Bavarian Industry Association sees geopolitical situation as increasing uncertainty factor.
The supply of raw materials in Germany has become more uncertain since last year. This is the conclusion of a study * conducted by the Research Institute of the German Economy (IW Consult) on behalf of the Bavarian Industry Association (vbw – Vereinigung der Bayerischen Wirtschaft). Whereas 22 of 45 metallic and mineral raw materials were classified as particularly risky in 2021, the number has now risen to 27, with manganese, fluorite, titanium, nickel, aluminum, phosphates and copper being new additions. Chromium and iron, on the other hand, have been downgraded to a medium supply risk.
The study (PDF) cites the geopolitical situation in particular as an increasing factor of uncertainty. Wars such as the current one in Ukraine are affecting production, supply routes and trade relations. Raw materials are also increasingly becoming instruments of strategic industrial policy, including in trade disputes or geopolitical conflicts. The most recent example is the suspension of gas trade between Europe and Russia. Company and country concentration as well as country risks have also increased. Economic development continues to be shaped by the effects of the Corona pandemic and disrupted supply chains worldwide.
At the same time, demand for many raw materials such as rare earths, gallium, germanium, lithium and platinum group metals is increasing, as they are needed for technologies in the context of global climate protection measures, but also for everyday electronics. This is associated with price increases, some of them sharp.
Recycling as Part of the Solution
To make Germany and Europe more resilient to import risks, the vbw recommends diversifying sources of supply. The task of policymakers here is to keep the raw materials markets open and maintain good relations with countries rich in raw materials. In addition, more recycling, resource-conserving product design and – as far as possible – the development of domestic raw material sources could reduce import dependency.
*Original source only available in German