China’s recent announcement of plans to curb exports of gallium and germanium starting in August has sent shockwaves through the global market for critical minerals and metals. Both gallium and germanium are rare metals with wide-ranging applications, particularly in the production of silicon chips used in the semiconductor sector.
The timing of China’s move, just a day before the US Independence Day holidays, carries symbolic weight, serving as a reminder of the West’s heavy dependence on China for crucial raw materials required by its high-tech industrial base. This action by China appears to be a calculated response to the US Chips Act and the increasing pressure on US allies to restrict sales of sensitive microchip technology to China.
Gallium and germanium are primarily obtained as by-products from the processing of aluminum and zinc, respectively. China’s dominance in the supply chain of these metals stems from its position as the world’s largest producer of aluminum and refined zinc. According to the United States Geological Survey (USGS), China accounted for approximately 98% of global low-grade primary gallium production last year, with exports reaching 94 metric tonnes, a 25% increase from the previous year. China also holds a significant share of the global germanium market, estimated at around 60% by the Critical Raw Materials Alliance (CRMA). In 2022, China’s germanium exports totaled 44 metric tonnes.
The Western countries, particularly the United States, have become heavily reliant on Chinese imports of gallium and germanium, with gallium being of particular concern due to the lack of domestic production and stockpiles. While the US produces germanium and maintains stocks under the control of the Defense Logistics Agency (DLA), the situation is different for gallium. The US has no gallium stockpiles and no primary sources, relying on one New York company that processes a mix of scrap and imported low-grade primary feed. However, plans are underway to establish a gallium processing stream at the Clarksville zinc refinery in Tennessee, which currently produces germanium.
In response to China’s export controls, various existing and potential producers have announced their intentions to address the potential supply disruption. Vital Pure Metal Solutions from Germany has resumed production of both gallium and germanium since the end of 2022 after an eight-year hiatus. Nyrstar, majority-owned by trade house Trafigura, is exploring projects in Australia, Europe, and Tennessee.
The Democratic Republic of Congo’s state-owned mining company Gecamines is on the verge of commissioning a refining plant that will produce copper, cobalt, and 30 metric tonnes of germanium precipitate annually. Additionally, Russian state conglomerate Rostec, which currently operates at only 30% of its production capacity, has the capability to produce up to 20 metric tonnes of germanium per year and already produces gallium through Rusal’s alumina and aluminum smelting network.
Despite the potential availability of alternative supplies, concerns remain regarding the reliance on a single problematic import source being replaced with another. The lessons learned from China’s previous export restrictions on rare earths in 2010 are a reminder of the potential negative consequences of a complete ban. China faced political backlash and a World Trade Organization ruling against its export practices. Moreover, the export halt led to a surge in illegal rare earth mining and widespread substitution, as companies sought alternative sources or eliminated rare earths from their products.
Former Vice Commerce Minister Wei Jianguo cautioned that the export controls on gallium and germanium could be just the beginning if the West continues to target China’s high-tech sector. This warning implies the potential for further escalation in the critical minerals war between China and the West, with China possessing various pressure points to exert control, including rare earths, cobalt, lithium, and electric vehicle batteries.
China’s latest move has intensified concerns among Western nations about their heavy reliance on China for critical metals. The prospect of decoupling from China and diversifying supply chains has gained greater urgency. With the imminent implementation of China’s export controls, the global competition for critical metals is set to enter a new phase, prompting Western countries to seek alternative sources and reduce their collective dependence on China.
