Germany Challenges China: 1 Billion Euros for Commodity Fund

German Economy Minister Katherina Reiche announced on Monday that a special government raw materials fund will support projects related to the mining of copper, gold, lithium, and rare earth elements in Germany, Canada, and Australia. The aim is to reduce the German economy's dependence on raw materials from China.

Reiche, quoted by Bild, announced that the fund will invest €150 million this year in a lithium mining project in the Upper Rhine Plain. Private investors are expected to contribute €1.9 billion.

At the same time, the German government intends to engage in gold and copper mining projects in Canada. This project also involves €150 million in government funding. The total value of the project is expected to exceed €500 million.

The ministry headed by Reiche also plans to allocate €100 million for rare earth element mining in Australia.

“We are facing the difficult situation related to China and we are investing,” said the CDU politician, describing her ministry’s intentions.

The Raw Materials Fund at the Ministry of Economic Affairs was established in 2024. The federal government plans to initially allocate one billion euros to it; the funding budget for a single project typically ranges from 50 to 150 million euros.

The Ministry of Economy explained that the fund's goal is to diversify raw material supplies to enhance security of supply. The idea is to increase the supply of raw materials more quickly through early state participation in specific projects and provide German companies with access to them.

According to data cited by the Frankfurter Allgemeine Zeitung, China currently controls almost 70 percent of the world's rare earth metals production.

The largest consumer of rare earth elements in Germany is the automotive industry. These raw materials are needed for power systems, including brakes, power steering, window lifters, seat adjustments, and windshield wipers. The average car contains up to 70 such systems.

The machinery, chemical, electronics, and semiconductor industries also rely heavily on raw materials mined in China. Rare earth metals are found in refrigerators, computers, smartphones, as well as advanced military equipment, fighter jets, and submarines.

German companies fear market disruptions and the extension of export controls on rare earth elements by the Beijing authorities. Consequently, they are trying to diversify supply sources or stockpile critical supplies. Germany's largest defense company, Rheinmetall, announced that it has five years' worth of raw materials.

Mateusz Obremski from Berlin (PAP)

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