Wadephul calls for rapid expansion of the raw materials fund for rare earths

The CDU politician praised the agreement as a "Gamechanger" and at the same time pointed to the geopolitical competition. "China is already there, the United States of America are just arriving," Wadephul said. The signatory states see "now a great opportunity in further and close cooperation. And we must now actually get to work on that in concrete terms." With a view to the negotiations between Europe and Mercosur, he added: "Therefore, we must not stay too long in the waiting room now, but must move forward."

Raw Materials Fund as a Response to China

Beyond the trade-policy dimension, Wadephul was also concerned with security of supply in raw materials. The German raw materials fund, through which the federal government intends to participate directly or via guarantees in extraction projects, is to reach a volume of up to one billion euros according to earlier statements. The state development bank KfW has already financed initial projects from the fund. The aim is to open up alternative supply partners for German companies and reduce dependence on China.

Wadephul emphasized that Brazil plays a key role as a partner in this. The country possesses large deposits of critical metals and minerals that are important for future technologies such as renewable energies and electric mobility. At the same time, according to information from the Federal Foreign Office, Brazil is Germany's most important trading partner in South America. Political relations between China and Brazil are also deepening; China has been Brazil's largest trading partner since 2009.

Wadephul advocated swiftly expanding the fund in Germany and at the European level so that companies "very quickly now get access to the raw materials." Exploration, processing, and preparation of these materials are capital-intensive, and profits only materialize significantly later. "That is why we, as the state, must accompany the path and we must enable it," the Minister said. Germany sees considerable opportunities in the agreement for the automotive industry, mechanical engineering, and the pharmaceutical industry.

Bizarre Moment with Capybaras

During his stay in Brasília, Wadephul also attempted – according to information from his surroundings – to attract the attention of a group of capybaras by waving and calling out; the animals remained unimpressed. With "Hallloooo?!" the Minister unsuccessfully ended the encounter. The meeting with the rodents known as capybaras thus remained one-sided and came to a quick end.

In total, the South America trip comprised four stops. On the earlier legs, the implementation of the EU-Mercosur agreement had already been the focus. With the call to expand the raw materials fund, Wadephul linked the expectation that the political signals from Brasília would translate into concrete investments.

Significance for German Industry

The federal government intends to use the fund to invest specifically in extraction projects for rare earths and critical minerals. This is meant to diversify the supply of German industry over the long term. Against the backdrop of growing global competition – particularly from China, which is already heavily engaged in Brazilian raw materials sectors – Berlin sees an urgent need for action. Wadephul announced that he would hold further talks with European partners in the coming weeks regarding the fund's endowment.

Mercosur stands for "Common Market of the South" in full. The bloc was founded in 1991 and has since pursued the goal of building a common internal market between the member states. With the provisional entry into force of the EU agreement in early May 2026, companies on both sides of the Atlantic gain far-reaching access to one of the world's largest economic areas for the first time.