Germany mulls financial support for companies competing for critical raw materials

In order to secure stable access to critical raw materials, Germany could financially support companies competing on global markets for materials needed for its energy transition plans, for example lithium, cobalt or nickel, newspaper Frankfurter Allgemeine Zeitung reports. The German climate and economy ministry (BMWK) is considering the introduction of a mechanism already practiced by the Japanese government, whereby companies are eligible for financial assistance if they submit supply plans for critical raw materials and other components. “A funding model that combines private and public investments would be one option,” state secretary Franziska Brantner told the newspaper. The government’s aim would be to incentivise companies to diversify their supplier base and increase their storage capacities for critical materials to be better prepared for supply shocks. Brantner said any such model should also focus not only on procuring new resources but also on the processing and recycling of valuable materials already available in the economy. “Moreover, we should consider pooling purchases to especially support smaller companies,” Brantner said, adding that the state could also directly purchase raw materials “in strategic areas.”

Germany and France in late September had called on the European Commission to quickly implement the EU’s Critical Raw Materials Act, as Russia’s war in Ukraine and the ensuing energy crisis had shown the need to better prepare for supply shocks. Demand for many raw materials is expected to skyrocket amid the energy transition, as for example the surge in e-car sales will require much more lithium to build car batteries. Plans to boost domestic production of the key energy transition material, which is available both in mines and in deep layers that could be exploited through geothermal heating solutions, so far have not taken off in Germany.