In the modern age of technology, rare earth elements have emerged as indispensable resources, playing a critical role in everything from consumer electronics to advanced military hardware. These valuable metals are integral components in the production of smartphones, electric vehicles, and sophisticated weaponry, including fighter jets and submarines.
Remarkably, the manufacturing of a single F-35 stealth bomber uses over 400 kilos of these rare earth metals.
Currently, the majority of rare earths utilized in Germany are sourced from China. However, geopolitical tensions have complicated this supply chain. Amid a trade conflict with the United States, China has recently announced plans to further restrict its already stringent export regulations, potentially halting the export of rare earths for military applications.
Exporters in China now face new requirements to submit sensitive information, a stipulation that defense companies find untenable. Jakob Kullik, a political scientist at Chemnitz University of Technology, expressed concerns over these measures, stating, “The end-use clauses, the high bureaucratic hurdles and the access into supply planning are basically nothing but industrial espionage,” to DW.
The Federation of German Industries (BDI) has criticized these developments, suggesting, “The new rules can be seen as a direct attack on the rearmament of the West.” With the German defense sector ramping up production to modernize military capabilities and support Ukraine against Russian aggression, these constraints could pose significant challenges.
German Companies Take Precautions
Despite the looming challenges, the German defense industry remains composed. Hans Christoph Atzpodien, CEO of the German Security and Defense Industry Association (BDSV), told DW, “There is no panic in the industry,” emphasizing that the sector requires “relatively small quantities” of rare earths. Companies have implemented measures to mitigate potential disruptions in production.
Nonetheless, experts caution that supply disruptions remain possible. China dominates approximately 80% of the global production and more than 90% of the refining processes for rare earths. Kullik highlights the concern: “When push comes to shove, the big question is where defense companies will get alternatives, and things are looking really bleak in that regard.”
Developing alternative sources independent of China could take years. Atzpodien underscores the urgency of enhancing European capabilities, stating, “We see an urgent need for action to make us more independent in Europe as a whole.” Simplifying environmental permits is essential for Europe to bolster its processing capacity.
A Dirty and Unprofitable Business
Extracting rare earth elements is a challenging, hazardous, and costly endeavor. Although these 17 chemical elements are not scarce in the Earth’s crust, their low concentration necessitates significant excavation and chemical processing.
Significant deposits of rare earths are located in China, Vietnam, Brazil, Russia, Australia, Greenland, and the United States. However, high costs render mining operations uneconomical, leading to closures in countries like the US and Australia. In contrast, China has strategically expanded its mining and processing capabilities.
Historically, Germany and its economy have favored importing rare earths, primarily from China. “In the past, we were happy to outsource processing to China, but that is no longer possible,” remarked the German Security and Defense Industry Association.
China’s near-monopoly on rare earths has provided it with significant geopolitical influence. In 2010, a territorial dispute led China to temporarily cease rare earth shipments to Japan, prompting Japan to reduce reliance on Chinese sources.
Similarly, the United States under President Donald Trump has sought to diversify its rare earth supplies. However, the US remains reliant on China, as evidenced by a recent agreement to suspend export restrictions temporarily.
Will Mining Make a Comeback in Germany?
Germany has long recognized the necessity of diversifying its critical raw material sources. However, progress has been minimal. “The government and industry are passing the buck back and forth,” Kullik observed. The Economy Ministry and industry stakeholders have been hesitant to act without evident urgency.
The question remains: Who will spearhead efforts to secure alternative sources? Who will bear the financial risk of establishing new mines?
Germany possesses some rare earth deposits, notably in the Ore Mountains of Saxony, but exploration is limited. Kullik noted, “We no longer have any large German mining companies with the expertise. That means that even if the federal government wanted to do it, even if it were to invest €10 billion ($11.5 billion) or more in the ideal case, the fact remains that we lack the necessary partners.”
Although German defense firms currently report stable supplies, China’s dominant position in the rare earth market provides it with considerable leverage. As Kullik describes, it is “the perfect geo-economic bargaining chip,” which could potentially disrupt Germany’s military modernization efforts.
This article was originally written in German.
Original Story at www.dw.com