Germany wants to intensify cooperation with Japan to help secure supplies of raw materials as part of a wider effort to make supply chains more resilient and avoid over-reliance on single countries.
(Bloomberg) — Germany wants to intensify cooperation with Japan to help secure supplies of raw materials as part of a wider effort to make supply chains more resilient and avoid over-reliance on single countries.
Raw-material security and linking the two nations’ strategies will be top of the agenda at upcoming talks with Japanese Prime Minister Fumio Kishida, Chancellor Olaf Scholz said Thursday during a visit to the Federal Institute for Geosciences and Natural Resources in Hanover.
“At the latest with the Russian war of aggression on Ukraine, we have learned that we must do everything possible not to be dependent on supply chains that we cannot sufficiently influence,” Scholz said.
“So we have to create structures with as many partners as possible all over the world to ensure a secure supply of raw materials,” he added. “The German-Japanese government consultations will focus on raw material security and on linking our raw material strategies.”
Scholz will travel to Japan in mid-March with senior ministers as part of the inaugural German-Japanese government consultations, according to people familiar with his plans.
He will be joined by senior ministers including Economy Minister Robert Habeck, who is also his vice chancellor, Finance Minister Christian Lindner and Foreign Minister Annalena Baerbock, as well as a delegation of senior business executives, said the people, who asked not to be identified discussing confidential information.
It will be Scholz’s second visit to Japan as chancellor in less than 12 months and he also plans to attend the G-7 leaders summit in Hiroshima in mid-May. It marks a clear shift from his predecessor Angela Merkel, who visited Japan only three times for bilateral talks during her 16 years in power while she flew to China with large business delegations nearly every year.
Scholz’s focus on Japan is not a coincidence, as he has repeatedly stated that democratic nations must work more closely together to counter the influence of economic rivals with different political systems.
While Scholz has rejected an economic decoupling from China, he has urged companies to diversify their business ties in Asia. This is often easier said than done, as Germany’s trade links with China have been decades in the making.
German carmakers and their suppliers are trying to secure direct access to raw materials such as lithium and cobalt needed in the production of battery cells for electric vehicles.
While Chile and Australia account for the majority of lithium mine supply, China has more than half of all capacity for refining it into specialist battery chemicals.
There’s growing concern about China’s dominance of refining and manufacturing capacity, which is seen as a vulnerability due to political tensions.
Scholz’s ruling coalition is in the process revamping its national raw-materials strategy. Russia’s war in Ukraine exposed the dangers of over-reliance on a single supplier for energy imports and Germany is keen to avoid similar dependencies when it comes to raw materials.
The updated strategy will focus on ramping up recycling, modernizing regulation to enable the expansion of mining on German territory and diversifying procurement partners via agreements with countries like Chile, Australia and Canada.
–With assistance from Isabel Reynolds.
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