The World from Berlin: Germany Playing Catch-Up in Scramble for Resources – by David Gordon Smith and Christopher Cottrell (Spiegel Online International – October 14, 2011)

This article is from Germany’s Speigel Online International: http://www.spiegel.de/international/

Chancellor Angela Merkel has signed a commodities deal with Mongolia during her visit to the Central Asian country. The agreement is intended to secure access to much-needed raw materials for German industry. But commentators point out that it will take more than just a piece of paper to win the scramble for rare earths.

At first glance, German Chancellor Angela Merkel’s decision to visit Mongolia precisely at a time when Europe’s debt crisis is hotter than ever might seem peculiar. But cool-headed economic interests were behind the trip: The Central Asian country has raw materials that Germany’s industry desperately needs.

On Thursday, the governments of the two countries signed a commodity partnership agreement. The deal promises, among other things, that no limits will be imposed on the quantity of raw materials that Mongolia supplies to Germany. Mongolia, for its part, wants to benefit from the deal by making sure that the raw materials are processed in the country.

“We have the raw materials, Germany has the latest technology and the know-how,” said Mongolian Prime Minister Sukhbaatar Batbold, who described Merkel’s visit as historic. Merkel promised that Germany intended to pursue “long-term, equitable and sustainable development.”

Mongolia is one of the Top 10 countries in the world in terms of quantities of natural resources and is home to huge deposits of copper, gold, silver and uranium. The country also has large reserves of rare earths, expensive metals which are in demand in high-tech industries, where they are essential for manufacturing various products. German companies have expressed concern about access to rare earths, especially as China, which dominates the market, has imposed restrictions on their export.

“Germany needs to forge strategic alliances in the area of raw materials, which could become scarce in the coming decades,” said Ekkehard Schulz, a member of the supervisory board of engineering giant ThyssenKrupp, in remarks given to the news agency Reuters.

International mining companies are currently in a race to get access to Mongolia’s rich mineral resources. A number of German mining and engineering companies also signed billion-dollar deals during the visit, the first by a German chancellor to Mongolia.

On Friday, German media commentators take a look at the raw materials deal.

The center-left Süddeutsche Zeitung writes:

“(Merkel’s trip to Mongolia) comes at a time when her schedule is packed because of the debt crisis. But her visit could not be postponed. After all, it was all about access to the raw materials which Germany does not have but which it desperately needs for its economy. Many of the resources which are rare in this country can be found in large quantities under the grassy steppes of Mongolia.”

For the rest of this article, please go to Speigle Online website: http://www.spiegel.de/international/world/0,1518,791843,00.html

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