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China is restricting exports of two specialty metals key to electronics manufacturing and semiconductors, as the technology battle with the United States and Europe heats up.
Germanium and gallium are two metals in the spotlight.
But what are they and how important are they?
Why does China impose restrictions on the export of minerals?
China and the United States have been locked in a technology trade war that has escalated since 2019. It used the United States Trade blacklists and blanket export restrictions isolate China from key technological components, semiconductors or chips.
These crucial pieces of technology became the focal point of the battle between the two superpowers.
China hasn’t responded much yet, but in May it called US chip maker Micron a “major security risk”. Now, Beijing is looking into areas where it has some strength — metals, materials that go into electronics, and semiconductors.
China’s Ministry of Commerce said on Monday that new regulations will require exporters of gallium and germanium to obtain a license to ship the metals. Beijing introduced the new rules for reasons of national security.
What is germanium and gallium?
Germanium and gallium are metals that do not occur naturally. It is formed instead, usually as a by-product of other mineral refineries.
Germanium, a silvery white metal, is formed as a by-product of zinc production. Meanwhile, the soft silvery metal gallium is a by-product of processing bauxite and zinc ores.
What are the uses of germanium and gallium?
Germanium has several uses, including solar energy products and optical fibers. The metal is transparent to infrared rays and can be used in military applications, such as night vision goggles.
Solar panels containing germanium have applications in space.
Gallium is used to make the chemical compound gallium arsenide, which can make radio frequency chips for cell phones and satellite communications, for example. This compound is also a basic material in semiconductors.
Which country produces minerals?
China produces 60% of the world’s germanium and 80% of gallium, according to the Critical Raw Materials Alliance, an industry body.
The production of gallium arsenide is complex, and there are only a few companies in the world that can do it. One is located in Europe, while the other is in Japan and China, says CRM Alliance.
How big is China’s restrictions deal?
“A warning shot, not a fatal blow,” the Eurasia Group said in a note on Monday.
“But these latter measures are limited in scope, and while the new rules require Chinese exporters to first obtain a license, there is no language that automatically blocks exporting to certain countries or end users.”
The United States and Europe do not import large quantities of these materials. The United States received $5 million in gallium metal and $220 million in gallium arsenide in 2022, according to government figures.
Intake of germanium was higher, with the country acquiring $60 million of the mineral, while the European Union imported $130 million of germanium in 2022, according to data from S&P Global Market Intelligence.
Other countries are also capable of producing these minerals. Belgium, Canada, Germany, Japan and Ukraine can manufacture germanium. Meanwhile, Japan, South Korea, Ukraine, Russia and Germany produce gallium.
There are also potential substitutes for these metals.
China’s size has allowed it to produce it at a lower cost than elsewhere, but the Eurasia Group notes that Beijing’s moves will have “limited impact on global supply given the target scale”.
“It is a shot across the arc intended to remind countries including the US, Japan and the Netherlands that China has options for retaliation and thus deter them from further restricting China’s access to cutting-edge chips and gadgets,” the Eurasia Group said.
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