Whilst, from a geological point of view, there is no shortage of these minerals, it is hard to predict technological developments (in German) and the changes in demand for raw materials associated with them. This can lead to price peaks and bottlenecks in the supply chain. It is also becoming increasingly difficult to gain access to metallic raw materials on the global commodities markets. An ever smaller number of companies and countries account for ever growing shares of the global commodities markets. In other words, there is market concentration going on.

Mineral resources needed for electric mobility

Car manufacturers rely on a large number of mineral resources and refined products made from them. These include steel, zinc and aluminium for the body of the car as well as quartz for the windows. Some of these mineral resources used by the automotive industry can be mined within Germany or recycled, but the bulk needs to be imported. In the age of electric mobility, modern electric vehicles are usually fitted with lithium-ion batteries. These batteries are made using lithium, nickel, cobalt and graphite. The electric motors and generators of electric vehicles depend on the use of neodymium and dysprosium. Demand for copper is also growing as a result of the trend towards electric mobility.

When electric mobility goes mass market, as has been forecast, this will also result in higher demand for certain mineral raw materials. None of the minerals that are required for battery production are scarce in geological terms. Whether or not sufficient quantities of these will be available, however, will largely depend on industry’s capacity to respond to the changes in demand patterns. Any sudden surges in demand could result in short-term price peaks and shortages. These would only be of a temporary nature, though, as the supply side would adjust to the higher levels of demand.

Mineral resources needed for lightweighting

The aerospace, automotive, mechanical engineering and construction industries, in particular, but also medical technology have a strong focus on developing and using lightweighting. Lightweighting would not be possible without mineral resources such as aluminium, magnesium and titanium. If these minerals are used in cars, for instance, they bring down the vehicles’ weight and real emissions levels. Lightweighting can also be used to compensate for the higher weight of the battery compared to a traditional engine, and to increase the range of these vehicles.

Mineral resources needed for wind power

With the energy transition, the German energy system is being completely overhauled. New energy technologies have led to a very different pattern of demand for mineral resources.

For instance, neodymium, praseodymium and dysprosium – all classified as rare earths – are needed for the permanent magnets that are part of the generators driving large, low-maintenance offshore wind turbines. These turbines also contain base metals such as aluminium, copper and zinc and also steel.

Alongside imported metals, domestic resources are also used. The base of each wind turbine largely consists of carbonate rock and of sand and gravel, which are used to make concrete. The optic fibre that is part of the rotor blades is made from German quartz sand and from kaolin and carbonate rock.

This expectation is set out in the National Action Plan for Business and Human Rights (in German). Under this plan, at least 50% of all companies based in Germany and employing more than 500 employees are to have integrated the elements of human rights due diligence described in the NAP into their business processes by 2020 at the latest.

Conflict minerals are to be subject to extra scrutiny

The Federal Government has played an active and constructive role in the drafting of Regulation (EU) 2017/821 on conflict minerals. The Regulation is to help prevent revenue from the sale of tin, tantalum and tungsten and their ores, and from the sale of gold from being used to finance armed conflict. For this reason, as of 1 January 2021, EU companies importing any of these commodities from conflict zones and areas deemed to be at high risk of conflict will have to comply with a number of due diligence obligations.

The EU Regulation is rooted in the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (PDF, 784 KB) (in German). This Guidance is aimed at all mining companies that do business in areas defined as conflict-affected or high-risk areas. Additional detailed recommendations have been issued to companies operating in the tin, tantalum, tungsten and gold industries.

On 6 November 2019, the Federal Government adopted the draft act implementing the Conflict Minerals Regulation proposed by the Economic Affairs Ministry. The act ensures that the EU Conflict Minerals Regulation is applied effectively in Germany. For example, companies will in future have to define a supply chain policy and introduce risk management systems. Also, the companies will have to issue annual, public and comprehensive reports, also online, on their strategies to meet due diligence requirements and on their procedures for responsible procurement. Further to the disclosure obligations for companies, the Federal Government is also envisaging an annual accountability report by the Federal Institute for Geosciences and Natural Resources. On the basis of this report, an expert dialogue is to take place between the Federal Institute for Geosciences and Natural Resources, the interested public and the relevant federal ministries, delivering greater transparency and establishing a dialogue between all the stakeholders.

EITI: Extractive Industries Transparency Initiative

Germany has been a EITI-compliant country of the global Extractive Industries Transparency Initiative (EITI) since 8 May 2019. Following an in-depth validation procedure, the international EITI Board decided that Germany has successfully implemented all the requirements of the EITI standard.

The Federal Government has been implementing the global transparency initiative since February 2016 and discloses statistics on the extractive industries and the relevant state revenues.

EITI is being supported by a growing number of governments and by numerous companies and NGOs all over the world. The decision of the German Federal Government to implement EITI sends a strong message of support to developing countries and emerging economies and the joint fight against corruption in the commodity sector. Find out more.

