Contribution of domestic natural resources extraction to security of supply and Germany's role in the international natural resources market

Status: May 2023

Natural resource requirements

As an industrial and technology location, Germany is dependent on a secure supply of energy and non-energy (mineral) natural resources. In the future, even more mineral resources will be needed than before for important technologies of the future such as renewable energies (RE) and technologies relevant for digitalisation and electromobility. In addition to high-tech metals, Germany needs selected industrial minerals. The 5th D-EITI report describes the specific natural resource requirements for renewable energies in the context of the overall energy supply as well as for electromobility in Chapter 8 .
With regard to the security of supply for natural resource requirements in Germany, three pillars must be considered: domestic primary resources, secondary resources and imports of natural resources . For this purpose, the report of the Federal Institute for Geosciences and Natural Resources (BGR) on the natural resource situation in Germany, published in December 2022, provides data on domestic natural resource production, German foreign trade, the use of secondary resources from recycling, the development of resource prices and resource consumption in the context of Germany’s supply situation with mineral natural resources and energy resources in 2021 .

Domestic primary natural resources

Contrary to popular opinion, Germany is certainly rich in natural resources (cf. figure 8). The demand for quarried natural resources (especially for the building materials, glass and ceramics industries), potash products (for agriculture), rock salt (especially for the chemical and pharmaceutical industries and as de-icing salt) and some industrial minerals can be met entirely from domestic sources. Some energy resources such as lignite and natural gas as well as crude oil are also extracted in Germany close to the place of consumption and contribute to the security of supply of natural resources. At the same time, high environmental and social standards are maintained by international comparison. The energy use of domestic lignite covered about 8% of primary energy consumption in Germany in 2020 and about 9% in 2021, with production volumes of 107.4 million tonnes and 126.3 million tonnes, respectively . Domestic production of oil and natural gas covered 2% and about 5% of consumption in Germany in 2020 and 2021 respectively . However, metallic resources are almost no longer mined in Germany and have to be obtained from recycling or imported.

Raw material production in Germany in 2021

Secondary resources from recycling

Metallic resources are often not only used once but several times due to their good recyclability. They can be returned to a product cycle after reprocessing. Many products made from non-metallic resources, on the other hand, are often chemically modified (e.g. cement, concrete) and can therefore not be fed back directly into the product cycle. However, they can be reintroduced into the economic cycle as substitutes (e.g. glass) for primary resources (recycling materials) . Secondary resources contribute to the domestic supply of resources and reduce dependence on imports. Individual data on recycling and use rates from 2020 are documented in Chapter 7.4d of the 5th D-EITI report .
With an expansion of the circular economy with qualitatively and quantitatively improved recycling, a rising share of the German demand for natural resources can be covered in the future . In the field of rare earths or other special metals, however, circular economy approaches or recycling processes have so far hardly progressed beyond the state of research and development . The necessary further development of the circular economy must aim, on the one hand, to cover a larger share of Germany’s need for natural resources through secondary materials and, on the other hand, to make the greatest possible contribution to greenhouse gas reduction. To this end, it is necessary to establish and expand appropriate recycling channels, also in order to reduce the necessary imports. Nevertheless, the supply of recycled material is not sufficient to fully compensate for the increasing demand for resources for the transformation of the energy supply and for other future technologies. Therefore, additional specific natural resources will have to be extracted and/or procured in the future.

Imports of natural resources

In the case of metals, individual industrial minerals and energy resources (with the exception of lignite), the industry is heavily dependent on non-European imports (cf. metal imports chart 10) and thus heavily dependent on the availability on the international raw materials markets. At 398.8 million tonnes, Germany imported a total of 3.3% more natural resources in 2021 than in the previous year. The import of metals increased significantly with a share of 14.6%. In 2021, energy resources, metals and non-metals (of which about 50% were industrial minerals) worth €211.2 billion were imported into Germany . Further information on import volumes in the German extractive sectors can be found in Chapter 2a.
The German Mineral Resources Agency (DERA), a department of the BGR, published its last monitoring report on the global supply concentration of important natural resources and intermediate products in 2021. The so-called “DERA Resources List 2021” lists a total of 34 metals, 27 industrial minerals, plus coking coal and 217 commercial products . The survey concludes that almost 45% of all mining, refining and trading products surveyed are subject to elevated supply risks. The European Commission has also published a list of critical natural resources , which are of high economic importance and for which there are at the same time high supply risks for the EU and thus also for Germany (see also DERA monitoring of natural resources ). China dominates the international market as the most important supplier of a wide range of natural resources and is currently the most important country for the extraction and processing of “critical resources”. For example, 80% of the rare earths are mined in China and are gaining in economic importance due to their diverse applications for the energy transition and for other key technologies.

