Africa as a Strategic Partner

Position Paper |Sub-Saharan Africa Policy |Raw Materials

Africa as a Strategic Partner

Opportunities for increased Cooperation in the Raw Materials Sector

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For German companies to operate successfully in the African raw materials sector, a strategic approach integrated into a European framework is required.

Preface

Reliable access to raw materials is a cornerstone for the competitiveness of German industry. They are indispensable for the technologies of the future in a decarbonized world—for example, in the expansion of renewable energies, the mobility transition, artificial intelligence and digitalization, as well as in the defense industry and thus for national security. China, which holds a dominant position both in the extraction and, in particular, in the processing of many metallic raw materials, plays a central role in raw material imports. This one-sided import dependence represents a significant structural, economic, and geopolitical risk for German industry. China increasingly uses its dominant position in the global raw materials sector as a means of pressure. Diversification strategies of German industry are hampered, as Chinese companies are able, due to their monopoly position, to push competitors out of the market. The collaboration between German and European politics and industry is therefore all the more important.

Against this background, Africa, as a resource-rich continent, is gaining increasing importance for Germany’s de-risking and diversification strategy: through a stronger direct supply of raw materials from Africa and support in building local processing facilities, the continent can make a decisive contribution to reducing dependence on imports from China. The BDI calls for the German government’s Africa policy to take the new importance of the continent— particularly for raw material security—into account. For German companies to operate successfully in the African raw materials sector, a strategic, European-embedded approach is needed, which guarantees companies predictable prices while also relying on reliable partnerships with African states.

How growing demand and increasing dependencies are challenging Germany.

Raw Materials Supply as a Key Issue for the Future Viability of German Industry 1

High one-sided import dependencies on individual countries, increased demand alongside supply deficits, and the geopoliticization of raw material markets threaten the supply to companies and increase the risk of delivery failures. China’s monopoly position complicates the industry’s diversification effort.

High one-sided import dependencies on certain countries, increased demand alongside supply deficits, and the geopoliticization of raw material markets threaten the supply to companies and increase the risk of delivery failures. China’s monopoly position complicates the industry’s diversification efforts.

The technological shift towards electric mobility, digitalization, and renewable energies is driving demand—particularly for critical and strategically important metallic raw materials—massively upwards. Access to raw materials is also essential for the security and defense industry. Anticipated demand growth is expected to far exceed historical peaks by 2030. The supply of raw materials cannot be increased quickly enough to meet the growing demand. The growing demand for raw materials and the high import dependence are becoming Europe’s Achilles’ heel in a world where economic security is increasingly equated with national security.

A Few Countries Dominate Raw Material Markets

The extraction and processing of many critical raw materials also depend on a very small number of countries, which often have complex political and economic conditions. According to the Organization for Economic Cooperation and Development (OECD), the concentration of global production of critical raw materials has increased significantly over the past decade (OECD, 2023). About half of all countries rely on three or fewer exporting countries for mineral imports, and a quarter rely on just one (International Monetary Fund, 2023). This makes them vulnerable to supply disruptions. China, in particular, has recognized the strategic importance of raw materials. Over the past decades, Beijing has expanded its involvement along critical raw material value chains—through pricing policies, location strategies, and foreign investments. In doing so, China has risen to become the most important player in the global raw material markets, even at the cost of high expenses.

Geopoliticization of Raw Material Markets

Geopolitical dynamics are exerting additional pressure on raw material supply chains in two ways. First, the strategic importance of critical raw materials for maintaining a strong competitive position in the key markets of the future (green and digital transformation) is increasing. As a result, more and more countries are developing corresponding raw material strategies. In addition to Germany’s 2020 Raw Materials Strategy and the European Union’s Critical Raw Materials Act, the International Energy Agency (IEA) has identified nearly 200 political initiatives. For raw material-importing countries—such as the EU or the USA—these initiatives aim, as part of their industrial policies (Net Zero Industry Act, Inflation Reduction Act), to secure new sources of raw material imports.

