Germany, France, Italy to cooperate more on raw material supplies

By Christian Kraemer and Gavin Jones

BERLIN/ROME (Reuters) -Germany, France and Italy pledged to cooperate more on procuring raw materials at a meeting of economy and industrial ministers on Tuesday in Berlin they said marked a new phase of trilateral collaboration on European industrial policy.

The West is racing to curb its dependence on China for critical materials after Russia's invasion of Ukraine, and the ensuing energy crisis in Europe exposed the danger of relying on an increasingly assertive, authoritarian state for key commodities.

The European Union relies on China for about 95% of its supply of rare earths, important in particular for the transition to a carbon neutral economy.

Tuesday's gathering kicked off a series of trilateral meetings on possible European policy responses to address "the challenges of the twin green and digital transition", a joint statement read.

"We can't guarantee the ecological and digital transformation if we are unable to help our companies get the raw materials they strongly need," French Finance Minister Bruno Le Maire said, according to the statement.

The European Commission in March unveiled a legislative proposal which would set up a central purchasing agency for rare earths and other critical materials like lithium. The Critical Raw Materials Act (CRMA) would also force member states to speed up permits for new mines and processing plants.

The act was an "important first step", said Le Maire, but governments also needed to define concrete action on strategic projects and issues like common stockpiling.

German economy minister Robert Habeck told a press conference after the meeting that state lender KfW should earmark funds for investing directly in European projects to secure critical materials.

France and Italy were already providing respectively 500 million euros and 1 billion euros to such ends, he said.

"That is the amount of support we should aim for in Germany too," he said, noting however there was no agreement on this so far in Germany's three-way coalition, which includes the fiscally hawkish Free Democrats (FDP).

Industrial firms welcomed the greater trilateral cooperation.

"We live in an era in which the speed at which choices are made does not often match the urgency of the decisions that need to be taken," said Roberto Cingolani, chief executive of Italian defence firm Leonardo.

"It's good therefore that the most industrialised countries are joining forces to offer European institutions a comprehensive vision."

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Enel (BIT:ENEI), among the world's top five developers of renewable energy, took the opportunity to urge the EU to include polysilicon, key to produce solar panels, in its list for strategic raw materials.

CEO Flavio Cattaneo said in a statement it was also important for the CRMA to define "the requirements for strategic projects and (to give) them preferential channels in terms of authorisations and adequate financial instruments".