In Search of Resource Partners

BERLIN/SANTIAGO DE CHILE | | chile

BERLIN/SANTIAGO DE CHILE (Own report) - Berlin is applying pressure to obtain more exclusive "resource partnerships" to ensure the supply of natural resources for German industry. According to the Ministry of the Economy and Technology, the German government has its eye on Chile, Peru, Zambia, South Africa, and Namibia as new "resource partner" candidates. This type of alliance has already been forged with Mongolia and Kazakhstan. Berlin's plans for a supplementary accord with Chile, which holds the world's greatest copper deposits, are furthest advanced. German enterprises are also receiving a large portion of their supplies from Chile. Against strong popular protests, the rightwing Chilean Sebastián Piñera government is carrying out a privatization policy, which is very advantageous for German access to the country's resources.

Seven "Resource Partners"

Germany is intensively seeking to obtain contractual privileged access to the raw materials of important resource countries ("resource partners") to reinforce its national industry's position on the global market. Since the recent conclusion of so-called resource partnerships with Mongolia and Kazakhstan, similar alliances are being sought with Chile, Peru, Zambia, South Africa, and Namibia. According to Werner Ressing, director of the Department of Industrial Policy in the German Ministry of Economics and Technology, "seven countries have been identified" with which Germany would like to enter "resource partnership" alliances.[1]

Dramatic Rise in Price

This frantic search has been caused by the heightened global market competition and therefore the dramatic rise in prices of raw materials over the past few years. The focus is not only on energy resources, such as oil and gas, but also on mineral resources, which are indispensible to the industry, such as iron ore or copper. The German economy had progressively retreated from the actual production of raw materials, because raw materials generally remained at a relatively low price for decades, and the necessary resources could be bought rather inexpensively on the world market. Therefore, today, it finds itself at a disadvantage - due to the rapid rise in the price of resources - in relationship to other countries, which had not taken this course, for example Great Britain, Australia, China and Brazil with their leading multi-national steel and mining companies. In a recently published interview, Volker Steinbach, department director at the Federal Agency for Geological Studies and Natural Resources (BGR), evoked dramatic scenarios. According to Steinbach, 30 percent of the global iron production is currently in the hands of three companies - Rio Tinto (Great Britain/Australia), Vale (Brazil) and BHP-Billiton (Australia/Great Britain). In reference to shipped iron ore, these companies are even in control of 70 percent of the global iron ore trade. This has placed them in a position to dictate prices. For Germany, this is "fatal."[2]

Concerted Action

Since some time, Berlin has been seeking to expand its own influence on the natural resources sector through a concerted action involving politics and economy.[3] The "resource partnerships" that the German government has already concluded with Mongolia [4] and Kazakhstan [5] are particularly aimed at exclusive access to their "rare earth" deposits. Germany, in exchange, promises an allegedly just as exclusive transfer of scientific expertise. At the beginning of the year, German industries initiated an "Alliance to Secure Resources," comprised of companies including Bayer, BASF, ThyssenKrupp and Daimler. The "Alliance" plans to enter, in grand style, both direct production and the commerce of raw materials.

Number One Copper Producer

At the moment, Berlin primarily has its eye on Chile for the expansion of its "resource partnerships." That resources rich country has the world's largest copper deposits. By 2018, private steel and mining companies plan to invest around US $50 billion in the local mining sector. German industry is also very interested. Europe's largest copper producer, Hamburg's Aurubis AG (formerly Norddeutsche Affinerie) is already drawing one quarter of its copper concentrates from Chile. In early January, German Minister of Development Dirk Niebel (FDP) visited Santiago de Chile along with Parliamentary States Secretary Gudrun Kopp (FDP), to confer with members of the Chilean government about an intensive cooperation in terms of resources. Kopp explicitly emphasized the significance of Chile, "one of the richest countries in the world in raw materials," a significance due to current "bottlenecks," also "in the supply of German industry."[6] The planned "resource partnership" with Chile is based on the principles of the already concluded alliances with Mongolia and Kazakhstan: German know-how in exchange for Chilean raw materials. Niebel pointed out that "over the next few years" Chile "will lack 20,000 qualified specialists in the mining sector." Germany is "prepared" to engage its technical expertise "in the reform process in Chile with the active support of the German economy."[7]

Pinochet's Economic Policy Tradition

"Chile's reform process" that Niebel would like to exploit for enhancing Germany's position in the Chilean raw materials sector, is nothing other than the outcome of the stringent privatization course followed by incumbent President Sebastián Piñera. Piñera, a political right-winger, is pursuing an all out pro-business austerity policy - a policy implemented in the 1970s by dictator Augusto Pinochet with the support of the USA and the Federal Republic of Germany.[8] Resistance to this policy has been growing at all levels of the society over the past few years, and is met with brutal government repression. Labor struggles are also recurring in the mining industry, most recently in opposition to the plan to privatize the large state-owned Codelco copper company. The workers went on strikes and engaged in other forms of protests. They also demanded that the government use a larger portion of the state copper mining profits for the benefit of the population. However, the Piñera government - with Berlin's support - continues to pursue its privatization plans and intends to give foreign companies free access to the country's Lithium resources.

Without Meaning

Government repression of strikes is no obstacle to conclude resources agreements with Berlin, as was demonstrated last February, when the German government concluded a "resource partnership" accord with Kazakhstan's government. Only a few months earlier, the dictatorial Kazakh President Nursultan Nazarbayev had brutally crushed a strike in the oil industry; killing up to 70 people, according to reports. For Germany, this plays no role, as long as the German industry can secure its supply of key raw materials.

[1] Bundesregierung plant Rohstoffabkommen mit fünf weiteren Staaten; www.fis.dowjones.com 15.03.2012
[2] "Engpässe bleiben bestehen". Interview mit Volker Steinbach; www.zvw.de 05.05.2012
[3] see also Kampf um Rohstoffe, Struggle for Natural Resources (II), Kampf um Rohstoffe (III) and Kampf um Rohstoffe (IV)
[4] see also Verbündete gegen Beijing (II)
[5] see also Kampf um Rohstoffe (IV)
[6], [7] Dirk Niebel: Berufsbildungspartnerschaft und Rohstoffkooperation stärken; www.bmz.de 10.01.2012
[8] see also Warnings