At the same time, the number of trade interventions is increasing sharply, particularly on the part of raw material-producing countries, according to the OECD. The number of global export restrictions on critical raw materials has more than quintupled over the past ten years (OECD, 2023). China has been using dependencies as a geopolitical pressure tool in conflict situations for years.

Second, the US-China conflict is increasingly affecting global raw material markets. The more the trade and technology conflict between the USA and China escalates, and the more the USA attempts to curb China’s technological progress, the more China will exploit its dominant market power in critical raw materials and restrict the global availability of these resources. This dynamic was most recently observed in April 2025, when China limited the export of heavy rare earths and corresponding permanent magnets in response to US tariffs on China. In the coming years, growing competition for the limited available critical raw materials is therefore to be expected. This has far-reaching consequences for global value chains and German industry.

Third, Europe—and Germany in particular—is heavily dependent on imports of critical raw materials from China: 40 percent of global copper demand, 60 percent of lithium, 70 percent of cobalt, 90 percent of Manganeseese, and 100 percent of graphite are processed in China (IRENA, 2023).

Why Costs Matter – China’s Price Advantage

as an Obstacle to Diversification

The one-sided dependence on China for critical raw materials is a geopolitical challenge. However, the necessary diversification of raw material imports is hampered because China’s price advantages in the production of critical raw materials significantly increase the costs of diversification initiatives for German companies. Due to state subsidies, Chinese companies will continue to be able to produce raw materials at lower costs. Diversification must be affordable and inevitably confronts German companies with the issue of price.

Globally, the most cost-efficient production of critical raw materials takes place in China. Over decades, China has strategically built a comprehensive value chain—from extraction to processing to its own innovation capacities. Chinese companies are subsidized to such an extent by the state that they can take on entrepreneurial risks to a greater degree than Western competitors and operate outside conventional economic constraints. The extent of Chinese state subsidies for domestic raw material companies is particularly evident in the aluminum sector. According to the OECD, between 2013 and 2017, 85% of up to USD 70 billion in global subsidies for the aluminum industry went to just five Chinese companies (OECD, 2019). In contrast, companies in Europe or North America face significantly higher production costs, due, among other factors, to stricter environmental regulations, higher wages, and energy prices. Against this background, companies are often unwilling to source raw materials and related intermediate products from outside China, as prices there are not competitive.

Another major challenge is China’s manipulation of global raw material markets: for many raw materials, China holds a monopoly position. Through targeted overproduction and flooding the market with certain raw materials, Chinese companies lower prices to such an extent that mining operators outside China come under massive economic pressure and are forced to reduce or cease production. This not only reinforces existing dependencies on Chinese raw material imports but also limits the development of alternative sources of critical raw materials outside China, which is essential for diversification efforts. Important metallic raw materials are particularly affected.

In 2023, the Australian mining company Jerovis opened the only cobalt mine in the United States, located in Idaho. After cobalt prices fell by 59.5% between May 2022 and May 2025, the company was forced to close it in the same year. Similarly, significant consequences are expected for rare earth elements: prices for neodymium-praseodymium oxide, a critical rare earth compound used in many high-

tech applications, fell below USD 60 per kilogram in 2025. If prices remain below this level until 2030, approximately half of the supply outside China is expected to become economically unviable (CSIS, 2025).

Affected Key Areas in Germany

The crisis particularly affects strategic future areas with the greatest potential for competitiveness, value creation, growth, and resilience. Key fields such as the energy and mobility transition, digitalization, and artificial intelligence, as well as security and aerospace, are especially impacted. Accordingly, supply disruptions can affect virtually all companies. The production of electric motors, permanent magnets, and battery systems—essential for many manufacturing processes—depends on the availability of critical raw materials such as rare earth elements, lithium, or copper. Permanent magnets are indispensable for the operation of wind turbines, while cobalt and nickel are central components of battery storage systems.

Moreover, the risks are particularly pronounced in the areas of digitalization and microelectronics. Critical metals such as gallium and germanium are essential components in semiconductor manufacturing, AI applications, and telecommunications technology.

Finally, the security and defense industry is also affected. Modern military systems—including radar, guided missiles, drones, and satellite-based systems—rely on the reliable availability of resource-sensitive components such as semiconductors, batteries, and magnets.

