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Germany Launches Raw Materials Fund Initiative

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The federal government participates in raw material projects with one billion euros via state development bank KfW.

Good news for Germany’s raw material supply: Through the state development bank KfW, the federal government wants to participate with around one billion euros in raw material projects at home and abroad from 2024 to 2028, reports the Handelsblatt. The fund planned by Minister of Economic Affairs Robert Habeck was initially on the brink after the ruling of the Federal Constitutional Court on the so-called debt brake.

Originally, it was to be financed by unrecalled funds for the fight against the corona pandemic, which had been moved to the Climate and Transformation Fund (KTF) – wrongly, according to the court ruling. In the budget now decided, 85 percent of the money is secured as a guarantee; a predominant part is hedging of allocation transactions of KfW, which would not burden the budget with great certainty, the Handelsblatt quotes the Green Housekeeper Felix Banaszak. However, according to VDI Nachrichten, the planned research funding of the Federal Government in connection with the extraction of raw materials over 400 million euros was cancelled.

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Raw material supply has become an important political issue

Due to the increasing geopolitical tensions of recent years, the supply of raw materials has moved far up on the political agenda. After Russia’s attack on Ukraine and the resulting energy crisis, the federal government wants to reduce further strong dependencies, especially in dealing with China. For raw materials such as rare earths and gallium, but also batteries, Germany is massively dependent on Chinese imports. The raw materials fund is intended to help to develop still untapped deposits in other parts of the world, in addition to extraction, processing and recycling are also to be promoted.

Other European countries have already become active earlier, according to Handelsblatt, France has launched a two billion euro raw material fund together with private donors, in Italy it is one billion as in Germany. As we reported, the Federal Republic also wants to work more closely with both countries on the supply of raw materials. This could be decisive for the success of the planned EU law (Critical Raw Materials Act) on critical raw materials, which provides, among other things, for a maximum of 70 percent of the annual requirement for a strategically important raw material from a single third country from 2030.

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