Dispute over financing resolved: One billion euros for domestic and international raw materials projects
After months of uncertainty, the planned German raw materials fund, with a volume of one billion euros, can finally move forward, as reported by Handelsblatt. The fund aims to reduce Germany’s dependence on China by promoting raw materials projects both domestically and abroad. Since its initial announcement in April 2023, the project has faced repeated delays. Most recently, in early July, media reports indicated that the Ministry of Economy and the Ministry of Finance disagreed over the fund’s structure: Should it involve direct state participation or support through loans? According to Handelsblatt, a letter from both ministries now directs the state development bank KfW to establish the fund, confirming that the government can participate in projects with equity capital.
According to the newspaper, 30 companies have already expressed interest. Industry representatives, such as Matthias Wachter, head of Raw Materials and International Cooperation at the Federation of German Industries (BDI), have welcomed the launch of the fund, particularly the possibility of equity investments. Just last week, the BDI called for “bold measures” against the impending deindustrialization of Germany, stressing the importance of securing raw materials.
A study by the German Economic Institute (IW) (only available in German) also emphasized the need for quick action from both EU and German raw materials strategies and funds. The number of German investments in foreign mining companies has sharply decreased over the past decade, from 99 to 22. However, the IW questions whether the financial resources of the planned German fund will be sufficient, noting that countries like France and Italy have allocated over two billion euros each for similar initiatives.
At the EU level, the Critical Raw Materials Act, which came into force in May, is designed to increase Europe’s autonomy in raw materials and boost domestic mining. However, industry representatives have already called for improvements, including additional financial support.
Photo: Drazen_vie Canva