Fig. 1: Demand Forecast for Critical Raw Materials until 2050 (In percentages)

Source: Bhutada, 2021

Fig. 2: Subsidies for the Aluminum Sector in International Comparison (Cumulative Subsidy Volume in Million USD 2013-2017)

Source: IW Köln, 2021

The African Raw Materials Sector‘s Untapped Potential for Germany

How strategic partnerships with the continent are opening up new opportunities.

About 30 percent of the reserves of critical raw materials are located in Africa (Atlantic Council, 2024). African countries are even the main suppliers of many raw materials that are crucial for industrial transformation. Nevertheless, these countries have so far been unable to benefit from their wealth of raw materials.

The extraction of mineral resources plays a significant role in many African countries. Raw material exports often represent the largest item in the foreign trade statistics of African countries (Germany Trade and Invest, 2025).

African countries are the largest producers of nine of the 34 critical raw materials identified by the European Commission: bauxite (Guinea), cobalt and tantalum (Democratic Republic of Congo, DRC), platinum group metals and manganese (South Africa) (European Commission, 2023 & United States Geological Survey (USGS), 2025). Significant quantities of copper (DRC, Zambia), chromium (South Africa), graphite (Mozambique, Madagascar, and Tanzania), and lithium (Zimbabwe) are also mined (International Energy Agency, 2024). Geopolitical tensions are also making reserves of rare earths that have not yet been mined more relevant, for example in Malawi, South Africa, and Madagascar (German Mineral Resources Agency, 2024).

African countries are already key players in the energy transition thanks to their raw material production. Further raw material reserves hold untapped potential.

Given the growing global demand for raw materials, the African raw materials sector is expected to play an increasingly important role in the future (Bernhart et al., 2024). So far, however, only 2.8% of global mining capital flows into African projects (Discovery Alert, 2025). China, above all, has built a dominant position over the past two decades, both in terms of investments in the African mining sector and the offtake of African raw materials (Benabdallah, 2024). Between 2005 and 2015, Chinese investments in the African mining sector increased twenty-fivefold (Zero Carbon Analytics, 2024). Since the launch of the Belt and Road Initiative in 2013, China has pursued a comprehensive raw materials strategy aimed at securing a leading position along the entire value chain. China, in particular, holds a dominant role in the processing and refining of critical raw materials.

African Raw Materials and the Energy Transition

• The DRC produces approximately 76 percent of the world’s cobalt, which is essential for electric vehicle batteries (Cobalt Institute, 2025).

• Chromium accounts for more than onethird of the mineral requirements for geothermal and hydropower. In 2021, South Africa alone accounted for 43.9 percent of global chromium production. In 2020, African countries accounted for 80 percent of global chromium exports (Mo Ibrahim Foundation, 2022).

• Graphite makes up almost one-third of all minerals used in electric vehicles. Madagascar (8.1 percent), Mozambique (7.8 percent), and Tanzania (5.6 percent) together hold more than one-fifth of the world’s graphite reserves (Mo Ibrahim Foundation, 2022).

Fig.

3: African Mineral Reserves

Source: Mo Ibrahim Foundation, 2022

Guinea World‘s largest bauxite reserves

Gabon

Second largest producer of manganese

DRC

70% of global cobalt production

South Africa

90% of the world‘s platinum metal reserves

Copper

Manganese

Cobalt

Bauxite

Platinum Group Metals (PGM)

Graphite

Chromium

Zambia

World‘s largest exporter of unrefined copper

Mozambique

Third largest producer of graphite

Zimbabwe

Third largest exporter of chrome ore

Non-renewable & renewable resources

Water

Fig. 4: Schematic Overview of Cobalt Extraction and Processing

Source: Cobalt Institute, 2025

Production of:

• Electricity

• Fuels

• Utility service

• Auxiliary materials

Further Processing

Pyrometallurgy

By-products:

• Nickel products

• Copper products

• PGM

• Sulfuric acid

Emissions into the air, soil, and water

Secondary raw materials and scrapped metal

Water

Raw Materials from Africa, Value Creation in China

In the DRC, 15 out of a total of 17 cobalt mines are owned by Chinese companies (Goldman Sachs, 2023). In fact, in most African countries, only raw material extraction takes place, while processing and refining are predominantly carried out in China. In 2024, the DRC accounted for 76 percent of global cobalt production, while China dominated refining with a 78 percent share (Cobalt Institute, 2025). In contrast, very little cobalt refining takes place in the DRC.

