VIDEO: Critical minerals race driving resource nationalism
Jimena Blanco, chief analyst at Verisk Maplecroft, says that geopolitical tensions are causing major shifts in global mining policies.
It’s clear that critical minerals will be China’s weapon of choice in its escalating trade war with the United States.
Every time Washington imposes new restrictions on exports of advanced semiconductor chips to China, Beijing responds by tightening controls on exports of the critical inputs for chip manufacturers.
A third clamp-down on China’s semiconductor industry has drawn a swift response in the form of a full ban on exports of Chinese gallium and germanium to the United States.
Exports of antimony, used in photovoltaic glass, are now also banned in what looks like a riposte to US tariffs on Chinese solar panels.
This is a carefully calibrated escalation, China using its dominance of critical metals to land like-for-like retaliatory blows for US attacks on its high-technology capabilities.
However, the rules of engagement are set to change with the incoming Donald Trump administration threatening blanket tariffs on all Chinese goods.
The big question is how well the United States can withstand China’s potential metallic response.
The United States was 100% reliant on imports of gallium last year with China accounting for 21% of metal imports, according to the United States Geological Survey (USGS).
US import dependency was 82% for antimony and over 50% for germanium, with Chinese products accounting for 63% and 26% respectively of total imports.
Flows of Chinese gallium and germanium to the US have dried up this year after Beijing tightened export controls in August 2023.
This month’s ban is just official confirmation that China’s Ministry of Commerce (MOFCOM) had already stopped approving exports to the US.
The supply chains of all three metals have been massively disrupted with buyers scrambling to find non-Chinese supply.
The price of antimony has rocketed from $13,000 per metric ton at the start of the year to $38,000 after China announced new export restrictions. The germanium price has jumped from $1,650 to $2,862 over the same period.
The Biden administration has poured billions of dollars into rebuilding domestic critical minerals production capacity but progress can be slow, particularly when it comes to permitting new mines.
The Pentagon is backing Perpetua Resources’ plans to reopen the Stibnite antimony mine in Idaho but first production is only expected in 2028.
The country’s only processor, United States Antimony, is planning to ramp up production in response to the current price boom but needs to secure enough non-Chinese third-party feed to do so.
The US hasn’t produced any primary gallium since 1987.
Rio Tinto thinks it may be able to produce the metal at its Saguenay–Lac-Saint-Jean alumina refinery in Canada. It plans to build a demonstration plant with backing from the Quebec government.
Rio has a successful track record of finding critical minerals in its smelter waste-streams. It already produces scandium at its titanium operations in Canada and tellurium at its copper smelter in Utah.
However, Rio’s gallium contribution to the US industrial base will be at least partly dependent on whether Trump makes good on his threat to impose tariffs on his Canadian neighbour.
The big problem facing the US is the extent of China’s supply-chain dominance in the critical minerals space.
China is the largest source of supply for 26 of the 50 minerals currently classified as critical by the USGS, according to the Center for Strategic and International Studies think-tank.
Many of them are on the same MOFCOM military-civilian dual-use export control list as gallium, germanium and antimony.
China has multiple channels of attack in the event of further sanctions on its high-tech industries.
Tighter restrictions on exports of graphite, announced at the same time as the US export ban, are an ominous sign the tit-for-tat is spilling into the battery metals space.
Although graphite doesn’t garner the same headlines as other battery metals such as lithium and cobalt, it is a critical battery input in the form of the anode.
That makes it an obvious choice for retaliation against US duties on Chinese electric vehicles.
Tungsten, also on the list, is another metal in the spotlight after the US announced plans to impose 25% tariffs on some Chinese products from the start of 2025.
Tungsten shows how the metallic decoupling is working both ways.
The more China flexes its critical mineral muscles, the more the US uses tariffs to create a price incentive for domestic producers.
Import duties on Chinese aluminum and steel have been hiked to 25% this year. Tariffs on Chinese imports of natural graphite will rise to a similar level in 2026.
That is, if China doesn’t get there first by banning exports to the US before then, just as it has done with gallium, germanium and antimony.
The US is walking a fine line between using tariffs to reduce import dependency on China and not being hit with a full retaliatory trade ban before it can build its own replacement capacity.
This is a multi-faceted task given each critical metal has its own unique supply profile.
The common theme, however, is China’s control of global supply and it’s only a question of which component of the periodic table is next to be thrown into the escalating trade war.
(The opinions expressed here are those of the author, Andy Home, a columnist for Reuters.)
(Editing by Mark Potter)
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