While the European Union works to flesh out what is expected to be landmark legislation said to rival the U.S. Inflation Reduction Act to combat climate change and strengthen supply chains, German Chancellor Olaf Scholz traveled South America to lobby key mineral producing countries to prioritize resource cooperation with Germany.

After years of complacency, fueled in part by what German officials described to Reuters as a “distaste for the dirty business of mining and faith in the open market,” German stakeholders are now pushing for securing and diversifying supply chains “for example through offtake agreements, stakes in mines, or possibly the establishment of Germany’s own processing capacity.”

During his trip, Scholz signed a commodity partnership agreement with Chile aimed at strengthening cooperation via an annual bilateral forum and “state instruments” like investment guarantees. According to Reuters, Chile and Germany recently launched a hydrogen pilot project in Patagonia drawing on wind energy which is backed by the German government while leveraging technology from Siemens Energy.

While South America is a target-rich environment for Scholz’s lobbying efforts, with the region home to key mineral producers, the southern hemisphere has also seen a rise of resource nationalism which may complicate his mission.  Although he also visited Argentina on his trip, no agreement with the country has been announced, and a 2018 Bolivian-German lithium joint venture fell apart in 2020 amid domestic political turmoil in Bolivia. [See our post on nascent resource nationalism in Central and South America here.]

Scholz’s lobbying tour to South America comes as the EU-co-funded EIT Raw Materials, an innovation community within the European Institute of Innovation and Technology, calls on the European Union to use its to-be-released Critical Raw Materials Act to speed up permitting and and strengthen investment into the metals and minerals underpinning the green energy transition.

While the EU and the United States are close allies, Europe will not only have to compete with China and Russia for resources, but also with the U.S., with the Biden Administration’s Inflation Reduction Act serving as a key vehicle to spur investment in the critical minerals sector.

As EIT Raw Materials CEO Bernd Schaefer argued in an interview earlier this week, “[w]e all know Europe isn’t as agile and quick when it comes to decision-making. The Americans take the fast track and the super fast track has been taken by the Chinese.”  

With the comment that what passes for fast from the European perspective isn’t nearly fast enough, it’s encouraging that we can expect more activity across the Atlantic in the coming months.

It’s a brave new world, in which stakeholders will have to strike a sustainable balance between competition and cooperation in the critical mineral resource sector.  It’s not an easy task, but one that the United States can achieve with a comprehensive and decisively implemented all-of-the-above approach to mineral resource security.

The post A Look Across the Atlantic – Germany Seeks Resource Cooperation in South America as Competition Heats Up appeared first on American Resources Policy Network.

In their quest to untangle complex critical mineral supply chains and reduce over-reliance on adversary nations, the extent of which was first brought to light in the coronavirus pandemic, nations are not only forming partnerships like the recently-announced Minerals Security Partnership (MSP), which Reuters’s Andy Home likens to the formation of a “metallic NATO,” they are also taking their own steps to secure supply chains for domestic manufacturers.

In the following, we’re taking a look at resource related activities in countries beyond ARPN’s usual purview (which of course is focused on the United States but sometimes includes our close allies Canada and Australia):

• Earlier in July, the United Kingdom released its first ever Critical Minerals Strategy, setting out, in the words of Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng, the UK’s “plan to secure our supply chains, by boosting domestic capability in a way that generates new jobs and wealth, attracting investment and playing a leading role in solving global challenges with our international partners.”

  The announcement comes only days after the launch of a Critical Minerals Intelligence Centre (CMIC), which seeks to “boost the country’s resilience and growth by providing up-to-date data and analysis on the supply of critical minerals,” and “develop evidence-based policies aimed at developing more robust critical mineral supply chains to the UK.”

• Germany, too, is taking steps to decouple from adversaries and bolster its domestic supply chains emphasizing domestic production, processing and recycling over imports.  Upon taking office, the new Federal Government  set itself the ambitious goal of presenting a comprehensive National Security Strategy within its first year. The process was kicked off in March of 2022, a few weeks after the Russian invasion of Ukraine, which served as an eye opener for Germans and Europeans in terms of their dependence on Russian energy supplies, particularly oil and gas. Consequently, Foreign Minister Annalena Baerbock has made clear that Germany must ensure that it cannot again fall victim to blackmail as it did over its dependence on Russian energy, and is looking for ways to reduce the country’s economic dependence on China, which is particularly high when it comes to supplies of Rare Earths.