The same applies to the aluminum ore bauxite, whose largest global producer is Guinea in West Africa. Guinea holds one-quarter of the world’s bauxite reserves and accounted for over 28 percent of global bauxite production in 2024 (USGS, 2025). However, the ores are entirely exported, primarily to China, and Guinea’s share of aluminum production remains below one percent (The Observatory of Economic Complexity, 2024).

A similar pattern emerges for other African raw materials: in 2020, China imported approximately one-third of African exports of unprocessed minerals and metals (Benabdallah, 2024).

The concentration of processing creates bottlenecks in the upstream supply chain for German companies. German industry exhibits strong dependencies on China, the world’s largest producer of aluminum, as well as processed copper, cobalt, natural graphite, manganese, and processed rare earths (European Commission, 2024).

Africa as a Natural Partner of German Industry

Direct sourcing of critical raw materials from Africa can make an important contribution to securing raw materials for German companies. Direct sourcing can take various forms, such as participating in an existing mining project in combination with long-term offtake agreements with the respective mining companies. “Remining,” the recovery of raw materials from existing mine tailings or former mining sites, is also gaining importance.

The establishment of refining capacities in African countries represents another key aspect of direct sourcing, aimed at avoiding the detour of raw materials through China.

A stronger engagement in the African raw materials sector is not only beneficial for German companies but can also offer African countries an opportunity to benefit more from their own resource endowments. So far, resource-rich countries in Sub-Saharan Africa have largely failed to translate their wealth of natural resources into sustainable economic growth: they record comparatively weak economic performance and deficits in income distribution and healthcare compared with other African states without major resource deposits (Lee & Gueye, 2015).

Many African countries therefore introduce export bans and local-content requirements to anchor additional value-added stages and processing activities for raw materials domestically (Acheampong, 2024). In practice, these local-content measures primarily focus on equity participation, the inclusion of local suppliers, requirements for employing domestic workers, the development of local skills, and the transfer of technological know-how.

In 2021, the DRC and Zambia initiated concrete steps to establish a regional, cross-border battery value chain (Mususa & Lutandula, 2024). These industrial policy measures are intended not only to create jobs locally but also to serve as a blueprint for building processing facilities and refineries, supporting the industrialization of African countries, and stimulating the development of additional industrial sectors.

Example I: Extraction of Germanium from the Big Hill Waste Dump in Lubumbashi, DRC (Umicore, 2024)

• In 2024, the Belgian company Umicore signed a partnership agreement with the Congolese company STL.

• The agreement concerns the extraction of germanium from metal-bearing slag at Big Hill.

• Umicore agreed to optimize STL’s processing plant by contributing its expertise in refining and recycling. In return, the company receives exclusive access to the processed germanium, which is used for the development of high-quality material solutions in the high-tech sector.

Weak Governance Hampers German Engagement

German companies active in the African raw materials sector are rare —beyond machinery manufacturers and service providers. This is partly because the African mining sector is associated with significant challenges. Except for Zambia and South Africa, the African raw material–producing countries referenced here perform below average in the World Bank’s last Ease of Doing Business report (World Bank, 2020). According to the Bertelsmann Transformation Index, governance in all of these countries ranges from “moderate” to “failed” (Bertelsmann Stiftung, 2024).

Poor governance and insufficient establishment and enforcement of legal standards have a direct impact on the raw materials sector—especially when violations of social and environmental requirements are not prosecuted. This is particularly problematic for raw materials originating from informal or small-scale mining structures, where labor standards are difficult to enforce and human rights violations are rarely sanctioned.

Example II: Extraction of Lithium from Tailings at the Former Kamativi Mine in Zimbabwe

• The African company Bravura Holdings owns large lithium deposits in the form of tailings from the former Kamativi mine in Zimbabwe.

