Germany's Excessive Relyance on China for Rare Earth Elements

Dependent on China? The EU's Rare Earths Dilemma & the Potential Role of Ukraine

Germany's Vulnerable Relyance on China for Rare Earths Supply - Germany's Excessive Relyance on China for Rare Earth Elements

When it comes to rare earths, Germany is laser-focused on China - accounting for a whopping 65.5% of its imports last year, according to the Federal Statistical Office. That's a far cry from the EU's collective import quota from China, which stands at a mere 46%.

China's grip on the market doesn't loosen when you dive into specifics. Substances like neodymium, praseodymium, and samarium - vital for the manufacturing of permanent magnets in electric motors - are mainly imported from China. This reliance doesn't exactly paint a pretty picture, especially with the ongoing trade conflict with the USA and China wielding rare earths as a political lever.

But hold your horses, because there's a potential silver lining - Ukraine. This war-torn country is sitting on two-thirds of the 34 worldwide critical raw materials, including the likes of manganese, titanium, graphite, lithium, cobalt, copper, nickel, and rare earth metals. With reserves this impressive, Ukraine could become a game-changer for the EU's raw material supply, particularly in the realm of rare earths.

Sounds promising, right? Well, it's not as simple as flipping a switch. A researcher from the Munich Ifo Institute, Isabella Gourevich, cautions that investments in the processing of these raw materials need to follow if Ukraine is to become a long-term partner in European supply chains. Collaboration between Ukraine and the EU could be key to turning this potential into reality.

Here's a brief breakdown of why Ukraine's potential matters:

• Ukraine possesses vast reserves of critical raw materials, including some crucial for green energy, digital technologies, and defence sectors.
• Significant investments are needed in mining, processing, and refining infrastructure to harness Ukraine's potential.
• In 2021, the EU and Ukraine signed a strategic raw materials partnership to reduce the EU's dependence on politically unstable suppliers and diversify supply chains.
• Ukraine already contributes substantially to the EU market's titanium, graphite, and manganese supplies.

The EU stands at a crossroads. It must decide whether to continue relying on China for its rare earth needs, or take a bold step towards strategic autonomy by partnering with Ukraine. And with the future of green energy, digital technologies, and defence industries hanging in the balance, the stakes couldn't be higher.

1. The Community policy and employment policy within the EU should consider investing in the processing of raw materials in Ukraine, as it could potentially reduce the EU's overdependence on China for crucial substances like neodymium, praseodymium, and samarium.
2. If successful, this collaboration could enable the EU to secure a significant portion of its rare earth metals, which are essential for the manufacturing of permanent magnets in electric motors, from Ukraine by 2024, lessening its reliance on China.
3. The imports of various critical raw materials from Ukraine, such as manganese, titanium, graphite, lithium, cobalt, copper, nickel, and rare earth metals, could potentially lower the EU's average dependence on politically unstable suppliers, leading to a more diversified supply chain.

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