Raw materials are no longer just the foundation of industrial value creation – they have become a core element of geopolitical power strategies. In a world experiencing technological decoupling, the interplay between supply security, economic sovereignty, and corporate responsibility is entering a new and volatile phase. European industry, in particular, faces a systemic challenge: it is heavily dependent on imports from politically unstable or strategically assertive states, without possessing adequate security mechanisms.
This situation is not solely a political dilemma – it carries direct legal implications for corporate governance. Those who rely on business-as-usual in a foreseeably unstable supply environment are not only risking operational disruptions but also personal liability. This article analyzes the raw materials crisis through the lens of geopolitical developments and links it to the legal obligations for forward-looking, liability-aware corporate action.
I. Geopolitics, Resource Power, and Europe’s Strategic Vulnerability
The global economic order is destabilizing – along with the illusion of reliable international supply chains. Amidst an escalating technology conflict between China, the United States, and Europe, a fundamental weakness of European industry is becoming increasingly evident: its overwhelming dependence on China for strategic raw materials. Nowhere is this more critical than in the case of rare earth elements, a market dominated by Chinese firms. China controls more than 90 percent of global refining capacity and is increasingly leveraging this dominance for geopolitical ends.
Beijing’s most recent move: restrictive export controls on critical materials, including germanium, gallium, and various rare earths. Though officially justified on technical grounds, these controls serve as strategic escalation: licenses are issued only selectively, with delays and opaqueness, often linked to political demands that Europe ease its technology export restrictions. What may appear as a distant trade maneuver strikes at the heart of European industry: some companies have already been forced to reduce or halt production, particularly in automotive, medical technology, and defense sectors.
European responses remain fragmented. Although the German government refers to diplomatic talks with China and coordination at the EU level, economic experts like Veronika Grimm speak openly of strategic failings. Grimm calls for a national policy framework that transcends isolated initiatives and builds comprehensive security architecture. Germany must adopt a geo-economic perspective on raw materials – treating them as part of national security. The goal: resilient supply chains through partnerships with democratic resource-rich nations, recycling, and strategic stockpiling. The stark reality is that while China pursues strategic policy with intent, Germany has long relied on free market mechanisms. That asymmetry is now proving costly.
Industry itself appears dangerously unprepared. Past initiatives like the “Alliance for Raw Material Security” collapsed due to lack of engagement. Strategic reserves were never built; diversification strategies remained vague. The result: a depleted market, skyrocketing prices, and scarce alternatives in the short term. This dependency is no longer merely an economic risk – it has become the Achilles’ heel of European sovereignty and a direct challenge to legal concepts of responsible corporate governance.
II. Legal Duties of Corporate Leadership in the Raw Materials Crisis
This geopolitical dependency gives rise to concrete legal implications for management boards and managing directors. German corporate law, particularly § 93 (1) AktG (Stock Corporation Act), imposes a duty of care on directors to take reasonable steps to identify and mitigate foreseeable risks. A supply dependency on politically controlled resources from a single supplier – particularly when subject to strategic manipulation – clearly qualifies as such a foreseeable risk.
Beyond this, § 91 (2) AktG mandates that corporate leadership establish a risk management system capable of identifying existential threats early on. Reliance on stable supply chains without developing alternative scenarios constitutes a breach of that duty. In legal terms, this may amount to organizational fault (Organisationsverschulden), potentially triggering personal liability for board members.
When it comes to risk prevention, ignorance is not a defense. Management must actively assess global developments and integrate raw materials risk into their overall compliance structure. Failing to do so is not merely negligent – it can become legally actionable.
III. Business Continuity Management as a Compliance Obligation
Business Continuity Management (BCM) must be understood not simply as an internal best practice, but as a binding component of corporate compliance. The Higher Regional Court (OLG) of Munich has underscored in rulings related to cyberattacks that companies must implement effective organizational measures to protect against existential threats. This legal logic extends to the raw materials crisis: disruptions in the supply of critical inputs constitute precisely such a threat.
An effective BCM system includes identifying essential inputs, contingency planning, supplier diversification, strategic sourcing, and full documentation. Hope is not a strategy – and certainly not a legal defense. Compliance today demands operational implementation and demonstrable governance action.
Furthermore, the social law dimension must not be overlooked. Access to state support measures (such as short-time work benefits due to supply disruptions) depends on demonstrating that all reasonable preventive steps were taken. Companies that fail to establish adequate BCM structures may lose access to such aid or even face accusations of subsidy fraud.
IV. Personal Liability in the Event of Supply Chain Collapse
Managerial liability is not contingent on actual damages. Rather, liability may arise from the failure to act in accordance with legal duties of foresight and risk management. The Business Judgment Rule (§ 93 (1) sentence 2 AktG) protects only those decisions based on appropriate information and aimed at corporate welfare. Ignoring known risks, or failing to assess them altogether, falls outside that protection.
Should it later emerge that a company had no functioning raw materials strategy, no risk matrix, and no documented BCM concept, executives may face liability claims. In light of the current global instability, such omissions are unlikely to be excused as simple oversight. Increasingly, they will be interpreted as gross negligence.
Any executive who ignores the geopolitical dimension of raw material supply today is not just out of touch — they’re exposing themselves to serious legal risk. These developments make clear: supply chain security is no longer just an operational issue, but a matter of strategic compliance. Legal duties arise here that cannot be delegated. Companies would be well advised to consult a professional in managerial liability to assess these risks and design resilient governance structures.
V. Strategic Governance as Corporate Responsibility
Companies now face a dual imperative: on the one hand, political pressure to reduce dependency on China; on the other, operational pressure from disrupted supply chains. Corporate governance must rise to meet this dual challenge. Raw materials security can no longer be delegated to purchasing departments or logistics teams – it must be elevated to board level.
Integrated BCM, a documented risk detection system, and engagement in government dialogue and strategic alliances are not optional. They are the hallmark of legally sound and forward-looking corporate leadership in an age where geopolitics and commerce are inextricably linked.
VI. Conclusion: Legal Security Requires Geopolitical Awareness
The raw materials crisis is a stress test for modern corporate governance. Managers who fail to integrate geopolitical risk into their strategic planning are not merely outdated – they may be in breach of their legal duties.
A modern understanding of managerial liability includes the expectation that leadership anticipate external shocks and prepare accordingly. Risk matrices must not end with IT or finance. In a world where critical resources have become tools of foreign policy, legal compliance starts with raw materials strategy.
Raw materials are power. Those who remain at their mercy, unprepared, risk far more than delivery shortfalls. They risk their license to operate – and their personal legal security.
Our law firm specialises in criminal defence, white-collar crime and IT law / technology law. Note our activity in digital evidence in IT security and software law.
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