Germany's "Raw Materials Corporation" to Provoke Military Conflicts?

A thought-provoking and deliberately challenging article in my favorite daily read the World Socialist Web Site likens calls in Germany for a “raw materials corporation to the mood and actions taken in Europe prior to the First World War.

As the article explains, Ekkehard Schulz, the outgoing chairman of the steel group ThyssenKrupp, has called for the setting up of a “German raw materials corporation to counteract skyrocketing prices and the growing shortage of raw materials on the world market (MetalMiner initially covered this development when it was announced back in November, analyzing the risks and rewards of metal stockpiling here).

Steel mills across Europe have been severely impacted by rising iron ore, coal and other raw material prices as demand from China has driven costs higher all over the world. The aim of the corporation is to support the German steel industry in the global procurement of raw materials, particularly iron ore and coal. The umbrella company would be involved in mining projects or the auction of mining rights. At the same time, it would be open to other industries that need products such as aluminum, copper, lead or zinc. So far so good, you may say; why not have an industry body that represents its members’ interests and coordinates efforts to secure mining rights or access to major projects in the way the largest steel companies like ArcelorMittal, and Posco are able to do?

The author’s concern is that almost identical calls for access to raw material was a driving dynamic behind the start of previous major conflicts, that the approach is an imperialistic one and eventually results in military support to achieve its aims – bear in mind this is the World Socialist Web Site! – nevertheless hear them out.   In this case, to the steel mills’ credit, they are declining offers of federal or state involvement, but the language of major proponents still has the ring of imperialistic aggression (says the site). In an interview quoted in the article, Mr. Schulz demanded a pan-European strategy for raw materials procurement and argued that the EU had failed to challenge the “raw material imperialism of the Chinese and establish the necessary political relations with Africa. “We are simply leaving the field to the Chinese, he complained, and asked, “Why should Africa be left to the Chinese? Well why indeed.

The ThyssenKrupp works council and the engineering union IG Metall are staunch supporters of the project and went so far as to transport more than 6,000 steelworkers to rallies held in both Duisburg and Brussels addressed by German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso.

Drawing on writings by Lenin on how the alignment of interests between capitalist corporations and bureaucratic workers’ organizations led to militaristic action to support what became national aims, the author warns that the development of a German or Pan-European raw material monopoly would almost inevitably end in the same situation – draw your own conclusions on that. While the analysis is interesting, we feel the risk of it leading to military conflict with China is slight. A European-wide project to support raw material projects in places like Africa would be horribly unwieldy — the EU is not renowned for being quick of action or resolute of purpose — but a German “council of interested parties (consumers, miners, financiers, etc.) may very well be able to act where smaller steel mills or metals consumers cannot. Certainly, the Chinese state actively supports Chinese raw material consumers in securing and accessing resources around the world, politically, logistically and financially. Why should German, or for that matter, American companies not form coalitions to do the same thing? In one way, Mr. Schulz is right. “Why should Africa be left to the Chinese? The answer isn’t military action, but coordinated action by firms with aligned commercial interests.

Join us for a free webinar on steel price trends and outlook for 2011 along with guest speaker Metalwest, where we’ll discuss how OEMs can improve profitability through lean metal supplier programs.

–Stuart Burns

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