Germany is extremely dependent on raw material imports, most of which come from anti-democratic countries. This is the result of a study by the DIW. But the institute also shows ways to free yourself from dependencies.
Germany is dependent – ??on raw material imports. A study by the German Institute for Economic Research now shows how much. Especially when it comes to raw materials that are indispensable for the energy and transport transition, such as lithium, magnesium and cobalt, there is an enormous dependency – and on less democratic countries like China or Congo. For 14 of the 30 raw materials classified as particularly critical, dependency on imports is 100 percent.
The share for another three raw materials is more than 95 percent. Raw materials that are essential and at the same time subject to an increased delivery risk are considered critical. “This year, Russia has shown us drastically how dependence on raw materials can be used by autocratic regimes as a means of exerting political pressure, and what serious economic consequences this dependence has,” says Lukas Menkhoff, head of the DIW’s Global Economics department, in view of the severely reduced energy supplies after the start of the war against Ukraine.
In the case of the so-called rare earths, which are essential for the construction of smartphones, electric cars and wind turbines, for example, Germany and the European Union are more than 90 percent dependent on supplies from China. The same is true of magnesium. According to the DIW, no individual actions help to reduce such dependencies. “A whole bundle of measures is required, which should ideally all be pushed forward at the same time,” said DIW study author Marius Zeevaert.
One possibility would be to diversify the supplier countries, i.e. to expand the supply to other countries. Brazil, Chile, India and Australia could be considered for the rare earths. Lithium can be imported from Australia, China and Argentina. Multiple suppliers reduce dependency. For example, should China block exports, Germany could rely on the other trading partners. “All of the measures mentioned would increase the cost of raw materials, but Germany would gain a lot in security of supply,” says Lukas Menkhoff.
It is also proposed to supplement storage with mandatory minimum reserves. The procurement of relevant raw materials should also be bundled across Europe in order to counteract the market power of the few suppliers. In the longer term, security of supply can be increased by partially replacing raw material imports. This also includes improved recycling. Furthermore, own production possibilities can be used more intensively.
Magnesium and lithium in particular can also be mined in the EU. Technical innovations that reduce or even completely replace the use of critical raw materials can also be promoted. “All of the measures mentioned would also increase the cost of raw materials, but Germany would benefit greatly – especially if the countries of the European Union were to cooperate,” says Menkhoff.
