China has announced a ban on exports of the critical minerals gallium, germanium, and antimony to the United States. All of these have important military and technological applications. The move marks a recent escalation in trade tensions between the two global superpowers following a U.S. government crackdown on China’s semiconductor industry.

Citing national security concerns, China’s Ministry of Commerce emphasized the dual-use nature of these minerals, which are essential for both military and civilian technology. The directive bans exports to the United States and forces stricter end-use reviews of other critical materials, such as graphite.

Strategic importance of critical minerals

  • Gallium and germanium: These are important components of semiconductors, infrared technology, fiber optic cables, and solar cells.
  • Antimony: Used in ammunition, infrared missiles, night vision equipment, and batteries, and plays an important role in both defense and renewable energy applications.
  • Graphite: The most voluminous component in electric vehicle batteries, highlighting the strategic importance of critical minerals in the transition to renewable energy.

This ban reflects China’s dominant position in the world supply of these minerals.

  • China accounts for 98.8% of refined gallium production and 59.2% of refined germanium production.
  • Last year, it accounted for 48% of the antimony mined worldwide.

Impact on global supply chains

Export restrictions are causing alarm in Western markets. Prices for antimony products are already rising, reflecting strained supply chains due to geopolitical tensions. In Europe, prices for antimony trioxide in Rotterdam have soared 228% this year, underscoring the urgency for alternative sources.

“This is a significant increase in tension in an already strained supply chain,” said Jack Vedder, 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 control over critical minerals, Australia’s strategic position in critical mineral markets is becoming more prominent. Several ASX-listed companies are actively exploring and developing resources to meet the growing demand for gallium, germanium and antimony.

  • element 25 (ASX:E25): The company specializes in manganese, a key component in batteries, and is also exploring related important minerals such as gallium.
  • south 32 (ASX:S32): South32, a diversified mining company, has been evaluating opportunities in key mineral sectors including gallium and germanium as part of its portfolio.
  • Australian strategic materials (ASX:ASM): ASM has identified gallium and germanium as key materials for its advanced materials strategy, with a focus on rare earths and critical minerals.
  • sunshine gold (ASX:SHN): Sunshine Gold is actively exploring antimony deposits and aims to supply this important mineral to domestic and international markets.
  • Legacy Minerals Holdings (ASX:LGM): Exploration projects targeting germanium-rich mineral systems are positioning Legacy Minerals as a future supplier to the technology and defense sectors.

The need for strategic partnerships and diversification

The United States is emphasizing diversification of critical mineral supply chains and emphasizing partnerships with allies such as Australia. The Inflation Control Act (IRA), introduced by the US government, provides tax credits to US companies sourcing from countries with free trade agreements, such as Australia, giving significant benefits to key Australian minerals.

Australian businesses are well placed to play a key role in closing the supply gap. Wingellina nickel-cobalt project developed by Nico Resources (ASX:NC1)is an outstanding example of leveraging Australian resources to supply global markets.

Looking to the future

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

The escalating trade war between the United States and China highlights the need for cooperative efforts to ensure reliable sources of these materials essential to future technology and energy transitions. Australian companies are poised to take advantage of this change and strengthen their role in the world’s key minerals markets.