German security and defence industry is not unprepared

As Dr Hans Christoph Atzpodien, Managing Director of the BDSV, stated in a press release, the "latest announcements by the People's Republic of China (...) have not caught our industry unprepared. The same applies to the EU Commission and the German government, which have been dealing with the security of supply of critical and strategic raw materials for years."

China dominates the global market for rare earths with a share of around 69 % in mining and around 99 % in processing. The latest export restrictions imposed by the Chinese government are exacerbating this dependency. This is critical for Germany, as around four million jobs and around nine per cent of its economic output depend directly on the supply of rare earths. A loss of supplies from China would cause considerable economic damage.

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Despite the investments, competition from China remains overwhelming due to low prices and high capacities. Demand for rare earths is expected to more than triple by 2040 due to electrification and the expansion of renewable energies. As early as 2026, supply will no longer be able to meet demand, which will further increase dependence on imports. Although there are around 470 deposits worldwide, almost 200 of which are outside China, a lack of infrastructure, investors and expertise is preventing an independent supply. The Chinese government is pursuing long-term strategies and is making targeted use of its market power. Export licences are strictly regulated and prices for rare earths can fluctuate greatly - with increases of up to 200 %. Without alternative supply chains, there is a threat of production stoppages in key sectors.

The BDSV says: "Rare earths are also available in Europe and even in Germany. But in the past, we were happy to outsource processing to China, which no longer works. In order to build up our own capacities, we need acceleration and exceptions in the granting of licences. Once again, the measures taken by the People's Republic show how important it is to respect European and ultimately also national independence and sovereignty when it comes to defence-related technologies."