Breaking the Monopoly

BERLIN |

BERLIN (Own report) - German authorities and business agencies are calling for drastic measures to attain national independence from of Chinese raw materials. Particularly in the case of so-called rare earths, "the entire Chinese-controlled value chain must be broken," the Federal Academy for Security Policy (BAKS) explains. If this fails, the "EU's military autonomy" would be compromised, since the metals in question are "indispensable" for arms production, according to the German government's think tank on military policy. This view is shared by the Federal Agency for Geological Studies and Natural Resources (BGR). In a recent paper it warned of serious "disadvantages" for "Germany, as an economic base of operations," should China's "supremacy" in exporting mining products is not countered with appropriate "alternative strategies." And according to the German media, China’s alleged raw material monopoly is like a "super weapon."

"Dependent on China"

The Federal Academy for Security Policy (BAKS) writes in its recent "working paper" that Germany's "security of supply" and the "EU's military autonomy" are at "considerable risk," should China retain its "dominant position" on the rare earth global market. Since rare earth elements are "indispensable" for arms production, the People's Republic could use its "raw material monopoly" to apply "political blackmail." Moreover, China is not only controlling the extraction, but also "all other stages in the production of the rare earth global market," which increases the "dependence" on Chinese imports, BAKS declares. This has "a significant impact on the West's economic and military security and the supply conditions in the case of conflict."[1]

"No Longer Sovereign"

According to BAKS, this is caused by the prevailing "market thinking" in western countries that has triumphed over "legitimate security concerns." Even "major financially sound end consumers" of rare earths, such as VW, BMW or Siemens dread making "strategic investments in their own raw materials projects" since it is, in general, difficult to estimate "the profit potential of mining projects and processing facilities, which usually amortize only years later." Therefore, BAKS calls for a "German raw material strategy, assigning to the state, as partner of the industry, a stronger strategic role." "It would be naïve and strategically irresponsible to solely rely on market forces." In concrete terms, the author of the "working paper" thinks of subsidizing "domestic raw materials extraction in Germany and Europe", coupled with "tax relief," "faster approval procedures" and "state participation." As the scholar of the Chemnitz Technical University and the Helmholtz Institute for Resource Technology in Freiberg further explains, "German and NATO planning circles" should always consider "which raw materials and components for which weapons systems are provided by which companies and suppliers from which mines and processors" - and not lose sight of the overriding goal: "Ultimately, the entire Chinese-controlled value chain must be broken to, at least partially, regain the West's lost sovereignty over raw materials."[2]

"Vulnerable"

Recently, a publication of the German DERA raw materials agency also made reference to China's "predominating position" on the world's mining products market. The institution created by the Federal Agency for Geological Studies and Natural Resources (BGR) considers that supply shortages and price fluctuations in rare earths, particularly indicate an extreme "vulnerability and dependency" of German companies. The "market power" of the People's Republic and the export restrictions decreed by the Chinese government could lead to "supply bottlenecks," endangering "security in procuration planning," and thereby, ultimately seriously weaken "Germany, as an economic base of operations." German companies are therefore advised to "get involved in mining" themselves. "Such initiatives would insure direct access to new sources of raw materials and supplies."[3]

Long-Term Agreements

TyssenKrupp has apparently already implemented this recommendation. On August 12, the company announced that it had reached a "long-term purchase agreement" with Australia's Northern Minerals Limited. "Northern Minerals Limited is among the few rare earth suppliers outside of China, which is why we are looking forward to a successful cooperation. As exclusive distributor of high-quality products, we will have the possibility of the tong-term strengthening of our customer relationships and positioning ourselves in this sector."[4]

Strategic Suppliers

In addition, since 2017, a consortium of 8 German academic institutions and companies, headed by the state-owned Fraunhofer Society has been engaged in the extraction and processing of rare earths in Brazil. The declared objective of the REGINA Project (Rare Earth Global Industry and New Application) is to make that South American country "Germany's strategic supplier of rare earths" - to form its own basis for the production of high performance permanent magnets, which are used particularly in arms production. The pretext given for the project is to "counteract" China's market "monopoly" on rare earths and magnetic products.[5]

China's "Super Weapon"

German mass media lend propagandistic support to Germany's efforts to become independent of Chinese supplies of natural resources: China's control of rare earth extraction and processing constitutes a "super weapon," with which the People's Republic of China can "inflict serious damage" to not only the USA but to Germany, as well.[6] According to commentators, it particularly problematic that the People's Republic of China - unlike the oil-exporting OPEC countries - is not dependent on its export of resources; any halt in exports would have no negative economic consequences on the country. "China can, therefore, swing the resources bludgeon, without having to worry about suffering the same consequences as OPEC."[7]

Prepared for War

All the projected German anti-Chinese threat scenarios do not mention the fact that breaking dependence on the import of resources is only really relevant, if the intention is to escalate conflicts with the supplier countries and possibly wage war against them. It is not for nothing that the efforts for self-sufficiency and "security against blockades" had been so important, for example, to the Nazi regime.

 

[1], [2] Jakob Kullik: Unter dem Radar. Die strategische Bedeutung Seltener Erden für die wirtschaftliche und militärische Sicherheit des Westens. Bundesakademie für Sicherheitspolitik, Arbeitspapier Sicherheitspolitik Nr. 13/2019.

[3] Deutsche Rohstoffagentur (DERA) in der Bundesanstalt für Geowissenschaften und Rohstoffe (BGR) (Hg.): DERA-Rohstoffliste 2019. Angebotskonzentration bei mineralischen Rohstoffen und Zwischenprodukten - potenzielle Preis- und Lieferrisiken. Berlin 2019.

[4] Abnahmevereinbarung unterzeichnet: ThyssenKrupp Materials Trading erweitert sein Portfolio für die Vermarktung von Seltenen Erden. Pressemitteilung der ThyssenKrupp Materials Trading, Essen 12.08.2019

[5] Projekt REGINA: Globale Industrien Seltener Erden und neue Anwendungen. iwks.fraunhofer.de 12.09.2017.

[6] Chinas Superwaffe zielt auch auf Deutschland. n-tv.de 06.06.2019.

[7] Trump muss Chinas Rohstoffkeule fürchten. spiegel.de 31.05.2019.