China's ban on gallium, germanium and antimony exports sparks concern

04/12/2024 14:03:00

China has announced an export ban to the United States on critical minerals gallium, germanium, and antimony, all of which hold significant military and technological applications. This move marks the latest escalation in trade tensions between the two global superpowers following Washington’s crackdown on China’s semiconductor industry.

The Chinese Ministry of Commerce cited national security concerns, emphasizing the dual-use nature of these minerals, which are vital for both military and civilian technologies. The directive bans their export to the US and enforces stricter reviews on the end-use of other critical materials like graphite.

Strategic importance of critical minerals

• Gallium and germanium: These are key components in semiconductors, infrared technologies, fibre optic cables, and solar cells.
• Antimony: Used in ammunition, infrared missiles, night-vision equipment and batteries, it plays a crucial role in both defence and renewable energy applications.
• Graphite: The largest volume component in electric vehicle batteries, it underscores the strategic importance of critical minerals in the renewable energy transition.

This ban reflects China’s dominant position in the global supply of these minerals:

• China accounts for 98.8% of refined gallium and 59.2% of refined germanium production.
• It contributed 48% of globally mined antimony last year.

Impact on global supply chains

The export curbs have created alarm in Western markets. Prices for antimony products have already surged, reflecting a tightening supply chain exacerbated by geopolitical tensions. In Europe, the price of antimony trioxide in Rotterdam has soared by 228% this year, highlighting the urgency for alternative supply sources.

“This is a considerable escalation of tensions in already strained supply chains,” noted Jack Bedder, co-founder of consultancy Project Blue. Western countries are now scrambling to identify domestic and allied sources of these critical minerals.

Australia's role in critical mineral supply chains

As China weaponises its control over critical minerals, Australia's strategic position in the critical minerals market has gained prominence. Several ASX-listed companies are actively exploring and developing resources to address the growing demand for gallium, germanium, and antimony:

• Element 25 (ASX:E25): Specialising in manganese, a critical component in batteries, the company is also exploring associated critical minerals like gallium.
• South32 (ASX:S32): A diversified miner, South32 has been evaluating opportunities in the critical minerals space, including gallium and germanium, as part of its portfolio.
• Australian Strategic Materials (ASX:ASM): Focused on rare earths and critical minerals, ASM has identified gallium and germanium as key materials for its advanced materials strategy.
• Sunshine Gold (ASX:SHN): Actively exploring antimony deposits, Sunshine Gold aims to supply this critical mineral domestically and to international markets.
• Legacy Minerals Holdings (ASX:LGM): With exploration projects targeting germanium-rich mineral systems, Legacy Minerals positions itself as a future supplier to the tech and defence sectors.

Strategic partnerships and the need for diversification

The US has emphasised diversifying critical mineral supply chains, underscoring partnerships with allies like Australia. The Inflation Reduction Act (IRA) introduced by the US government gives Australian-sourced critical minerals a significant advantage due to tax credits for American companies sourcing from countries with free trade agreements, such as Australia.

Australian companies are well-positioned to play a crucial role in filling the supply gap. Wingellina Nickel-Cobalt Project, developed by Nico Resources (ASX:NC1), is a prominent example of leveraging Australia’s resources to supply global markets.

Looking ahead

China’s export ban serves as a wake-up call for Western nations to reduce their reliance on Chinese supplies of critical minerals. By accelerating domestic production and fostering international partnerships, countries like the US and Australia can mitigate supply chain risks and strengthen their positions in the global tech and defence industries.

The intensifying trade war between the US and China underscores the need for collaborative efforts to secure reliable sources of these indispensable materials for future technological and energy transitions. Australian companies are poised to capitalise on this shift, enhancing their role in the global critical minerals market.