths such as neodymium oxide. These apply as of October 1, 2024.
New mindset through dependencies
The increasing visibility of dependencies has changed the Western and thus also the German mindset. The Americans are financing state warehouses for gallium and germanium, all paid for by the Department of Defense. In Africa, Australia, China, the USA, and Canada are competing for rare earths such as terbium. Yet Europe has remained quiet until now. At least France and Italy have launched billion-dollar funds for raw material projects. The Ministry of Economic Affairs under Habeck has also initiated a raw materials fund of one billion dollars, to be managed by the KfW Bank (as we reported). These are good and important approaches for mining and recycling projects in the future. But we need these metals now.
Germany's iron reserve
Increased defense production, in particular, is putting stress on the market. Prices for rare earths, for example, are almost certain to explode starting in October. Despite the increased demand from the defense sector, we assume that wars over commodities do not pay off and that peaceful global trade is the better alternative. Let us hope that the global situation eases soon so that the right decisions can be made. Until then, our well-guarded commodities warehouse remains Germany’s iron reserve.
A version of the article from the Berliner Zeitung can also be found on MSN.