• Bravura plans to produce battery-grade lithium from these deposits. Concentration and initial processing steps are to take place in Zimbabwe, while final processing is planned in Germany. Production is expected to begin in 2027/2028.

• The German subsidiary, Bravura Lithium GmbH, is currently being established.

• Bravura is negotiating potential offtake agreements with major German corporations, and there are initial discussions regarding subsidies and financing with German and European banks as well as public institutions.

For German industry, responsible sourcing of raw materials is a key concern. Many companies participate in sectoral and multistakeholder initiatives and have established risk management systems to identify, prevent, and remediate human rights risks within their sphere of influence. However, if the necessary institutional framework is lacking locally to support corporate responsibility and guarantee legal certainty, this can severely restrict companies’ ability to act—and, in the worst case, lead German actors to withdraw from certain raw material markets, such as in Africa, or not to enter them at all.

Another obstacle is inadequate infrastructure and energy supply. The road network in Africa shows significant gaps in both capacity and quality (Africa Finance Corporation, 2025). Robust transport infrastructure is needed to move raw materials from extraction sites to processing facilities and eventually to ports for export to Europe. Transport failures can also occur if existing infrastructure is not maintained or is heavily damaged due to climate impacts. Companies in Sub-Saharan Africa often have to invest heavily in infrastructure to make remote mining projects economically viable (Global Construction Review, 2024; Glencore, 2012).

Energy supply—crucial for establishing local processing capacity—is also insufficient in many African countries. Energy expansion is lagging behind the rising demand, jeopardizing efforts to build up local refining and processing facilities. By 2024, an estimated 6.5 GW of electricity-generation capacity had been added, but this is far below what is needed to meet growing demand (Africa Finance Corporation, 2025).

China’s Strategy in Africa

The prevailing conditions in the African raw materials sector pose far fewer challenges for Chinese (state-owned) companies than for their Western competitors. Chinese companies benefit from strong financial backing from the state and are subject to very few regulations. This enables Chinese mining companies to take on greater risks in their raw materials engagement and to invest in exploration far earlier—often before the economic viability of a project has been shown. At the same time, state guarantees allow Chinese firms to operate in politically unstable countries without bearing the full risks themselves. This enables Chinese actors to position themselves in markets that present significantly higher obstacles for Western companies (Zhou, Chrochet & Wang, 2023).

This state-backed corporate engagement is complemented by the Belt and Road Initiative (BRI), China’s comprehensive global infrastructure strategy. In Africa, the BRI targets strategic objectives: infrastructure projects—such as transport links between mines and ports—are deliberately implemented along resource-relevant corridors. In parallel, China is driving a massive expansion of energy infrastructure on the continent (Ze Yu, 2023).

Infrastructure development is not only in China’s interest but forms part of the “Resource for Infrastructure” model, which offers resource-rich African countries low-interest loans in exchange for access to raw materials. This model combines economic interests with geopolitical influence and strengthens China’s structural presence in Africa’s resource-rich regions.

To counteract the structural disadvantages faced by European companies competing with Chinese actors, massive support from both the European and German sides will be required. Simply relying on improving local framework conditions will not be sufficient to enhance the competitiveness of European companies in the African raw materials sector (Benabdallah, 2024).

China‘s strategic combination of state guarantees and infrastructure investments gives its companies a significant competitive advantage in the African raw materials sector.

Strategic,

Partnership-Based, European

Recommendations for an effective raw materials policy using Africa as an examplee

3

Germany must act decisively to secure its raw material supply in the long term. Since market principles are undermined on the global raw materials market, Germany cannot fall into the illusion that merely improving framework conditions will lead to raw material sovereignty. A joint effort by both politics and industry is required to ensure the future viability of the German industrial base.

The example of the African raw materials sector illustrates that Germany‘s raw materials policy still operates too piecemeal to be fully effective. The BDI advocates for a policy that is strategically oriented, embedded within the European framework, and based on reliable partnerships.

Strategic

Raw materials policy must aim to reduce the costs of diversification and create incentives for companies to invest in raw materials projects—including in Africa—and secure direct sourcing despite strong global competition and locational disadvantages.

