German industry warns of dependence on China for rare-earth elements

BERLIN: German industry is warning of a growing dependence on China for critical raw materials such as rare-earth elements amid global trade conflicts.

"The Chinese government has realized that it can use Europe's dependence on rare earths to force concessions in other areas," Stefan Steinicke, a raw materials expert at the Federation of German Industries (BDI), told Friday's edition of the news magazine Der Spiegel.

China is reportedly restricting the export of rare earths to such an extent that it is difficult for other countries to build strategic reserves.

At the same time, however, it is said that Beijing is always capable of flooding world markets with raw materials again to send prices plummeting.

Investments in the expansion of production and processing are therefore a high risk for Western companies.

The BDI representative said that building up capacities will not be possible without government assistance.

Despite existing production, Germany is reportedly making little progress so far.

Due to China's export restrictions on rare-earth elements, industries outside the People's Republic have recently come under significant pressure.

In Germany, companies in sectors such as the automotive industry or mechanical engineering are concerned about the supply of important metals used in sensors or electric motors.

China has justified its controls by stating that the raw materials are goods for both civilian and military use.

Although the measures were ostensibly a reaction to the trade dispute with the United States, they apply to all countries and thus also affect European companies.

The Chinese Ministry of Commerce takes a long time to process applications, with no certainty of approval, European companies have complained, while concerns about potential production stoppages are spreading.

The Ministry of Commerce has repeatedly emphasized that it has already approved applications for companies in the EU and intends to speed up the process.