Rare earths are extremely valuable metallic elements that are found not only in smartphones and electric cars, but also in weapons. Among other things, they are used in the construction of fighter aircraft and submarines. In addition, rare earths are particularly found in hardened ammunition and armored vehicles, propulsion systems, and sensor technology.
More than 400 kg of rare earths are used in one F-35 stealth bomber alone.
The vast majority of rare earths processed in Germany come from China, and herein lies the problem: As a result of a tariff dispute with the US, Beijing announced in early October that it would once again tighten its already strict export rules. China threatened to stop exports of rare earths needed for military purposes.
In addition, companies applying to export materials to China are now required to submit detailed information, some of which is confidential. Especially for arms manufacturers, there is no question about it. “The terms of end-use, high bureaucratic hurdles and access to the supply scheme are basically nothing more than industrial espionage,” political scientist Jakob Kulik of Chemnitz University of Technology told DW.
The Federation of German Industries (BDI) is also critical: “The new rules can be seen as a direct attack on the revival of the West,” it said in a statement. Recently, the German arms industry has increased mass production to equip the German armed forces, the Bundeswehr, with modern weapon systems. Providing continued aid to Ukraine in the form of arms is another reason for the arms buildup, which is likely to become a thorn in the side of Russia’s ally China.
German companies take precautions
How is the German defense industry reacting? “There is no panic in the industry,” Hans Christoph Atzpodien, CEO of the German Security and Defense Industry Association (BDSV), told DW. Atzpodean pointed out that compared to other industries, the defense industry uses “relatively small amounts” of rare earths. Moreover, companies have taken precautions so that they do not have to limit production in the coming months.
However, experts still see a real risk of supply disruptions. China controls about 80% of global production and more than 90% of rare earth refining. “When push comes to shove, the big question is where defense companies will find alternatives, and things are looking really bleak in that regard,” says Kulik, who studies the strategic importance of raw materials to military security.
Establishing an alternative to China will take years, even if work starts immediately. “We see an urgent need for action to make us more free in Europe as a whole,” Etzepodean said. Europe must build up its own capacity to process rare earths. “This will require streamlining the relevant environmental permits.”
a dirty and unprofitable business
Mining rare earths is difficult, dirty and expensive. The 17 chemical elements are actually not that rare in the Earth’s crust, but they are found only in very low concentrations. Extracting them requires mining large quantities of rock and ore and often requires chemicals to separate them.
Apart from China, Vietnam, Brazil, Russia, Australia and Greenland, the largest deposits are also found in America.
However, due to the expense involved, mining is unprofitable for mining companies. This is the reason why mines in America and Australia had to be closed. China, on the other hand, recognized the importance of rare earths early on and expanded its mines, refineries, and processing plants.
For the German government, but also for the German economy, it has always been easiest to rely on imports of rare earths. “In the past, we were happy to outsource processing to China, but this is no longer possible,” the German Security and Defense Industries Association said.
As became clear in the 2010s, China’s quasi-monopoly has given it powerful geopolitical leverage. Due to a territorial dispute in the East China Sea, China temporarily stopped supplying rare earths to Japan. Since this wake-up call, Japan has significantly reduced its dependence on rare earths from China.
At present the same path is being adopted by America also. President Donald Trump has used the past few months to secure sources of rare earths around the world. But even the US can’t live without China: At a meeting in South Korea in late October, Trump agreed with Chinese President Xi Jinping that export restrictions on rare earths would be suspended, at least temporarily.
Will mining make a comeback in Germany?
For years now, Germany has believed it would be safer to diversify supplies of critical raw materials. However, very little has happened. “Government and industry are passing responsibility back and forth,” Kulik said. “The Economy Ministry has said, if the industry does nothing, we will also do nothing. And the industry has said, if the situation is not serious, we do not need to hoard supplies and we do not need government intervention.”
So the question is who will take the responsibility of ensuring supply from alternative sources? Who will take the risk and invest money in the development of mines?
Germany also has rare earth deposits, for example, in the Ore Mountains in the eastern state of Saxony. But they are hardly being investigated. “We no longer have any large German mining companies with the expertise. This means that even if the federal government wanted to do it, even if it were to invest €10 billion ($11.5 billion) or more in the ideal case, the fact is that we lack the necessary partners,” Kulik explained.
Although large German defense contractors claim that their supplies are currently secure, China’s quasi-monopoly on rare earths gives it, as Kulik says, “the perfect geo-economic bargaining chip.” If China were to use this chip, it could at least complicate or delay the German military’s efforts to arm itself with modern weapons.
This article was originally written in German.