Sounding the Alarm: Economist Grimm Urges Germany to Strategize on Securing Rare Earths
Strategy advocated by Grimm for managing rare earths resources
In an informative chat with "Focus", economist Veronika Grimm emphasizes the urgent need for a comprehensive national strategy to maintain Germany's supply of rare earths. Grimm believes it's high time the National Security Council stepped up, as the federal government has only just begun to tackle the issue with initiatives like the Resource Fund and the National Resource Strategy. However, she notes that implementation can be slow, overly bureaucratic, and excessively focused on individual areas of action, calling for a more cohesive security strategy.
The Resource Fund, provided by KfW, is a stepping stone, but Grimm believes it falls short of what's needed for a sustainable resource strategy. What's truly vital is a strategic perspective that takes geopolitical developments into account, addressing factors such as strategic partnerships, energy trading, and trade relations. This broader vision, she suggests, could beautifully merge within the context of the new National Security Council.
China currently commands a significant portion of the rare earths market, and its strategic securing of the processing of critical raw materials raises red flags for Grimm. Disruptions in supply could lead to severe production delays or even shutdowns, impacting high technology, electric vehicles, wind power, and defense supplies.
Given the mounting pressure, Grimm urges strengthening European purchasing cooperations, developing strategic reserves for critical raw materials, and expanding resource partnerships with nations like Canada, Australia, and Chile. This global collaboration can help navigate strict export controls and mitigate potential shortages.
Behind the Scene
The EU and Germany are part of a broader effort to lessen their dependence on external sources, particularly China, for rare earths. The challenges confronting Germany include navigating China's strict export controls and addressing potential shortages that could impact various sectors, such as the automotive and electronics industries.
Key challenges revolve around China's export controls and perceived supply chain risks. German companies, while reporting stable supply chains so far, face the specter of disruptions. Initial effects on supply chains have been observed, and delays in export licenses could lead to short-term disruptions.
The EU has responded with the Critical Raw Materials Act, aiming to increase domestic mining, processing, and recycling of strategic raw materials by 2030. Germany is focusing on diversifying supply sources and boosting industrial resilience, investing in renewable energy, and exploring alternative materials and technologies to lessen dependence on rare earths.
As Germany navigates these challenges, it is likely to continue collaborating with EU partners to bolster its position in the global rare earth market.
The economist Veronika Grimm advocates for the integration of a comprehensive, cohesive common foreign and security policy within the new National Security Council, as it could provide a suitable platform for addressing the geopolitical aspects of rare earths, such as strategic partnerships, energy trading, and trade relations. With China's dominance in the rare earths market posing potential threats to industries like finance, business, and defense supplies, Grimm emphasizes the importance of European industry cooperation, strategic reserves for critical raw materials, and expanded resource partnerships with nations like Canada, Australia, and Chile to ensure a stable supply of these essential materials.
