Rare earths are crucial for Germany's energy and mobility transformation and further digitisation. They are found all over the world, but the largest reserves are located in just a few countries. Mining and processing also take place in only a few countries, with China occupying an absolutely dominant position. Germany imports 49% of the early stages of rare earth mining or processing and 84% of the processed intermediates from China. At the end of 2023, China tightened its export laws and banned the export of rare earth processing technologies. Experts suspect that this measure may be linked to the goal of continuing to control the entire value chain.

Until now, Germany has only imported rare earths in the form of processed products, which are difficult to store and therefore cannot be used to cover short-term shortages. The current geopolitical situation makes it all the more urgent for Germany and Europe to reduce their dependence on a single country in the interests of de-risking. However, given the limited number of alternative suppliers, this will not be possible through diversification alone. In TAB’s topic profile on rare earths (Themenkurzprofil Nr. 69) several strategies: developing domestic deposits, recycling rare earths and establishing a European circular economy were outlined.

Objective and approach

The compact TA study will explore the topic in more detail, focusing on recycling and the circular economy of rare earths to stabilise the supply situation, based on three key questions:

• As a starting point, future technologies that are relevant for coping with the 3D transformation (decarbonisation, digitisation and demographic change) and for whose production or the production of their components rare earths are needed in Germany and Europe will be identified on the basis of criteria.
• The next step is to determine how the supply situation for rare earths for future technologies could develop over the next 10 years. This includes an analysis of the relevant supply and value chains. Possible alternative geopolitical development paths will be considered.
• Furthermore, the study will analyse what technological and systemic advances in the recycling of rare earths and the establishment of a circular economy are conceivable in the next 10 years. This includes an examination of the expected technical and systemic development progress and obstacles. It will also consider whether there are already good examples of rare earth recycling and circular economy development in the international context.

On the basis of a desktop research, three to five future technologies relevant for Germany will be selected and the rare earths required for them will be identified. It is expected that the desktop research will already provide information on the current design of the supply and value chains for these rare earths. Gaps in the literature will be filled by guided interviews with scientists and experts from industry and associations, e.g. in the fields of geopolitics, manufacturing and production.

In a next step, the current state of development of recycling technologies will be assessed, also based on desktop research and guided interviews with experts from the fields of recycling, circular economy and systems engineering, and whether these are already in use in Germany or elsewhere in an industrial context. In addition, the causes of progress and setbacks in the establishment of a circular economy in Germany will be identified with regard to the rare earths that are the focus of this TA-Kompakt study.

Based on the results of the previous methodological steps, a scenario workshop with experts will be prepared and carried out. The aim of this workshop is to develop alternative scenarios for the supply situation of the rare earths relevant to the identified future technologies. For this purpose, different conceivable development paths will be discussed, including supply and value chains as well as the possible technological maturity and the possible diffusion of recycling technologies and the circular economy.

On this basis, decision-makers are provided with information on possible future geopolitical risks and their likely impact on the production of future technologies. The scenarios also provide an orientation framework to anticipate any necessary adjustments and readjustments in research and innovation funding with regard to rare earth recycling and the establishment of a circular economy.