  In the same vein, the German Federal Institute for Geosciences and Natural Resources (BGR), in partnership with the German Resource Research Institute (GERRI) has released a research paper calling for a “rethink” for German resource policy. Outlining that German resource policy rests on three pillars — imports, domestic development and processing, and recycling — the authors of the report call for strengthening the second and third pillar over the first one going forward.

• But it’s not just Western nations feeling the heat — South Korea, too, is starting to feel vulnerable over critical minerals.  The Korean National Assembly Research Service has said that “securing metal resources will be a key to energy security, and stressed the importance of plans to stockpile metal resources and diversify suppliers.”

  A founding member of the Mineral Security Partnership (MSP) led by the United States, South Korea is planning to “draw up related measures such as measures to stockpile more mineral resources,” after having neglected its resource policy over the past decade, according to researchers.

These are only a few examples of mineral resource policy developments beyond ARPN’s usual purview, but they all make one thing abundantly clear:  With geopolitical tensions rising, countries are realizing that critical mineral resource supply chains are vulnerable to manipulation or weaponization, and are taking steps to shore up their domestic development and processing capabilities.  All-of-the-Above increasingly appears to be the order of the day.  Friend-shoring is an important pillar of any resource strategy, but must be embedded into a comprehensive approach from mine to manufacturing and across all segments of the value chain.

The post A Look Beyond the United States — Realizing the Extent of Resource Dependencies, Countries Take Steps to Bolster Domestic Supply Chains appeared first on American Resources Policy Network.

They did kick off, and the long-suspected occurrence of Rare Earths in the area has now been confirmed by a report conducted by an independent Australian company, which detected a deposit of roughly 20,100 tonnes of Rare Earth oxides underneath the village of Storkwitz between Leipzig and Dessau.

As the German weekly Wirtschaftswoche suspects, it probably won’t be long until opposition to the development efforts will be voiced:

“Regardless of the amount, it will take a long time until the metals can actually be mined. The residents of Storkwitz likely will not be thrilled to see their village turn into a huge construction site. It wouldn’t be the first project in Germany to get held up by protests and petition drives.”

The Wirtschaftswoche’s commentary touches on an interesting (though not overly surprising) point which raises the specter of hypocrisy: Like the United States, where environmentalists are quick to demonize the domestic development of the very minerals upon which their preferred energy sources so heavily rely. Germany, whose Chancellor has made trips to Mongolia and Kazakhstan to sign Rare Earths development agreements, apparently is no stranger to the “Not in My Backyard” sentiment.

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While not making a big splash in the media, a piece of news from Germany once more underscores the relevance of critical minerals and associated supply issues.

As the newly launched German Resource Alliance (Rohstoffallianz) has announced, automakers BMW and VW are officially becoming shareholders of the alliance. Founded in 2012, the Resource Alliance is a “globally active profit-oriented raw materials corporation” which has the backing of the German government, and brings together “companies in Germany with high-level industrial value creation, which have their own need for raw materials.”

BMW and VW are joining ten other companies, among them Copper producer Arubis, chemical companies BASF, Bayer, Evonik and Wacker Chemie, as well as Bosch, Georgsmarienhuette Holding, Rockwood Lithium, Stahl Holding Saar, and ThyssemKrupp.

Primary targeted areas of action for the alliance are: providing a communications platform, developing strategies for securing the raw material supply, lobbying and exchange of information, sharing mining know-how and market expertise, project financing and insurance, as well as project management.

Automakers require significant amounts of critical minerals such as Rare Earths Elements and Copper for vehicle manufacturing. Copper, in particular, is significant as a stand-alone metal and as a “Gateway Metal” that unlocks other “Tech Metals” such as Molybdenum and Selenium.

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In its Energy Study 2012, the German Mineral Resources Agency (DERA) emphasizes the importance of using domestic raw materials against the backdrop of increased price volatility and supply risk.