Resource efficiency makes a major contribution to strengthening and modernising Germany as an industrial base on a long-term basis. With this in mind, the German government adopted ProgRess, the German resource efficiency programme, back in 2012, revising it in 2016 to create ProgRess II.

ProgRess focuses primarily on cooperation with business, voluntary action and innovation. Innovations are crucial drivers of resource efficiency. The central goal of ProgRess is to sever the link between economic growth and the use of raw materials. Between 1994 and 2014, Germany succeeded in improving its resource efficiency by 50%, resulting in a drop in the consumption of raw materials by 14%. This is all the more important because materials are also by far the largest cost factor, accounting for almost 44% of overall expenditure in the goods-producing sector.

As part of its efforts to shine the spotlight on best-practice examples of (raw) materials efficiency, the Federal Ministry for Economic Affairs and Climate Action and the German Mineral Resources Agency (DERA) present an annual Raw Materials Efficiency Prize. Companies and research institutions can submit their entries for the 2018 round as of 3 September 2018. The Federal Government also wants to promote resource efficiency at international level, particularly within the G7 and the G20. After all, only international cooperation will make it possible for the growing flows of goods being exchanged internationally to be managed in a standardised way that makes international supply chains and logistics more efficient.

International commodities organisations

Germany is a member of numerous international commodities organisations (sometimes in its own right, sometimes via the European Union). This allows the country to benefit from greater market transparency and opens up opportunities for g-to-g and g-to-b dialogue with producers and consumers of individual raw materials. Germany is a founding member of the Common Fund for Commodities. In this capacity, Germany advocates the establishment of value chains in developing countries and of sustainable practices in the raw materials sector.

Raw materials partnerships

The extent to which countries and companies have access to raw materials depends not only on their technological capabilities, but also on the economic and political background. In recognition of this fact, the Federal Government has made bilateral raw materials partnerships part of its overall raw materials strategy. Up until today, intergovernmental agreements establishing raw materials partnerships have been concluded with Mongolia (in German), Kazakhstan (in German) and Peru (in German). Other bilateral partnerships have been formed using Joint Declarations to this effect (with Chile and Australia) or by exchange of notes (with Canada). These are cases in which business has concluded its own contracts under private law. These contracts can then be given additional backing and support by the government and its foreign trade and investment instruments as well as under its foreign policy. The actual implementation of the raw materials partnerships is also supported by the countries’ governments, which hold bilateral working groups, and organise economic committees and expert forums.

Competence Centres for Mining and Mineral Resource

The Federal Ministry for Economic Affairs and Climate Action is providing funding for a number of Competence Centres for Mining and Mineral Resources that have been established within the bilateral chambers of commerce and industry in selected mining countries. These centres conduct investigations and analysis and provide German companies with information about opportunities and risks associated with these markets, their potential and possible hindrances firms may encounter. They also help companies find the contacts they need. The work of the centres fits in well with the raw materials policy championed by the Federal Government whilst also helping to promote the sale of German mining technology abroad. So far, centres have been established in Australia, Brazil (in German), Chile (in German), Canada, Peru (in German) and South Africa, with the latter serving southern Africa as whole and in particular South Africa, Zambia and the Democratic Republic of the Congo.

The Competence Centres have teamed up with the German Mineral Resources Agency (DERA)(in German), Germany Trade & Invest (GTAI) and the Association of German Chambers of Commerce and Industry (DIHK) to form the German Mining Network, thereby ensuring a good flow of information beyond centres’ individual focus areas.

Guarantees for untied financial loans granted for foreign raw materials projects

The guarantees for untied financial loans also form part of the Federal Government’s raw materials strategy. Guarantees for untied financial loans are used to hedge the economic and political risk incurred by those investing in raw materials projects abroad. The Federal Government uses these guarantees to support German companies in their efforts to conclude long-term supply contracts for the raw materials they need. The guarantees are issued by Euler Hermes, a listed company that acts as agent for the Federal Republic of Germany. For additional information, please visit agaportal.de (in German).

The mining authorities of the Länder are responsible for enforcing the Federal Mining Act. Depending on the type of mineral, the mining authorities may be in charge of licencing and supervision. The Federal Mining Act sets out the basic legal requirements that must be met for mining companies to be able to receive a licence to operate. This particularly applies to health and safety and hazard prevention, third-party rights and environmental protection.

The Federal Mining Act stipulates the rules on exploration, extraction and on the processing of minerals. It also provides that former open-cast mines must be rehabilitated and sets out the rules governing the construction and operation of underground storage sites. cOil and gas exploration and extraction in Germany’s offshore locations is also subject to the provisions of the Federal Mining Act. In addition to the federal law, the Länder and their regional authorities also issue their own legislation and regulation on mining on their territories.