Since August last year, Chinese authorities have been restricting the export of gallium and germanium without special licenses, so the cost of these minerals in Europe has almost doubled over the past period, as noted by the Financial Times. This has affected the cost of products produced using these substances for the needs of the electronics and defense industries.
Image source: GlobalFoundries
As the source recalls, China controls almost 98% of the world’s supply of gallium and about 60% of germanium, based on data from the US Geological Survey. Representatives of the Western semiconductor industry admit that dependence on China for these materials is reaching a critical level. Market participants note that although gallium supplies from China are still significant, they have halved compared to last summer. If China further restricts the supply of gallium, Western producers will no longer have enough of their existing supplies, and there will be a shortage of products.
One of the German traders said that he is now purchasing only a small fraction of the volume of gallium and germanium from China that was purchased before the introduction of sanctions by the Chinese side. The measures taken by the Chinese authorities are putting significant pressure on the market and supply channels. Gallium and germanium are needed to produce advanced processors, fiber optic network components, and night vision devices. This month, China also announced plans to limit the export of antimony, which is needed to make armor-piercing ammunition, night vision devices and precision optics. The country’s authorities previously imposed restrictions on the export of graphite, which is used in the production of traction batteries for electric vehicles.
Just since the beginning of June this year, the cost of germanium has risen by 52% to $2,280 per kilogram, as Argus notes. Some traders complain that it is impossible to buy Chinese-made germanium outside of China itself. A contract for the supply of each batch of any of these materials requires approval within 30 to 80 days. In such a situation, no one simply enters into long-term contracts due to the uncertainty of the future. The country’s authorities can quickly cut off the supply channels of gallium and germanium to any of the unfriendly powers, and this is the main signal sent to the public. The need to build up increased reserves of sanctioned minerals has led to a sharp rise in prices. So far, there are no signs of changes in the policy of the Chinese authorities in this area, according to market participants.