As summarized by the German daily Handelsblatt, the agency’s core message is as follows (rough translation):

Supply shortages are likely to occur not due to due to geology, but will rather stem from natural disasters or economic and political turmoil. The agency reiterates that in spite of rising production, known global reserves of energy resources have in fact increased, with oil being the only energy source for which reserves are considered finite. Meanwhile, it predicts that the supply picture for high tech minerals such as Indium, Gallium, Molybdenum or Neodymium – with China being the main producer – will remain tense.

A recently formed, German government-backed “globally active profit-oriented raw materials corporation” called the “Resource Alliance,” reflects Germany’s strong focus on mineral resource security. After a successful startup phase, the alliance’s first projects are slated to kick off in 2013.

It’s important to note that Germany’s approach to mineral resources is rather comprehensive. It stretches beyond the now-hyped Rare Earths and includes many other rare metals, including the ones derived from what we have described as gateway metals in our September study – a broad focus we’d like to see more of on this side of the Atlantic.

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During her state visit to China, Merkel offered to partner with Beijing in efforts to address environmental issues related to REE development – which China claims are the main reasons for its restrictive policies. Speaking at a conference in which both Chancellor Merkel, and Chinese Prime Minister Wen participated, President of the German Federation of Industries Ulrich Grillo reiterated that joining the WTO suit was not in Germany’s best interest. He did, however, voice concerns about distortions resulting from Chinese government control over the global REE market.

Raising the Rare Earths issue during the state visit is in line with Germany’s recent policy shift towards a more comprehensive mineral strategy and a more active role in the global race for resources. Having jumped into the REE pursuit at the beginning of the year with plans to develop a 38,000 tonnes deposit of Rare Earths in the East German state of Saxony, Germany has inked a cooperative REE development treaty with Mongolia and Kazakhstan, and is expected to partner with Russia to develop these precious resources as well.

Meanwhile, the recently formed “globally active profit-oriented raw materials corporation” called the “Alliance for Securing Raw Materials,” which enjoys the backing of the German federal government, is beginning to take concrete action, and may participate in a first project to explore and develop Rare Earths as early as this year.

With mineral supply issues affecting not only many of U.S. domestic manufacturers, but also our national security and economic wellbeing, one would think our policy makers in Washington, D.C. would place as much emphasis on addressing them. Thus far, Berlin is ahead of Washington in framing out a strategic policy concerning strategic metals.

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According to the company’s CEO, the German government has been extremely supportive of the project in the context of its new mineral commodity strategy, the implementation of which has been made a priority in spite of the fact that the political agenda remains dominated by the Eurozone crisis.

The post Germany jumps into the race for rare earths appeared first on American Resources Policy Network.

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The German Government is being spurred on by mega multinationals like Siemens, anxious to lock in continued rare earths access with non-Chinese sources of supply.

Germany’s strategic focus is sharpened by the fact that it has no Rare Earths deposits of its own to develop; being 100 percent import-dependent, its only concern is to diversify its supply sources away from China, currently providing 97 percent of global rare earths production.

One question for U.S. policymakers:  With the U.S. home to 13 percent of global rare earths resources – not to mention similar reserves of a dozen other critical metals – why isn’t the German Chancellor coming to Washington, D.C. to look for partners in resource development?

The post Germany Goes Prospecting for Mongolian Rare Earths appeared first on American Resources Policy Network.

As the German monthly Manager Magazin reports, the envisioned procurement trust, which companies like chemicals maker Evonik and auto manufacturer Daimler have already pledged to partially fund, would, as a first step, focus on the exploration of rare earths elements (REEs), tungsten and coking coal. The next stage would likely involve resource development, manufacture, and sale with preferred purchasing rights for member companies.

The BDI assumes that for the project to be successful – and as a sign of how critical these metals are even as the German treasury is under pressure as the chief supporter of Eurozone bailouts – investments of more than one billion Euros would be necessary over the course of the next five to ten years.

The German government, which, according to the association has already asked the BDI to examine investment in Kazakhstan and Mongolia, is expected to pick up part of the tab.  BDI member companies are currently reviewing the plans. If approved, a contract could be signed Nov. 17, and the resource alliance could formally launch on January 1, 2012.

While certainly ambitious, the BDI’s move is hardly surprising in light of China’s tightening of export restrictions for rare earths and rising cost for critical mineral resources in general. It should, however, serve as a wakeup call for U.S. policy makers that other nations won’t wait for the U.S. as they position themselves in the global race for resources.

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