Origin of German imports of important industrial metals in year 2021

Challenges and goals

The phase-out of the use of and dependence on fossil fuels and the transformation in industry towards the use of greenhouse gas-neutral technologies will lead to an increased demand for mineral resources and especially metals. At the same time, the phasing out of fossil fuels causes a strong reduction in the consumption of energy resources.
The German government is pursuing the goal of making comprehensive use of the economic and ecological potential of recycling in order to reduce overall resource consumption . Tasks to strengthen the circular economy are of a regulatory, organisational and technological nature, such as the introduction of digital product passports (data transparency) or the recovery of low-concentration rare precious and special metals from disused ICT devices. The aim is to secure high-quality secondary resources from recycled materials for the economic cycle in order to achieve an increased use of secondary resources compared to primary natural resources. This requires the maintenance and, if necessary, the expansion of processing capacities for metal resources in Germany and Europe. In this respect, a decline in processing capacity in Germany, e.g. in the aluminium industry, which is important for lightweight construction, also comes with the danger of new import dependencies. From the perspective of civil society, the overall consumption of natural resources should be reduced and resource-related dependencies reduced through a limited use of primary resources, ecological product design, product durability and reparability, sharing models, recycling, urban mining and many more.
The transformation of the industry is associated with considerable challenges because the German economy is heavily dependent on the import of natural resources. International competition for natural resources, such as the “critical resources” mentioned above, is subject to increasing market restrictions. This is due to governmental control measures in those countries that extract natural resources and the partly high concentration of companies on the supply side, both in mining and in the processing of resources. The COVID-19 pandemic has led to a decline in the extraction of natural resources and global supply shortages in 2020. In addition, there are increased tendencies of geopolitical escalation including high dependencies. The Russian war against Ukraine and the associated restrictions have further increased the risks for raw material procurement due to shortages, price increases and disruptions in the supply chain. In addition to natural gas, crude oil and hard coal, a number of metals such as nickel, titanium, palladium and copper were imported from Russia. Also, metals such as copper, iron and ferroalloys came from Ukraine. The economy is making great efforts to ensure security of supply and at the same time reduce dependence on fossil and mineral resources from Russia as quickly as possible.
In view of the global situation, the German government wants to support the efforts of German companies in the procurement of natural resources. At the same time, the German government is pursuing the goal of ensuring compliance with the highest human rights and environmental standards along the supply chain of primary natural resources and thus contribute to achieving the goals of the 2030 Agenda for Sustainable Development. Companies in the extractive sector have a responsibility to comply with any regulations that apply to them .
Another challenge for companies is to react in time to rapid developments in the transformation process and the international commodity market. Changes in the plant park or in the business model often require considerable investments, complex in-house planning processes and construction phases with simultaneous shortages in natural resources, price fluctuations (in addition to high energy costs) and a shortage of skilled workers. In addition, the private sector in particular complains about the complexity and high time requirements of approval procedures. In addition, the frequent lack of public acceptance makes the exploration and extraction of natural resources in Germany more difficult . To present the ambivalent character of natural resources production , it is crucial from the perspective of civil society to show not only the economic gains but also which social and ecological impacts the extraction of primary resources extraction has both at home and abroad.

