Leading German industrial groups are losing confidence in the federal government and intend to take greater control over their own raw material supplies in the future. For years, companies have warned about dangerous dependencies regarding raw materials and have called for effective government action. However, according to sources within the industry, policymakers are acting too slowly and inadequately. Consequently, several corporations—with significant involvement from BMW—are developing a joint “future model for raw materials.” The initiative is set to be unveiled at the end of November. This move is driven by factors such as China’s export restrictions, geopolitical conflicts, and rising energy costs. Without secure supplies of raw materials, the automotive sector, mechanical engineering, and other industrial branches face the risk of further production disruptions.
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Industry has been issuing warnings for years—yet the federal government fails to provide adequate solutions
The criticism from companies is by no means new. As early as October 2025, BMW pointed to Germany’s “inability to act effectively in the global competition for raw materials.” In February 2026, the German Association of the Automotive Industry (VDA) also informed the Federal Ministry for Economic Affairs that existing mechanisms would be insufficient in the long term. Despite these warnings, industry stakeholders believe that critical prerequisites for a reliable supply of raw materials are still lacking.
The Federal Ministry for Economic Affairs, led by Katherina Reiche, has come under particular scrutiny. Companies fear that the federal government will fail to secure vital supply chains in time. The state-backed raw material fund—established during the tenure of the previous “traffic light” coalition—only came into existence after protracted disputes. Industry representatives also accuse the Merz administration of failing to provide an adequate response to the recent upheavals in energy and raw material markets. Consequently, the industry is now expected to develop its own concrete procurement structures.
Loss of confidence in the federal government reaches broad segments of the economy
A recent study by the University of Mannheim illustrates the extent of this dissatisfaction. In October, only 13 percent of the corporate representatives surveyed expressed satisfaction with—or a neutral stance toward—the government’s economic policy; in June 2025, that figure had stood at 32 percent. Furthermore, companies that are particularly dissatisfied are more likely to report declining profits and investments. The criticism, therefore, extends well beyond the raw-material-dependent firms involved in the study.
For many industrial enterprises, the situation has become a matter of economic survival. Between February 2022 and March 2026, German industrial production fell by 9.5 percent—with a decline of 15.2 percent in energy-intensive sectors. At the same time, high energy costs are driving up manufacturing expenses, while international competitors often benefit from more favorable production conditions. Potential shortages of raw materials could further exacerbate an already strained situation.
Corporations seek to secure their own raw material supply
For the first time since 2012, companies are looking to establish a cross-industry raw material initiative. Under the banner of a “Future Model for Raw Materials” (Zukunftsmodell Rohstoffe), they are exploring the creation of a joint procurement organization. BMW is playing a leading role in this effort and has already appointed an internal raw material officer. Unlike the failed raw material alliance of 2012, the goal this time is to develop a viable model with concrete operational structures.
At the core of the proposal are a joint raw material trading house and a more robust state-backed raw material agency. The trading house could aggregate demand across multiple industrial sectors and secure long-term supply contracts. Additionally, the initiative aims to improve the financing of international raw material projects and provide hedges against price volatility. Collaboration with government authorities remains an integral part of the concept. However, the industry aims to develop its own operational capabilities rather than relying exclusively on political programs.
China controls critical raw materials – Germany remains dependent
The dependence on Chinese suppliers is particularly critical. China controls approximately 93 percent of the global processing of rare earth elements—materials that companies require for electric motors, electronics, machinery, and military equipment. Beijing is increasingly using export controls as an instrument of economic policy. Consequently, political decisions made in China can directly impair production at German industrial firms.
Other supply risks further exacerbate the situation. More than 40 percent of the raw material products analyzed by the German Mineral Resources Agency are classified as high-risk. Added to this are the decoupling from Russia and the economic consequences of the conflict involving Iran. Higher oil and gas prices place an additional burden on transport and production. As a result, companies are facing multiple simultaneous challenges, while the necessary alternative supply chains are developing only slowly.
Federal Government Announces New Partnerships – Corporations Demand Results
The German federal government has initiated measures to secure raw material supplies. On October 28, Minister for Economic Affairs Reiche agreed on a closer raw materials partnership with Japan, involving plans for joint investments, financing, and long-term off-take agreements. Furthermore, in early October, eight German raw material projects were granted “strategic status” by the European Union. However, such agreements and the easing of regulatory hurdles do not automatically translate into an immediate increase in available supply volumes.
This is precisely where the core conflict between policymakers and industry lies. Companies require reliable raw material supplies for their ongoing production, whereas new extraction and processing projects often take years to develop. On November 25, the Federation of German Industries (BDI) will host its first “Resilience Congress” in Berlin, where a new forward-looking model is expected to be unveiled. It remains unclear which companies will commit to participating and how the initiative will be financed. Nevertheless, the very existence of this initiative highlights a loss of confidence: leading industrial corporations view the government’s efforts to secure raw materials as insufficient and are increasingly looking to drive practical implementation themselves.
Author: Blackout News
Sources: Berliner Zeitung (01.11.26) – Ostdeutsche Allgemeine (01.11.26)