The world’s renewable energy, military, and tech industries rely on lesser-known metals such as antimony, gallium, and germanium to help their missiles fly and computers operate. Due to decades of little to no investment by the West, these critical minerals are entirely controlled by China. Global refining capacity is between 80 and 90% for these metals (and other minor metals), and certain applications have almost no substitute.
In early December of 2024, China, again, escalated its trade tensions with the West, targeting critical minerals pivotal to semiconductor manufacturing, military technology, and renewable energy applications. The latest announcement bans exports of gallium, germanium, antimony, and “superhard materials” to the US, with stricter reviews on graphite shipments. This strategic move reflects the intensifying competition between the world’s two largest economies and has significant implications for Western industries, particularly semiconductor manufacturing and should sound off alarms bells for the need to mine and refine these materials in the West.
The new export restrictions: A chokehold that should spark investment
China’s decision to ban the export of these critical minerals comes under the guise of national security concerns but is widely seen as retaliation against the US’ increasingly stringent semiconductor sanctions. Gallium, germanium, and antimony are essential for producing semiconductors, infrared devices, military equipment, and renewable energy technologies. While gallium and germanium shipments to the US had already ceased earlier this year, by some accounts dropping by up to 98%, China’s official ban cements its control over these vital resources.
Adding to the restrictions, China has tightened export reviews on graphite, another material crucial for lithium-ion batteries used in electric vehicles and energy storage. These measures target dual-use items, which have both civilian and military applications, further complicating the West’s ability to source materials critical for technological and defense advancements.
There is no indication that these tensions are going to subside. In fact, tensions between the West and China are likely to only escalate over issues such as Taiwan and military support for Russia. This reality should serve as a catalyst for miners, governments, and investors alike to consider investing in both the mining of these and other critical minerals as well as the refining of these minerals.
China dominates critical minerals
China’s control over critical minerals is both extensive and deeply entrenched. For gallium and germanium, the country produces most of the world’s supply, and alternative sources are either underdeveloped or economically unviable. Similarly, China accounts for 48% of global antimony mining, a mineral vital for military applications, such as flame retardants and armor-piercing ammunition, and renewable energy technologies, including batteries and solar panels.
For years, China has invested and strategically built its stranglehold in these materials through a combination of domestic production, aggressive investment in refining, and state-backed industrial policies that have provided financing to projects in Africa as well as global offtake agreements with producers. This dominance gives China considerable leverage in global supply chains, especially as demand for critical minerals surges in response to the green energy transition and the proliferation of advanced technologies. This head start is also compounded by the fact that permitting and financing a mine or refinery in the West can take over a decade, whereas in China it can be done almost immediately.
The semiconductor industry in crisis, a glimpse into what could happen across a host of other industries
The impact of these restrictions on the semiconductor industry could be profound. Semiconductors are the backbone of modern technology, powering everything from smartphones and computers to military systems and artificial intelligence applications. Critical minerals like gallium and germanium are indispensable for producing high-performance chips, particularly those used in fields such as quantum computing and aerospace technology.
For the US and its allies, these restrictions pose a significant challenge. While companies like Intel, Qualcomm, and NVIDIA have spearheaded innovation in chip design, the materials required to manufacture these chips often rely on Chinese supply chains. To date, none of these companies have invested directly into mining projects. The loss of access to gallium, germanium, and antimony as well as other critical minerals could lead to production delays, increased costs, and even a potential slowdown in technological innovation. Not to mention the military implications if weapons makers are unable to procure chips.
The loss of access to gallium, germanium, and antimony as well as other critical minerals could lead to production delays, increased costs, and even a potential slowdown in technological innovation. Not to mention the military implications if weapons makers are unable to procure chips.
Broader implications for the West
Beyond semiconductors, the export restrictions will ripple across other key industries, including renewable energy and defense. Solar cells, which rely on gallium and germanium for their photovoltaic properties, could see production bottlenecks, complicating efforts to meet ambitious climate goals. The defense sector, which depends on antimony for various military applications, may also encounter challenges in maintaining readiness and advancing next-generation weaponry.
The restrictions underscore the vulnerabilities in Western supply chains. For decades, the West has prioritized cost efficiency over investment in mining, and critical minerals in particular, leading to an overreliance on China. The current crisis highlights the need for a paradigm shift toward investing in mining and potential government intervention in the form of tax credits and other subsidies.
The path forward requires investment and action
To counter China’s dominance and mitigate the impact of these restrictions, Western nations and investors must adopt a multi-pronged strategy:
- Investing in domestic production: Governments should incentivize the development of domestic mining operations and processing facilities for critical minerals. Initiatives such as the US Defense Production Act can play a pivotal role in jumpstarting these efforts
- Strengthening alliances: Collaborative frameworks like the US-EU Trade and Technology Council (TTC) can facilitate resource-sharing agreements and joint investments in alternative supply chains
- Recycling and substitution: Investing in recycling technologies and research into material substitutes can reduce dependence on Chinese exports. For instance, innovations in gallium and germanium recovery from electronic waste could provide a partial solution
- Expanding stockpiles: Strategic stockpiling of critical minerals can provide a buffer against supply disruptions. The US National Defense Stockpile, for example, could be expanded to include more materials essential for semiconductors and renewable energy
- Encouraging innovation: Increased funding for research into next-generation chip designs and production methods that rely less on scarce minerals could help reduce vulnerability to supply chain disruptions