Measures to ensure and increase resilience

Securing the supply of natural resources in Germany is primarily the responsibility of the companies. The task of the public natural resources policy is to support companies with suitable and reliable framework conditions in creating a secure social, economic and ecological basis for the procurement of the natural resources they need. This is particularly necessary when fair competitive conditions in the international market of natural resources are affected.
As part of its strategy for the procurement of natural resources, the German government has already made necessary adjustments in 2020 . With a total of 17 measures, the German government has replaced the first natural resources strategy from 2010. The strategy identifies the three main pillars Germany relies on in the procurement of natural resources: domestic primary resources, secondary resources from recycling and imported resources. Each of these pillars is of utmost importance to ensure a secure supply of natural resources in the long term.
The “Strategy Paper of the Federal Ministry for Economic Affairs and Climate Action (BMWK): Ways to a Sustainable and Resilient Supply of Natural Resources” published in January 2023 supplements the existing strategy for the procurement of natural resources with current focal points of the realigned natural resources policy. These include a close integration of the circular economy and the natural resources strategy, the diversification of the supply chains used to procure natural resources, and the safeguarding of a fair market framework by means of high ESG (Environmental, Social & Governance) standards and international cooperation .
There are established structures of cooperation for the extraction of domestic natural resources and the safeguarding of geological data referring to natural resources in Germany. The State Geological Services (SGD) of the Federal States collect the geological and economic data required for securing natural resources, publish geological maps indicating the places where natural resources can be found as well as sectoral planning maps and prepare concepts to secure natural resources. To this end they are in close contact with the BGR. Furthermore, the BGR participates in various European projects and committees (e.g. GeoERA ) and cooperates with European geological services. In this way, the authorities as a whole make an important contribution to securing the supply of natural resources in Germany.
Domestic extraction of natural resources continues to need a reliable legal framework. The German government intends to modernise the existing one. To this end, the Federal Mining Act is to be amended in this legislative period. The German government intends to make the extraction of natural resources more ecological and, at the same time, facilitate the extraction of domestic natural resources .
Compliance with the highest environmental and social standards can contribute to the acceptance of extraction. Appropriate and constructive stakeholder participation is particularly important in the extractive sector, as its activities are associated with significant impacts on society, the economy and the environment. Therefore, from German government believes that constant, constructive dialogue with the population is essential. As part of its natural resources strategy, the German government is working to increase awareness and social understanding of the importance of the extraction of domestic resources. The domestic extractive industry is already implementing numerous measures to promote an informed, critical discussion, including through the teaching of knowledge in schools, active, early communication and public participation in new projects, and voluntary commitments to transparent disclosure of data along the entire value chain . Offering extracurricular learning sites for environmental education, e.g. in certified geoparks and geotopes , can also contribute to the understanding of domestic natural resources extraction.
Furthermore, the implementation of largely closed natural resources cycles and thus the increased use of secondary resources from recycling can increase the resilience of the supply in resources. To promote the circular economy, existing barriers must be identified and removed. A comprehensive dialogue process to be carried out for two years by the “Dialogue Platform for Recycled Resources” at DERA commissioned by the Federal Ministry of Economics and Technology (BMWK), the necessary fields of action for important industrial resources (metals and industrial minerals) are to be identified . This dialogue process will promote the transformation of the procurement of natural resources towards a circular economy that reduces a need for primary resources. With its Circular Economy Action Plan, the EU Commission is pursuing the goal of doubling the use of recycled materials by 2030. Together with the shift to less material-intensive manufacturing processes and products, this can achieve greater resilience in the natural resources sector.
In view of geopolitical developments and the aforementioned challenges in the import of natural resources, the German government also sees the need to work with companies in the medium and long-term to increase diversification in the supply chains of critical and strategic resources . The diversification of the supply chains used for the procurement of natural resources is particularly necessary if there are only very few suppliers or if there is no market on the supply side (see section II). This applies both to the mining and extraction of natural resources and to the further processing of natural resources.
In order to better assess potential risks in connection with the prices of natural resources and supply chains, it is necessary to create a sound and up-to-date knowledge base on how the demand for natural resources might or will probably evolve to cover the needs of new technologies that heavily rely on critical natural resources. DERA (a department of the BGR) continuously carries out analyses and evaluations of the international markets for mineral, fossil energy, and (more recently) recycled resources, so that it is able to offer a comprehensive range of information and advice for the companies, policymakers and society as a whole. Part of the DERA monitoring is the project “Natural Resources for Future Technologies” including the report bearing the same title, which is regularly updated every five years. The report “Natural Resources for Future Technologies 2021”, prepared by the Fraunhofer Institute for Systems and Innovation Research ISI and the Fraunhofer Institute for Reliability and Microintegration (IZM) on behalf of DERA, estimates the needs for natural resources for 33 future technologies for the year 2040. Drivers for the selected technologies are megatrends such as decarbonisation and digitalisation . DERA’s Price Monitor informs the public monthly about current price developments .
In addition, the Federal Ministry for Economic Affairs and Climate Action (BMWK) is working to expand cooperation with international partners in the natural resources sector. This cooperation is intended to promote the diversification of international sources of natural resources and expand cooperation with those countries and regions that share the same values as the German government . This involves both bilateral cooperation in the field of natural resources (with Chile, Australia and Canada, for example) and multilateral formats such as the Minerals Security Partnership (with the US, Japan, Canada, Australia, Korea, France, Norway, Finland, Sweden and the European Commission).
The diversification of procurement contributes to the achievement of the 2030 Agenda for Sustainable Development Goals and must be achieved in compliance with high sustainability standards. The German Government expects all German companies with international operations, regardless of their size, to fulfil their responsibility to respect human rights along their value chains in the field of procurement of natural resources . The benchmarks for this corporate due diligence requirement are the UN Guiding Principles on Business and Human Rights , the OECD Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises . There are also OECD guidelines with concrete recommendations in the area of human rights due diligence that have been drafted specifically for minerals from conflict and high-risk areas as well as for the participation of stakeholders.
The obligations under the German Act on Corporate Due Diligence in Supply Chains (LkSG), which have been in force since 1 January 2023, are in principle also applicable to the import of natural resources. This also applies to German subsidiaries of foreign companies. The implementation of the Act is controlled by the Federal Office of Economics and Export Control (BAFA) .
In a total of eight countries (Australia, Brazil, Canada, Chile, China, Ghana, Peru, South Africa), competence centres for mining and natural resources have been established at the respective chambers of commerce abroad. They advise companies and conduct local dialogues with government agencies and multipliers in the respective mining and natural resources sector to raise awareness of the requirements for sustainability standards along the entire supply chain.

