Exclusive: Germany plans Kazakhstan raw materials partnership

BERLIN (Reuters) - Germany has been working for months on establishing an exclusive raw materials partnership with resource-rich Kazakhstan, government and business sources told Reuters.

The initiative aims to secure access for companies to strategic materials not readily available on world markets, especially rare earths that have been at the center of a trade dispute with China, the sources said at the weekend.

German industry federation BDI said it had received several positive responses from a dozen or so mid-sized companies to which it had floated the idea just before Christmas.

"Talks are at an early stage. The BDI is looking into some of the initial ideas," a spokesman said. "Given the high dependency on imports of raw materials, in particular metals, direct cooperation in digging projects abroad could help."

Shortages of rare earth minerals used in high-tech and defense production have sent jitters around the world since dominant producer China restricted exports.

The German government is deeply involved in the initiative to improve access, sources said, and a secretary from the economy ministry, Bernd Pfaffenbach, has been assigned to boost political support for the idea.

Chancellor Angela Merkel supports the idea of bilateral raw materials partnerships, and said on Saturday it was important for German companies to have unlimited access to raw materials.

The Kazakh side is interested in technology transfer from the deal, while Europeans want to wean themselves off dependence on Russia and the growing influence of China.

Kazakhstan, mainly a gas exporter, is one of the few countries which, like China, has large deposits of rare earth minerals.

Political hurdles do remain, however, as Germany has criticized Kazakh President Nursultan Nazarbayev's plan to hold onto his job as leader of central Asia's largest economy for life.

Kazakhstan is not the only state that could be part of the plan. Government sources said interest existed on both sides for Mongolia, which last year saw a high number of visits by German officials.

The resource hunt there raises other challenges -- exploiting mines would require major investment in the country's rail infrastructure.

(Writing by Brian Rohan; Editing by Dan Lalor)