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Securing raw materials: Challenges and strategies for Germany’s economy

Minerals and metals like lithium and copper are crucial, but rare earths such as scandium, cerium, promethium, terbium and thulium are equally essential. While rare earths aren’t as scarce as their name implies — with thulium even more common than gold — their economic viability for mining depends on finding significant deposits.

A recent study by IW Consult at the German Economic Institute and Fraunhofer Systems and Innovation Research (ISI) examined Germany’s reliance on these rare earths, copper, and lithium imports to gauge their significance to the economy. The findings reveal a substantial impact, with nearly a third of Germany’s manufacturing sector value linked to copper, a tenth to lithium-containing goods, and over a fifth to rare earths.

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The report underscores the market dominance of a few suppliers, primarily China, which holds the largest rare earth deposits. Despite deposits in other countries like Greenland, Canada, and Sweden, China remains the primary source. Consequently, almost a third of Germany’s lithium and 19% of copper and rare earth imports come from sources deemed at risk, including China.

Germany’s reliance on China for rare earths is more significant than its dependence on Russian gas, posing considerable vulnerability due to China’s control over exploration and processing. This dependency is exacerbated by China’s export controls on rare earth minerals and geopolitical tensions impacting trade.

To enhance rare-earth security, experts advocate auditing the entire supply chain, diversifying supplier countries, domestic production strengthening, and bolstering recycling efforts. Failure to address these challenges could endanger Germany’s industrial economy, hindering its climate ambitions and jeopardizing industrial production and job opportunities.

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