Germany's role in the international natural resources market

Within the framework of the natural resources strategy, the German government supports initiatives of the European Commission aimed at reviving the primary extraction of metallic resources required for electromobility and the energy transition in EU member states .
Initiatives such as the European Battery Alliance have already triggered substantial public and private investments that strengthen technologies, skills and competences in refining and metallurgy as a crucial part of the value chain. The German government participated actively and constructively in the drafting of the EU Regulation (2017/821) on so-called conflict minerals, thereby establishing rules for corporate responsibility (see also 5th D-EITI report Chapter 7.3h on Corporate Responsibility).
Access to resources is of strategic importance to Europe’s goal of achieving the Green Deal and ensuring sustainability in resource extraction. The extraction of resources is therefore an integral part of the new European Raw Materials Alliance (ERMA) . The Mineral Security Partnership (MSP) founded in 2022 and supported by the German government is a multilateral initiative to strengthen critical commodity supply chains . The MSP aims to ensure that critical minerals (natural resources) are extracted, processed and recycled in a way that helps countries realise the full economic development potential of their mineral resources.
The German government supports the Extractive Industries Transparency Initiative (EITI), which aims to increase transparency in the extractive sector so that revenues in the extractive sector flow into the national budgets of the respective countries . Even though China and other EITI non-implementing countries produce the majority of critical resources, the Mission critical EITI report from 2022 lists global producers and potential producers of “critical commodities” that are already implementing the EITI Standard. An overview of the production of key resources required for the implementation of greenhouse gas neutral technologies (lithium, cobalt, nickel, copper and rare earths) in countries implementing the EITI is provided in the Strengthening governance of critical minerals EITI report of 2022.
The gaps in the EU’s capacities for extraction, refining, processing, recycling (e.g. for lithium or rare earths) and in the circular economy clearly show the high (including the sometimes critical) dependencies in the supply of natural resources. The goal must be to reduce the critical dependencies. This requires rethinking the industrial and innovation policies at the various international levels as well as in Germany and includes, in particular, the targeted promotion of material-efficient approaches for the reduction of the absolute amounts of natural resources used in industrial production (e.g. lightweight construction taking into account recyclability). The reorientation of policies also requires eco-design approaches (e.g. improving the durability, reusability and reparability of products) and approaches for the substitution of non-renewable, scarce or critical resources. Where recycling cannot increase security of supply, at least in the short to medium term, imports need to be diversified and domestic production strengthened. It will be necessary to set effective economic and ecological incentives so that the country can control its procurement of natural resources responsibly and securely in the future.

