In an escalation of a technology trade war with the US and Europe, China announced it would control exports of two little-known but very important metals. Those are gallium and germanium .
According to Bloomberg, China said that starting August 1, it will impose measures to limit the export of both metals as well as their chemical compounds. The purpose is to protect China’s national security. Specifically, exporters will have to obtain a license from China’s Ministry of Commerce if they want to start or continue exporting the two metals abroad. They will have to report details about the overseas buyer as well as the buyer’s intended use of the two metals.
China’s export tightening measures come after the US moved to put Chinese companies on a blacklist, which restricts the country’s access to US technology, including chips. advanced. China believes that the US move is aimed at maintaining its advantage in the industry, while also taking measures to enhance self-sufficiency in the semiconductor sector.
These two metals do not usually occur separately in nature.
The US has also tightened export restrictions on semiconductors in recent weeks and is pushing its allies to do the same. From September this year, the Netherlands will impose restrictions on the export of technologies for the production of electronic chips.
Both gallium and germanium have a silvery-white appearance and are generally classified as filler metals. These two metals do not usually occur separately in nature . Instead, they are produced in small concentrations as products .
The markets for these two metals are very small when compared to other commodities such as copper or petroleum. The value of gallium and gallium arsenide sheets that the US imports in 2022 is only about 225 million USD. But the use of these metals in strategic industries means that China’s restrictive measures could still have far-reaching effects.
The two metals have a wide range of applications of their own in chip manufacturing , communications equipment and defense .
According to a European Union study of key raw materials this year, China is the main source of both metals, accounting for 94% of gallium and 83% of germanium.
While it is possible to replace both of these metals, it can be more costly and can hinder the performance of the technology.
In practice, no metal is particularly rare, but processing costs can be high . Since China has been exporting the two metals at relatively cheap prices for a long time, there are very few facilities elsewhere that produce these metals. As China increased production, other countries such as Germany and Kazakhstan decreased.
But if China’s move causes prices of the two metals to skyrocket, analysts expect output from other suppliers to increase to meet demand.
Recycling can also play an important role. Site scraps have accounted for some of the supplies, while germanium scrap is also obtained from windows in decommissioned tanks and other military vehicles.
Besides China, other countries with gallium production capacity include Russia and Ukraine , where the metal is produced as a by-product of aluminum oxide. Korea and Japan also produce gallium as a by-product of zinc.
In North America, germanium is collected along with zinc, lead and other metals at Teck Resources’ Trail smelter in British Columbia.
Manufacturers of these two metals also include specialty materials manufacturer 5N Plus and Indium Corporation in the US. In Europe, the Belgian company Umicore SA is a producer of both metals.
Some mining projects contain higher levels of the metal and could provide an opportunity to increase supply, such as the Kipusi zinc project, which is set to kick off next year in the Democratic Republic of Congo.