Germany has initiated plans to start up a state fund worth between €500 million ($546 million) and €1 billion ($1.1 billion).
According to the Economy Minister, Robert Habeck, the country intends to use the money to support the mining of key raw materials needed to boost the country’s green transition.
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The disclosed amount is said to be around half the initial budgets. However, constraints had to be put in place as the German government looks to minimize its budget for 2024.
Experts knowledgeable in the subject speculates that the required amount for the fund may be up to €2 billion.
In a bid to trim down its dependency on China for essential commodities, Europe wants to diversify its supply chains and building closer bonds with like-minded partners.
The European Union anticipates that its demand for key materials and metals such as those used in wind turbines, photovoltaic cells, and electronic equipment will soar due to its digital and green transitions.
“We’re discussing the option of using equity capital,” Habeck said in a news conference in Berlin after a meeting with French Finance Minister Bruno Le Maire, and Italian Industry Minister, Adolfo Urso.
According to him, Germany’s KfW Development Bank might partake in projects or even take stakes.
The Economy Ministry has drawn conclusions about the concept, although it is yet to agree with other ministries, he added.
Finance Minister, Christian Lindner, intends to slash the 2024 budget by €20 billion, with reductions in expenditure in all the departments except defense.
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Habeck said Germany must have the ability to offer financing instruments similar to those available in France or Italy. He further warned that “German companies would be disadvantaged against others if act” if actions were not taken.
In its Critical Raw Materials Act launched in March, the European Commission — the executive arm of the EU — proposed that member states should extract 10% of the critical raw materials the bloc needs domestically by 2030.
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