Canada and Germany signed an agreement Tuesday to boost co-operation in critical raw materials including rare earths as Berlin tries to reduce its dependence on Chinese imports.
China’s dominance in supplying the world with such materials has been in the spotlight since Beijing this year introduced export curbs on some key rare earths, triggering jitters among businesses globally.
Rare earths, which are abundant but often extremely difficult to extract, are used in products from electric car batteries to wind turbines and computer hard drives.
Germany is hoping to cultivate Canada as an alternative source of rare earths as well as other materials such as lithium, graphite, cobalt and nickel.
German Economy Minister Katherina Reiche hailed the agreement, saying that “reliable supply chains are of central importance to businesses in both countries.”
Three German companies, including copper producer Aurubis, also announced memorandums of understanding with Canadian firms involved in mining and processing raw materials.
Reiche signed the deal with her Canadian counterpart Tim Hodgson, who said he hoped it would ensure “that German manufacturers can count on Canadian suppliers and that Canadian producers can access global markets.”
German Chancellor Friedrich Merz called the new agreement with Canada “a step towards strengthening our economies and making them more secure.”
Speaking alongside Merz, Prime Minister Mark Carney said a range of factors — from global trade volatility to the Ukraine war and coronavirus pandemic — had exposed the vulnerabilities of critical mineral supply chains.
“Germany has been amongst the leaders in beginning that diversification away from China,” Carney said, adding that Canada could help to speed up the process.
China’s export restrictions have rattled industry in Germany more than in many other countries.
In late July, the European Union said it had reached an agreement with China on a mechanism to reduce curbs on rare earths exports to the bloc.
Other materials currently sourced from China are also key to German businesses. Lithium, for example, is crucial for Germany’s flagship automobile sector as it increasingly shifts towards electric vehicles.
