Canada’s critical minerals: Powering Germany’s industrial transition

Germany, Europe’s industrial engine, combines a central location with world-class manufacturing strength, innovation and scale across automotive, mechanical engineering, chemicals, electronics, pharmaceuticals and logistics, to drive the region’s technological progress, exports and growth. This industrial power makes Germany a major energy consumer, importing about 80% of its oil and gas due to limited domestic supply.

Over the past few years, Germany has made remarkable progress transitioning its energy needs, becoming a pioneer in renewables and environmental technologies. In 2024, renewables supplied nearly 60% of all electricity generation, with wind and solar surpassing fossil fuels for the first time. Energiewende, Germany’s energy transition strategy, aims to pull that ratio up to 80% by 2030.

But every wind turbine, solar panel and energy storage solution requires materials in short domestic supply. Essential resources like lithium, cobalt, nickel, graphite and rare earths are mostly imported.

Why Germany needs critical minerals for its energy transition

German automakers and battery manufacturers remain almost entirely dependent on imports, as domestic lithium production is still in early development despite significant reserves. Nearly half of Germany’s lithium-ion battery imports come from China, up from less than 20% a decade ago, creating a significant vulnerability to supply disruptions.

Domestic production and recycling remain limited, with no economically viable lithium output before 2030 and rare earth recycling below 1%. The €1 billion Raw Materials Fund (C$1.5 billion) and European Union (EU) goals for extraction, processing and recycling are in place, but meeting targets will require international partnerships and integrated supply chains.

Canada’s critical minerals advantage

With Canada’s large reserves of multiple critical minerals, expanding production capacity and clean processing infrastructure, our country can provide access to the reliable supply chains needed to help support Germany’s industrial ambitions. Specifically, Canadian minerals most relevant for Germany include:

• Nickel: 2.2 million tonnes, mainly concentrated in Ontario and Manitoba.
• Lithium: 930,000 tonnes, including production at Manitoba’s Tanco Mine since 2021, and projects advancing in five provinces.
• Rare earth elements: More than 15.2 million tonnes of rare earth oxide resources.
• Cobalt: 5,000 tonnes produced in 2023, ranking Canada fourth globally.
• Graphite: 4,261 tonnes produced in 2023, ranking Canada 11^th globally.

The Government of Canada’s Critical Minerals Strategy looks to accelerate mining, processing and infrastructure development, with a view to positioning Canada as a global leader in critical minerals.

Key initiatives under the federal strategy include:

• Support for clean energy and transportation projects under the Critical Minerals Infrastructure Fund, with 31 projects worth $300 million approved and a total allocation of $500 million.
• A two-year extension of the 15% Mineral Exploration Tax Credit to boost exploration and discovery, totalling $110 million.
• Infrastructure development, innovation and Indigenous engagement initiatives, including grants and research programs, amounting to $50 million.
• The Critical Minerals Research, Development and Demonstration Program to advance processing technologies, funded at $192.1 million.
• A Sovereign Investment Fund to finance critical mineral projects and bridge early-stage funding gaps, valued at $2 billion.

The August 2025 Joint Declaration between Canada and Germany represents a strategic alignment that looks to build on the Canada-EU Comprehensive Economic and Trade Agreement. It’s aimed at formalizing our partnership through co-financing and private sector arrangements, helping strengthen midstream capacity and support European manufacturing.

The bottom line: Canada and Germany’s critical minerals partnership drives energy security

Germany’s energy transition depends on secure access to critical minerals—and Canada is uniquely positioned to help. By leveraging our reserves, clean processing capabilities and strong trade ties, Canada can provide the stability Germany needs while attracting investment and creating jobs at home. 

Germany gains supply security, while Canada gains market access and investment capital. Together, both countries can strengthen their energy security and industrial competitiveness, while also supporting global climate objectives. As Germany advances toward its renewables targets, Canadian critical minerals can play a critical role.

This week, a very special thanks to Sasan Fouladirad and Hani Wannamaker, analysts in our Economic and Political Intelligence Centre.

As always, at EDC Economics, we value your feedback. If you have ideas for topics that you’d like us to explore, please email us at economics@edc.ca and we’ll do our best to cover them.