Raw materials policy is not an end in itself. Its goal is to enhance national supply security to maintain the competitiveness of domestic industry and the operational capability of the military. A successful raw materials policy is strategically oriented: it not only improves framework conditions but also enables companies to mitigate supply risks and actively engage in the global raw materials sector. It analyzes obstacles that hinder supply security and develops tailored measures.

Dependence on China is driven by the country’s favorable production factors and strong state subsidies in the sector. This distorts raw material prices and allows Chinese companies to consistently offer materials at lower prices. Diversification strategies therefore become a matter of cost.

Policy Recommendations

3 4 5 2 1

Consider price-stabilizing measures: The German government should consider implementing price-stabilizing measures for selected, strategically important raw materials. Such an instrument—similar to existing EU intervention mechanisms in the agricultural sector—can provide companies with a reliable investment foundation by protecting them from drastic future price declines. Despite high price volatility, intense competition, and long-term capital commitment, clear incentives for investment along the value chain are created. Countries such as the USA and Australia are already planning guaranteed minimum prices for critical raw materials (Burton, 2025; Scheyder & Renshaw, 2025). If prices fall below the established minimum level, an institutional buyer enters the market and stabilizes prices by purchasing at the floor price. State reserves built through this intervention mechanism are released to processing companies in case of price increases or supply shortages to offset potential supply disruptions. Such price signals do not cause shortages; on the contrary, they strengthen German and European mining activities and increase output. An example of a price-stabilizing institution is the Japan Organization for Metals and Energy Security (JOGMEC). A project-specific example is the U.S. Department of Defense’s investment in MP Materials, which combined equity, convertible and option rights, a price floor for a key product (neodymium-praseodymium oxide), and offtake commitments.

Strengthen coordination between AA, BMZ, and BMWE: To optimally support German industry in the African raw materials sector, a coordinated approach between the Foreign Office (AA), Federal Ministry for Economic Cooperation and Development (BMZ), and Federal Ministry for Economic Affairs and Energy (BMWE) is necessary. Program overlaps must be avoided, clear responsibilities communicated, and common goals defined.

Ensure industry-oriented selection of strategic raw materials and projects (for example in Africa): The identification of which raw materials and projects are strategically relevant should be done in close consultation with industry and based on existing DERA studies. This should take into account not only current demand but also medium-term technological developments and industrial needs. The national security and defense industry strategy provides a basis for stronger consideration of critical raw materials for the security and defense sector.

Improve bottleneck analyses along the entire value chain for specific strategically relevant products or technologies: Germany and the EU should systematically identify and assess existing and foreseeable supply bottlenecks along the entire value chain, particularly for strategically relevant products or technologies. It must be ensured that political measures to secure supply do not merely shift bottlenecks to other processing stages. Strengthening German and European raw materials activities in Africa must therefore be accompanied by an increase in local processing and refining capacities and improved conditions for energy-intensive production in Europe.

Expand and make the Raw Materials Fund more flexible: The Raw Materials Fund established by the German government should be expanded to cover funding volumes below €50 million. This would primarily benefit small and medium-sized enterprises, enabling them to quickly enter the African raw materials sector. The fund could also be supplemented with a development-financed component.

The Japan Organization for Metals and Energy Security (JOGMEC)

• JOGMEC is a state organization founded in 2004 and operates under the Japanese Ministry of Economy, Trade and Industry (METI). Its primary task is to ensure a stable national supply of mineral and energy resources in cooperation with government authorities and private Japanese companies. To this end, JOGMEC supports international operations of private Japanese companies in the raw materials sector through investment assistance and guarantees. For example, JOGMEC can cover up to 50% of exploration costs and up to 90% of development guarantees abroad (GTAI, 2024a). This encourages companies to develop strategic raw material sources. JOGMEC is also active on the African continent. In 2023, it signed agreements with Zambia, Namibia, and the DRC to strengthen cooperation in securing raw materials. In Namibia and Zambia, JOGMEC is conducting five joint-venture exploration projects together with the private sector (JOGMEC, N/A).