Glossar

In Federal States in which legislation does not include an excavation law and the State-level Nature Conservation Law does not apply to the extraction of non-energetic, ground-based natural resources in the context of dry excavations, this type of natural resource extraction falls within the scope of the relevant state building regulations.

Legal limitations also exist: State building regulations apply to the excavation of solid rock (limestone, basalt, etc.), for example, in quarries with an area of up to 10 hectares (ha) in which no blasting is carried out. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable.
In Bavaria and North Rhine-Westphalia, the above-ground excavation of non-energetic, ground-based natural resources in the context of dry excavations is determined at state level by the existing excavation laws (AbgrG). For the excavation of solid rock (limestone, basalt, etc.) in quarries where blasting does not occur, the AbgrG applies to sites with an area of up to 10 ha. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable. In the other Federal States, this type of natural resources extraction is regulated by the respective state building regulations or by the state-level nature conservation laws.

In general, the AbgrG applies to those raw materials the excavation of which is not directly subject to mining law or the mining authorities. These raw materials include (in particular) gravel, sand, clay, loam, limestone, dolomite and other rocks, bog mud and clays. However, the jurisdiction between AbgrG and mining law can vary from case to case in the case of certain raw materials, such as quartz gravels. The requested authority must always verify its own jurisdiction in each case. The AbgrG also encompasses surface area usage and the subsequent rehabilitation of the area.
The German Federal Immission Control Act (BImSchG) is the most important and practice-relevant law in the field of environmental law. It constitutes the basis for the approval of industrial and commercial installations. In the natural resources extraction industry, quarrying companies must have approval to extract stones and earth. Every quarrying area of 10 hectares or more must undergo a full approval procedure, including public participation and UVP (environmental impact assessment). A more simplified approval procedure is used for quarrying areas of less than 10 hectares.

The sphere of responsibility for the legal immission control approval procedure is fully specified in the Immission Control Acts of the Federal States. The Federal States are tasked with the administrative enforcement of the approval procedure. Each individual state’s Environment Ministry – the highest local immission protection authority – usually bears the responsibility for this procedure. Subordinate authorities include regional councils, district authorities and lower-level administrative authorities. Administrative jurisdiction generally lies with the lower-level administrative authorities.
The GDP measures the value of goods and services produced domestically (creation of value) within a given period (quarter, year). The Federal Office of Statistics calculates the GDP as follows: production value minus intermediate consumption = the gross value added; plus taxes on products and minus subsidies = GDP
The gross value added is calculated by deducting intermediate consumption from the production values, so it only includes the value added created during the production process. The gross value added is valued at manufacturing prices, i.e. without the taxes due (product taxes), but including the product subsidies received.

During the transition from gross value added (at manufacturing prices) to GDP, the net taxes (product taxes less product subsidies) are added globally to arrive at an assessment of the GDP at market prices’. Source: Destatis
The planning approval procedure under mining law is used for the approval procedure of a general operating plan for projects which require an environmental impact assessment (§§ 52(2a), in conjunction with 57 a of the BBergG).
There are different definitions and methodological approaches at the international as well as at the national level as to what subsidies are and how they are calculated. According to the definition of the German government’s subsidy report, this report considers federal subsidies for private companies and economic sectors (ie grants as cash payments and tax breaks as special tax exemptions) which are relevant to the budget. Subsidies at the federal level can be viewed via the subsidy reports of the federal states (see Appendix 5 of the German government subsidy report).
In compliance with § 68(1), Water Resources Act (WHG), the excavation of landowners’ natural resources such as gravel, sand, marl, clay, loam, peat and stone in wet extraction operations requires a planning approval procedure. The reason for this is that groundwater is exposed in wet extraction, resulting in above-ground water. The planning approval procedure is implemented by lower-level water authorities.

The procedural steps of the planning approval procedure are governed by the general provisions of §§ 72 to 78 of the Administrative Procedures Act (VerwVfG). Within the meaning of § 68(3), nos. 1 and 2 of the WHG, the plan may only be established or approved if an impairment of the common good is not to be expected and other requirements of the WHG as well as other public-law provisions are fulfilled.