Economy

Germany’s $1B Raw Materials Investment Project to Defy China is 'Totally Unrealistic' – Expert

Billions of dollars are reportedly needed to successfully implement a new German investment project for raw materials, Thomas W. Pauken II, a veteran China and Asia-Pacific affairs observer and author, told Sputnik.
Sputnik
The German government has allocated around €1 billion ($1.1 billion) for raw material investments in a bid to reduce dependency on producers such as China for critical minerals, Bloomberg news agency cited unnamed sources as saying.
The sources referred to an upcoming selection process that will determine which projects related to extraction and processing are eligible. An Economy Ministry spokesperson, in turn, insisted that projects in Germany and abroad will “contribute to the security of supply of critical raw materials.”
"This is a very silly project" given the sum allocated for the purpose, Thomas W. Pauken II, a veteran China and Asia-Pacific affairs observer and author, told Sputnik.
He said that it remains unclear whether Berlin itself or someone else could be behind the idea with the $1.1 billion raw materials investments.

"It could have been Brussels, London or Washington. And if that is the case, they will encourage Germany to make investments in their specific regions and member states in their countries or allies.

However, is $1 billion sufficient to totally transform their minerals, their supply chains and regard to natural resources? This is absolutely absurd. This is a drop in a bucket. When companies have to invest in a mine even extract coal it costs lots and lots of money," W. Pauken II stressed.

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When asked about whether the implementation of the project is realistic in overall terms, he argued that it’s “Absolutely, totally unrealistic” and that it would be “impossible” to achieve the project’s goals.
"It's going to cost more than $1 billion. $1 billion is a lot of money, but it’s not enough," he reiterated, recalling that "billions and billions of dollars are [typically] used to extract natural resources."
Reflecting on what impact Germany's reduced dependence on China could have on the European economy, W. Pauken II suggested that if Berlin’s project "actually succeeded, it would be a significant changer."

"But it's not going to succeed with just $1 billion. It's not even come close to succeeding with $1 billion. It’s not sufficient to transform the way the natural resources are being extractive at this moment and to somehow 'stop' China or other countries," the expert concluded.

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Last year’s report by the German Institute for Economic Research think tank revealed that Europe is currently heavily dependent on the import of critical raw materials.
Most of the imports are coming from China, which holds superiority in terms of the mining and the processing of critical raw materials. The EU is, in particular, is currently importing 93% of its magnesium and 86% of its rare earth metals from Beijing, according to the report.
As for Berlin’s $1.1 billion raw materials investment plan, it is part of the EU’s controversial efforts to wage a trade war with China, which shows no sign of yielding to the bloc’s pressure.
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