State bank urges Germany to diversify copper, lithium and rare earth supplies

Germany should introduce a "balanced catalogue of measures" to secure its supply of necessary raw materials as the world shifts through a dual transformation of decarbonisation and digitalisation, said the government-owned financing institution KfW based on a research report by IW Consult and Fraunhofer ISI. The report analysed supply risks along the production and supply chains for selected raw materials: copper, lithium and rare earth minerals. It found high dependencies exist in sectors that dominate manufacturing in Germany, such as the automotive sector. Additionally, it said supply risks result primarily from the fact that there are only few suppliers, and so diversification should be "at the heart of" any strategy to enhance resilience. Risks vary widely for each of the raw materials, so a strategy should not only focus on single instruments, but a whole range of measures. "One example of an overarching instrument is to promote technological progress that may provide outcomes in the area of substitution or material efficiency," wrote KfW.

Germany's energy transition is designed to produce a sustainable economy based on renewable power. But making the necessary wind turbines, solar panels, electric car batteries, and other "green" technologies requires vast amounts of resources, many of which must be imported from only a few suppliers. At the end of their lifetime, many products containing these raw materials pose risks to the environment. Germany's experience with wind and solar power production, as well as its huge carmaking industry, means the country faces a massive challenge in ensuring that resources needed on the way to climate neutrality do not produce social and environmental damages.