* Medvedev and Merkel discuss raw materials deal * Russia says has vast rare earths deposits * Moscow eyes German power market after nuclear exit (Recasts with Merkel and Medvedev news conference) By Alexei Anishchuk and Andreas Rinke HANOVER, Germany, July 19 (Reuters) - Russia offered Germany long-term deals for natural gas and rare earths on Tuesday, putting pressure on China, which currently dominates the rare earths market, to end delays in agreeing to imports of Russian gas. China controls 97 percent of the global supply of rare earth minerals -- used heavily in Germany's electronics industry -- and Russian President Dmitry Medvedev opened the door to German investment to exploit Russia's untapped reserves of the elements. "Of course we're ready to enter into new relations with our friend, including on rare earths," he told reporters after talks with Chancellor Angela Merkel and German business leaders in Hanover. "I'm referring to a planned wave of privatisations. We expect German investments in this area." Germany's electronics industry says the market for rare earth minerals with magnetic, luminescent and other valuable properties is critical, due to export curbs from China. China eased the restrictions last week, restoring them to near-2010 levels, but trading partners like the European Union and United States said it was not enough to ensure stable supplies of 17 rare earth metals which are crucial for the electronics, defence and renewable energy industries. The issue became a flash point last year after China halted shipments to Japan in a diplomatic spat, showing it was ready to use its monopoly as a political tool. Deputy Prime Minister Viktor Zubkov said Russian deposits easily accessible and not requiring industrial extraction were of a volume "equal to global annual production". EUROPE, CHINA COMPETE FOR GAS Russian talk of its "unlimited" capacity to supply Europe with gas also seemed directed at China, which is driving a hard bargain in long-running price talks on Russian gas deliveries to China, some of whch would come from the same fields supplying Europe. Russian energy giant Gazprom wants the same returns on deliveries to China as to Europe, which sources say means there a price gap of at least $100 per thousand cubic metres between Gazprom and China's negotiating positions. Germany's decision to shut down all of its nuclear reactors by 2022 is a huge opportunity for Russian gas sales in what is already Moscow's third-largest trading partner. But Zubkov's talk of Gazprom hoping for a 30-35 percent increase in demand from Germany met a cool response from the German chancellor. "Let's wait and see what happens," she said, telling a news conference with Medvedev that "market forces will be decisive" in how much Russian gas does fill the gap left by nuclear power. Germany needs additional power plants with a capacity of 10 gigawatts as it phases out nuclear power, but it also intends to double its renewable energy output in time for the final exit in 2022. Last week Gazprom, Russia's gas export monopoly and the world's largest gas company, announced exclusive talks with Germany's RWE for a joint venture in power generation, with an implied promise of fatter margins on its German sales. "We will cover all the volumes demanded by the German economy with Russian gas supplies through North Stream and Yamal-Europe, so there are no problems at all," said Zubkov, who is also the chairman of Gazprom. Medvedev said trade between Russia and Germany would reach "record post-crisis turnover" this year of $60-70 billion. (Additional reporting by Douglas Busvine in Moscow; writing by Stephen Brown in Berlin; editing by Dmitry Zhdannikov and Anthony Barker)

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