Clean Energy Metals Caught in Global Trade Fray
In the summer of 2023, Vasileios Tsianos, the vice president of corporate development at Neo Performance Materials, found himself at the center of a transatlantic whirlwind. Neo, renowned for manufacturing rare earth magnets vital in various applications including electric vehicles and home appliances, was suddenly thrust into a global spotlight due to the scarce metal gallium.
The world’s only industrial-scale producer of gallium in North America, Neo processes high-purity gallium from semiconductor scrap at its Ontario factory. As China, the primary global gallium producer, imposed fresh export restrictions on the metal in response to potential U.S. semiconductor chip sale limitations, Neo became a sought-after entity for international conversations surrounding gallium production.
The escalating tensions over gallium and its counterpart, germanium, have triggered a flurry of activity. China’s abrupt ban on exporting these metals to the United States in retaliation for U.S. chip export restrictions has spurred discussions among U.S. and Canadian companies to bolster gallium and germanium production to meet growing demand. Amid this uncertainty, industry experts are emphasizing the necessity of diversifying critical mineral supply chains to mitigate reliance on any single country.
Gallium and germanium, while not household names, play essential roles in various cutting-edge technologies. Gallium’s exceptional electrical properties make it a key component in semiconductor chips found in everyday devices like cell phones, electric vehicles, and LED lighting systems. Germanium, on the other hand, serves a crucial function in fiber optic cables, supporting internet infrastructure and satellite technology.
These metals are irreplaceable in many applications due to their unique properties. While some substitutes exist, gallium and germanium are often the preferred choice due to their unparalleled performance characteristics. These metals, vital to the transition towards clean energy, are indispensable for enhancing the efficiency and longevity of advanced technologies.
The supply chain for gallium and germanium is primarily dominated by China, reflecting the metals’ status as byproducts of other industrial processes. Gallium is typically extracted during aluminum oxide production from bauxite ores, while germanium is derived from zinc refining waste. China’s strategic focus on gallium and germanium co-extraction underscores its significant influence on the global supply chain dynamics.
The U.S., devoid of primary gallium production and with limited germanium output, heavily relies on imports from China. Consequently, China’s export ban on these metals poses significant economic risks to the U.S., as highlighted in a U.S. Geological Survey study projecting substantial economic losses in the event of total export restrictions.
Amidst this looming trade war uncertainty, U.S. companies are exploring alternative solutions to secure gallium and germanium supplies. Neo’s Ontario facility, poised to double gallium production, is actively seeking new sources of virgin gallium by collaborating with bauxite miners globally. Teck Resources in British Columbia is another key player in germanium production outside China, contemplating production capacity expansions in response to the export ban.
The immediate response to the current trade dynamics involves establishing new supply chain partnerships, primarily with Canada, to secure gallium and germanium supply. While the short-term focus remains on strengthening existing relationships, long-term strategies might involve recycling initiatives, especially in the defense sector, to recover these critical metals from decommissioned military equipment.
In the U.S., Umicore’s recycling facilities in Oklahoma and Belgium play a vital role in recycling germanium from various sources, contributing to the nation’s overall supply. Additionally, Nyrstar’s proposed facility in Tennessee, capable of significant gallium and germanium production, represents a potential domestic source for these vital metals.
The economic viability of gallium and germanium production outside China remains a key challenge. Despite the recent market shifts and price fluctuations triggered by geopolitical events, investments in gallium and germanium production require careful consideration due to the high costs and uncertain returns associated with establishing new production capacities.
The evolving landscape of gallium and germanium production underscores the intricate interplay between geopolitics, technology, and economic forces. As global stakeholders navigate this complex terrain, the quest for secure, sustainable supply chains for critical minerals remains paramount in shaping the future of clean energy and high-tech industries.
