The announcement by China that it would implement export controls on specific minerals may have far-reaching and drastic consequences for American consumers, as tensions between Washington and Beijing increase.
Chinese officials announced Monday export limits for germanium and gallium after U.S. officials decided in October 2022 that they would impose restrictions on advanced computer chip exports to China. According to CNBC, the Chinese export restrictions could increase prices in the U.S., as these minerals are used for high-speed computer chip manufacturing, military equipment and solar panels.
According to Electropages, the two minerals are vital to nearly all modern technology utilizing optical or radio components. Many of these devices could not operate without them. The global availability of these minerals is likely to decrease, which could increase the cost of goods that rely on them.
Forbes reports that there are growing fears China will expand its export controls and include other rare earth minerals of strategic value, as relations between Beijing and Washington continue to deteriorate. According to Reuters, manufacturers use other strategic rare earth minerals in the production of smartphones, electric cars and wind turbines.
According to Electropages, if China continues to increase its dominance of rare earth minerals, electronics for U.S. customers will be more expensive. According to Electropages, China’s decision of leveraging its supply dominance could also lead to a longer supply chain, which would negatively affect production timelines and availability of key components.
According to Electropages, U.S. producers may have to stop producing certain products if they cannot access the rare earth minerals needed in the case of a further increase.
According to Electropages, the U.S. will either need to accept the idea of importing minerals from China or open their own mines to source rare earth minerals. According to Electropages, Western mines will have to compensate for higher labor costs and stricter regulations by raising the price of minerals extracted. This would in turn make electronics more costly for Western consumers.
According to Reuters, China restricted exports of rare-earth minerals to Japan in 2010, due to a territorial dispute. China claimed that the decision to limit rare earth mineral exports was based on environmental concerns. According to Reuters, the sudden restrictions caused a significant price spike in the global market for these minerals.
According to Reuters, China produces 60% of global germanium and 80% of world gallium. Reuters reports that Germanium consumption in 2022 increased by 10% compared to 2021. According to International Netherlands Group, China exported 25% more galium in 2022 compared to 2021.
According to Reuters, China produced about 70% of all rare earth minerals in 2022. It also has 85% of processing capacity within its borders. Although there is only a small amount of rare earth mineral mining in the U.S. the minerals are often sent to China for refining since the U.S. has no refinery capacity.
