China's Warning Shot: Will Robert Habeck's Raw Materials Fund Now Come to Fruition?

“One for all, all for one.” The motto of the Three Musketeers would also serve as the slogan for the raw materials pact between Germany, France, and Italy. These three countries, together with multi-billion-dollar raw materials funds, intend to invest in achieving independence from China’s metal imports. The fact that, starting from August 1st, Chinese companies will only be able to export Gallium and Germanium with state approval might have been the necessary warning shot for German Federal Minister for Economic Affairs Robert Habeck to take his part of the agreement seriously.

Italy and France have already established funds of one billion and half a billion euros respectively for mining projects outside of China. Robert Habeck is somewhat behind in this endeavor. The raw materials fund he proposed in January of this year has so far faltered due to the budgetary plans of Finance Minister Christian Lindner. However, news recently emerged from government sources that the required billion could also come from Habeck’s special fund for climate and transformation (KTF). This would negate Lindner’s objections, as it would not burden the budget. Habeck therefore expects the fund to enter the market no later than 2024: “Given the paramount importance of viewing economic policy as economic security policy, I believe it’s likely to happen.”

In reality, Europe is running out of time. China’s export halt on technology metals might have been just the beginning. Further export restrictions on rare earths are already being discussed. These are indispensable for the energy transition, particularly as magnet metals used in wind turbines and electric cars. Having their own mines and, above all, refineries is also crucial for Europe in the medium to long term. However, it can take 10 to 15 years for a planned mine to become operational. The industry needs these metals now, and China can throttle supply at any time.

Fortunately, the industry has prepared by stockpiling a certain amount of critical metals. This enables companies to continue production for a few months in case of supply disruptions. They are supported by Noble BC, which, along with its investors, stockpiles Germanium and Gallium for emergencies.

Only together are we strong. Full industry stockpiles, government foresightful planning, and private raw material storage with the prospect of attractive tax-free returns – these are the three “Musketeers” of our time!