• In addition, JOGMEC manages a program to stockpile 34 critical raw materials/metals to meet domestic demand and stabilize prices during crises (International Energy Agency, 2025). JOGMEC maintains a reserve of critical raw materials sufficient to cover at least 60 days of national consumption. In crisis situations where the national raw material supply is threatened—such as production shutdowns, unrest in key supplier countries, or transport disruptions—JOGMEC can sell raw materials from the national reserve to domestic companies. The sales process is initiated based on company requests, but the final decision on the sale is made by METI.

European

Competition in the global raw materials sector is characterized by high capital intensity and economies of scale. Reducing dependence on China and replicating Chinese value chains comes with enormous costs: for example, the estimated expenses for reproducing China’s production of refined rare earth metals outside China amount to 15–30 billion USD (Goldman Sachs, 2023). A stronger engagement in Africa is likewise associated with high costs. In addition to long-term capital tied up in raw material projects, additional expenses arise for the development of infrastructure, energy supply and logistics—without which these projects would not be economically feasible.

A German diversification strategy “on its own” will therefore not be successful. A European-wide approach is needed to generate sufficient clout in global raw material markets. Such an approach enables the use of economies of scale— both in procurement, in building alternative value chains, and in financing infrastructure and energy projects in Africa. At the same time, coordinated action helps to avoid duplicative regulatory structures within member states and increases the effectiveness of European measures.

Germany needs its European partners: joint action creates the required economies of scale and increases our clout on global markets.

Policy Recommendations

3 4 2 1

Securing European raw materials financing, closely involving industry: While China and the US are securing critical raw materials with large amounts of capital, the EU Critical Raw Materials Act (CRMA) does not provide its own investment fund. The EU should provide start-up or venture capital and risk mitigation instruments for exploration projects, especially for the high-risk and capital-intensive exploration phase. In order to attract investment in CRM projects in the EU, financial risk mitigation measures, e.g. through investment guarantees or guaranteed purchase agreements, should be offered. The EU Competitiveness Fund and the Scale Up Europe Fund should focus on critical raw materials, and the proposed EU CRM Centre should closely involve industry and established industry-related raw materials financing specialists.

Underpin raw material projects with infrastructure initiatives: European infrastructure investments in Africa under Global Gateway should be aligned with the raw material needs of industry. Infrastructure development is the basis for alternative supply chains and trade routes. The Lobito Corridor jointly planned by the EU and the United States is a positive example of a combined approach linking raw material needs with infrastructure investments. To ensure an optimal use of Global Gateway’s financial resources, there needs to be a prior identification of strategically important regions in Africa, accompanied by a holistic approach across the entire value chain—from extraction to processing to recycling. These projects should be made visible as a separate category within the Global Gateway pipeline and also take local value creation into account.

Adapt the Critical Raw Materials Act (CRMA) to regional standards: Within the CRMA, four projects in Africa have been identified: rare earth projects in Malawi and South Africa, cobalt processing in Zambia, graphite production in battery quality in Madagascar and the extraction and processing of manganese in battery quality in South Africa. The selection of projects is explicitly to be welcomed. However, the selection of future projects in Africa may become more difficult if European standards—as a criterion—are applied, since these tend to be significantly higher than those in African countries. Instead, the CRMA should align itself with the standards of the respective countries for projects in third states and work on improving standards through development cooperation.

Explore instruments for demand aggregation: In the field of procurement and off-take agreements, options for demand bundling or collaborative approaches such as purchasing consortia are being discussed at both the national and the European level. It is important to discuss these options closely with industry, with regard to critical mass, added value and the role of trading houses. On 2 July 2025, the European Commission launched the new EU Energy and Raw Materials Platform for joint procurement. European buyers are to be connected with suppliers through demand requests, and the cumulation of demand is intended to strengthen European market power in global procurement markets. The EU should ensure that the use of the platform does not entail intrusive disclosure requirements or excessive bureaucracy. At the same time, the EU must implement credible cybersecurity measures to ensure that company data submitted to the platform is securely stored. Furthermore, to provide companies with legal certainty regarding potential demand aggregation, ambiguities and grey areas in the guidelines on the applicability of Article 101 TFEU to horizontal cooperation agreements must be resolved.

