(Bloomberg) -- Germany is considering setting up a state-backed fund to help the country secure and diversify supplies of raw materials as Russia’s invasion of Ukraine sparks a global scramble for resource security.

The fund is a key part of a wider revamp of the nation’s natural resource strategy, according to a government paper seen by Bloomberg. Germany is becoming increasingly concerned about supplies of critical materials like metals that underpin many technologies needed for the transition away from fossil fuels.

The aim is find alternative suppliers to China, an initiative spearheaded by Economy Minister Robert Habeck, a Green party politician who led government criticism of Chinese economic policies. Discussions to reduce dependency on Beijing are are also ongoing in the EU, and the European Commission plans to present its Critical Raw Materials Acts in the first quarter of 2023.

Germany is particularly exposed as it needs to import 39 out of 46 strategic raw materials, according to an Ernst & Young study commissioned by the Economy Ministry. The goal of the raw materials fund -- which could also be set up with private support -- would be to reduce supply risks through “alternative financing structures”, according to the EY study.

Help could be given to finance purchases by issuing public guarantees and sureties, and to support exploration projects at home and abroad, according to the study. The proposed fund could also help companies acquire shares in exploration companies or hedge commodity risks.

Germany is already offering loan guarantees to commodity trading houses to buy energy and key metals. Trafigura Group, the world’s biggest trader of copper, has already agreed to supply German customers with non-Russian metals for the next five years, helped by $800 million in bank credit that’s ultimately guaranteed by the German government. 

The EY study also recommends setting up a resource agency to build alliances and coordinate policies, and establishing a national inventory for critical raw materials, similar to the one set up this year to shield against a gas crisis. Such strategic reserves exist in South Korea, Japan and China.

The results of the EY study are being fed into the update of the national resource strategy, according to the government paper.

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