According to a media report, two billion euros are to be invested in the supply of raw materials to the German economy via a sovereign wealth fund. The project could be of strategic importance.
The German government wants to secure the future of the domestic economy by setting up a raw materials fund, reported the news agency Bloomberg. The multi-billion euro fund could help to create long-term access to raw materials whose extraction and processing are largely controlled by foreign companies.
Billions invested for more diversification in the supply of raw materials
The German government wants to endow the state fund with two billion euros to be channelled into domestic and international raw materials projects. The money could be channelled into the extraction and processing of rare metalslithium, cobalt and other raw materials that are essential for the manufacture of electric vehicles, smartphones and other high-tech products. Germany relies on imports for up to 90 % of the supply of these metals. In the area of rare earths, these come almost exclusively from mines or processing companies in China. The funding programme could help to break this supply dependency and broaden access to raw materials.
Germany follows the example of Japan and South Korea
With the planned raw materials fund, Germany is following Japan's example. Back in 2004, the country created its own raw materials authority under the name Japan Organisation for Metals and Energy Security (JOGMEC). Its aim is to secure access to critical raw materials and promote the strengthening of the industry by investing in the exploration of mineral resources and supporting national raw materials companies with loans and guarantees. JOGMEC is currently planning to set up a fund worth 105.8 billion yen (720 million euros) to subsidise the supply of raw materials for the construction of electric cars. In South Korea, the state has also been actively involved in securing the supply of raw materials since the 1960s in the form of Korea Resources Corp (KORES).
Cooperation with Indonesia as a possible application
One possible concrete application of the raw materials fund planned in Germany is cooperation with Indonesia. As reported by the industry portal Rohstoff.netthe two countries want to enter into a raw materials partnership. Indonesia has rich deposits of nickel, which is needed for the production of batteries. According to the state news agency Antara the country also wants to develop its rare earth deposits. Germany could participate in exploration and extraction and thus guarantee access to these critical raw materials.
Need for action also seen at EU level
A draft law from the European Commission from March of this year shows just how important the issue of raw material supply is. The Critical Raw Materials Act aims tostrengthen European sovereignty over important natural resources: In addition to the extraction of raw materials, the aim is to expand local value chains. In contrast to the planned raw materials fund in Germany, however, there is currently a lack of information on financing and possible instruments.
