German industry urges reduced dependency after China export controls

BERLIN (Reuters) – German industry on Tuesday warned that Europe must become more self-reliant in the hunt for raw materials needed for cleaner, more digital economies, after China caused alarm by announcing restrictions on some metals used for semiconductors.

China’s commerce ministry said on Monday it would require export permits for eight gallium products and six germanium products from Aug. 1 to protect national security.

The metals are used in high-speed computer chips and for the defence and renewable energy sectors.

The Chinese export restrictions “illustrate the urgency for Europe and Germany to quickly reduce their dependency on critical raw materials now,” said Wolfgang Niedermark, a member of the BDI German industrial association.

In a position paper, the group said that Germany’s and Europe’s dependency on mineral raw materials such as rare earths from China was “already greater than that of oil and natural gas from Russia”.

Another German industry group, Bitkom, called for steps to massively increase Germany and Europe’s digital sovereignty .

“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,” said Bitkom managing director Bernhard Rohleder.

Berlin has called for a “derisking” strategy towards China following the Russian invasion of Ukraine, which spelled the painful end of Berlin and Moscow’s partnership on energy – and highlighted the risks of a similarly close reliance on Beijing.

Last week, European Union member states adopted the Critical Raw Materials Act, a centrepiece of the EU strategy to ensure industry can compete with the United States and China.

The BDI’s Niedermark said that agreement to recycle and process raw materials sent an important signal but called for a similar push to establish domestic mining in Europe.

(Reporting by Rachel More and Hakan Ersen; Editing by Madeline Chambers, Miranda Murray and Emelia Sithole-Matarise)