Industry heads in Germany have warned that Europe must decrease its resource dependency on China, after the eastern nation declared it would be restricting exports of certain metals which are critical for modern manufacturing.
The announcement came on Monday as China’s Ministry of Commerce declared it would be demanding export permits for a number of products that contain gallium and germanium – two key metals that is used in semiconductors and computer chips. These are particularly relevant to the defence industry and renewable energy technology like wind turbines.
The policy will come into effect from August 1st, with China saying the policy was “to protect national security and interests.”
China is by far the world’s biggest gallium producer, and a key producer of germanium.
The Critical Raw Materials Act, adopted by the European Union last week, aims to ensure “secure and sustainable supply chains for the EU’s green and digital future.” However, some industry leaders in Europe fear it does not go far enough.
Reacting to the news, Germany’s BDI industrial representative group said that “Germany’s and Europe’s dependence on mineral raw materials such as rare earths from China is already greater than that of oil and natural gas from Russia.”
“The increasing systemic competition with autocratic regimes further increases the supply risks,” the group said.
“With the EU Critical Raw Materials Act, the European Commission is sending an important signal to strengthen European sovereignty in the raw materials sector. However, central instruments for implementation are missing.”
According to Reuters, another German industry association called Bitkom reiterated similar concerns.
“German technology and security policy must…aim more than ever to end unilateral dependencies, build up its own capabilities and competencies in key digital technologies,” Bitkom managing director Bernhard Rohleder said according to Reuters.
Last December, a study by the German Institute for Economic Research (DIW) warned that the EU is dangerously dependent on resources which are important to modern economies, such as lithium, graphite, cobalt, tungsten, phosphate, silicon, and more.
EU relies on essential raw materials from undemocratic foreign regimes, German study claims#gripthttps://t.co/6Ea0HolDuH
— gript (@griptmedia) December 16, 2022
It further warned that many of these imports are purchased from “less democratic” countries, such as China and Russia, which the study warns may pose a risk to the European economy.
Of the 27 “critical” raw materials listed in the paper, 14 of them are sourced 100 per cent from outside the bloc. Another three resources are 95 per cent sourced from abroad.
Many of these materials are vital for the production of modern industry, such as the manufacturing of cars, phones, computers and more.