Partnership-Based

German companies in the African raw materials sector have so far mainly been active as providers of services, consulting or industrial machinery. They play hardly any role in the extraction or further processing of critical raw materials. Established actors benefit from long-standing networks, know-how and economies of scale. In addition, many privately operating mining companies receive targeted support from their home states—for example in the form of bilateral agreements, strategic partnerships in exploration projects or state-supported infrastructure initiatives.

To be successful in the African raw materials sector, German and European policymakers must work together with the private sector to offer African partner countries attractive forms of cooperation. These partnerships should reflect both European and African interests. A one-sided imposition of European values is to be avoided. The objective of African states to generate more value added within their own region can serve as the basis for promising win-win partnerships. German companies, with their strong reputation in machinery and plant engineering, can make crucial contributions to the development of local processing capacities through knowledge transfer and capital support. This not only helps secure Germany’s raw material needs but also supports African industrialization efforts.

Furthermore, such partnerships have significant development-policy benefits, as they create well-paid local jobs. Through local production facilities, German companies can directly influence labour, safety and environmental standards in the raw materials sector.

Sustainable success in the African raw materials sector arises where partnerships are based on mutual benefit and shared value creation.

Policy Recommendations

1 3 4 5 6 2

Specify partnerships with African countries: The Federal Government should negotiate bilateral raw material agreements with African states. These should not be limited to declarations of intent but should instead explicitly aim for long-term off-take guarantees and state-supported framework contracts for German buyers. A structured exchange with industry must precede this so that negotiated raw material agreements correspond to actual industrial demand. Partially, trilateral raw material projects in Africa should also be explored—for example with countries such as Canada or Australia, whose mining actors are already active in Africa. The same applies to countries like South Korea, whose chemical and steel companies are present in Africa and could be of interest to German buyers.

Political support through development cooperation (EZ): The coalition agreement places a development-policy emphasis on access to raw materials. To live up to this, development-policy and industrial-policy objectives must be more closely aligned. Companies active in the African raw materials sector should be involved early in the BMZ’s project planning to enable economically viable and practice-oriented initiatives. The goal should be to design projects so that they directly contribute to the business activities of German companies. A central focus of development cooperation should be the improvement of entrepreneurial framework conditions—for example through establishing contacts with the respective governments, measures to improve local standards, vocational training, co-financing of infrastructure, as well as support for industrial clusters and special economic zones with German participation.

Establish binding targets and reliable structures: To make progress measurable and enable effective steering of partnerships, clear and verifiable targets should be agreed between the Federal Government and partner countries. Such target agreements create commitment, promote transparency and allow for evidence-based adjustments of measures and strategies in the spirit of continuous improvement of cooperation.

Integrate African development goals into European strategies: The EU should systematically incorporate the development priorities of its African partner countries into its raw materials and industrial policy. This includes, in particular, the objective of many African states to establish and expand domestic processing capacities.

Avoid duplicate structures and promote complementary approaches: When supporting the development of processing capacities in Africa, it must be ensured that parallel structures to existing European facilities are not created. Instead, the focus should be on complementary solutions that meaningfully supplement existing capacities and contribute to the efficiency and strategic resilience of Europe’s raw materials supply.

Support regional clusters: The parallel buildup of processing capacities in several African countries is not very efficient, especially given the price pressure in raw material processing. Instead, regional clusters and cross-border value creation should be supported. For example, Zambia and the DRC are planning the joint production of NMC battery precursors (Natural Resource Governance Institute, 2023). A potential medium-term buyer could be South Africa, which aims to establish itself as a producer of battery storage systems (GTAI, 2024b). A key requirement for the development of regional clusters is the swift and comprehensive implementation of the African Continental Free Trade Area (AfCFTA). Non-tariff trade barriers—such as infrastructure deficits—should also be considered, for example through coordinated infrastructure investments via Global Gateway.

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Matthias Wachter Head of Department

International Cooperation, Security, Raw Materials und Space

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Date

November 2025

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