Battle for rare earths: Danger for Baden-Württemberg's industry!

Battle for rare earths: Danger for Baden-Württemberg's industry!

Rare earths are essential in modern industry and play a central role in the production of many technologies, particularly in the manufacture of lasers, cell phones, electric cars, as well as wind turbines and solar systems. Today, numerous companies in Baden-Württemberg, such as Trumpf in Ditzingen and Stöber Antriebstechnik in Pforzheim, are heavily dependent on these raw materials. China is the main supplier, as the country processes over 90% of the rare earths produced worldwide and is responsible for around 60% of global mining. This dependence is becoming increasingly critical, especially in the context of the current trade conflict between China and the USA, which is also having an impact on European industry. As SWR reports, the issue will be addressed at the upcoming G7 summit in Canada, where many nations are concerned about the future availability of rare earths.

The term “rare earths” includes 17 metallic elements, including cerium, lantane, neodymium and yttrium. The important role of these materials in industry is undisputed, as they are crucial for the development of modern technologies. For example, Trumpf requires laser crystals made from rare earths for its laser systems, and Stöber Antriebstechnik is particularly dependent on neodymium. Due to the trade dispute, companies like Stöber have already experienced delivery delays that could jeopardize their production processes. According to Stöber, a complete delivery stop could jeopardize up to 30% of sales.

China's influence and new regulations

The Chinese government has issued new regulations for the mining and use of rare earths, which are due to come into force on October 1, 2024. Premier Li Qiang signed a decree requiring that the resources belong to the state and that companies that extract or process them must establish a traceability system. This comes in the context of increased demand for rare earths, which is forecast and could further fuel global demand. According to the new regulations, mining will also be controlled in order to exploit resources carefully and minimize environmental impacts such as the formation of toxic sludge.

According to the Tagesschau, German industry sources around two thirds of its rare earths from China. This dependence also carries risks, as China has already introduced restrictions on the export of other critical raw materials such as germanium and gallium in 2022, which are primarily used in the chip industry. This is often done with reference to national security interests.

Recycling and future outlook

Another aspect that companies like Stöber are addressing is the need to increase the recycling rate of rare earths. At the moment this is quite low, and the recycling process itself is environmentally harmful and time-consuming. Stöber calls for close collaboration between politics, research and industry in order to develop more efficient and sustainable solutions. Trumpf is also pursuing a “two-way strategy”: On the one hand, the company wants to maintain existing relationships with China and, on the other hand, look for alternative retail chains in order to protect itself against possible future supply bottlenecks.

With the G7 summit and China's new regulations, the future of the market for rare earths is in jeopardy. Experts are already warning that supplies could only last a few weeks if China stops exports. The pressure on industry in Germany and Europe is growing to free itself from this current dependency and develop its own strategies to sustainably secure the availability of these crucial raw materials.