Weaponizing Critical Minerals, China Selects Gallium as Tool of Choice


Announcement to Stop Exporting Gallium and Germanium on August 1st to have Massive Impact on Chip Market

At the recent Critical Minerals Institute (CMI) Summit II in Toronto, I was asked by the CMI co-founder Tracy Weslosky, along with my colleagues on a panel: which one of the critical minerals was our #1 choice for being most critical. Having been monitoring the Top 5 Critical Mineral Markets and maintaining a critical minerals list for the last several years for the CMI, I selected Gallium (Ga). Then explained that my rationale was that China dominates production with close to 98% of the world’s exports of gallium. Adding that gallium is required for semiconductors “…a substance that has specific electrical properties that enable it to serve as a foundation for computers and other electronic devices”, I offered the recommendation that we better find another source.

China agreed with me.

Yesterday there was an announcement out of China that will have massive ramifications for the semiconductor industry. China’s Ministry of Commerce and General Administration of Customs decided to implement export controls on items related to gallium and germanium (Ge) to take effect on August 1, 2023. Furthermore, this same announcement as translated by Google states: “If exporters export without permission this constitutes a crime and will be held criminally responsible.”

So, why is this significant? According to a USGS Report, China produced 420 tonnes out of a global total of 430 tonnes of gallium in 2021, which is 98% of the world’s supply.  

What drove China to this decision? China typically does not make moves like this without some sort of thought-out process and usually in response to another action. In my experience, it is my opinion that this is in response to an American move in October 2022, which banned exports to China of high-end semiconductors and equipment to make these high-end semiconductors. In addition to this, the National Defense Authorization Act (NDAA) prohibited US government agencies from procuring products or services that contain semiconductors made by China’s leading chip manufacturers. Needless to say, the immediate impact of this ban will be felt in Taiwan, South Korea, the USA and Europe. Again, according to the USGS, The USA imported 270 tonnes of gallium arsenide wafers in 2021. And SEMI, a global industry association that “unites the entire electronics manufacturing and design supply chain”, estimates the equipment market in 2022 at over $100 billion.

So, is there a replacement for gallium arsenide and gallium nitride? The short answer is yes and no. The properties of gallium arsenide (GaAs) allow transistors to operate at higher frequencies than silicon. It is used in mobile phones, satellite communications, microwave links, and high-frequency radar systems. In solar cell production, GaAs can absorb light better than Silicon (Si). Silicon is cheaper and has massive economies of scale, so it is the dominant chip material. It is easy to find while gallium is produced from zinc production and the production of bauxite. Obviously, there are potential sources outside China, but these would take time to develop. The Chinese announcement goes into effect in 4 weeks so there is little time to load up on inventories. I am not sure what inventory levels are, but I would be surprised if they exceed 6 months outside China. This may force producers to move production to China, which is how they came to dominate the rare earth market as they eliminated the export of rare earth concentrates in the late 1990’s and magnet manufacturers moved production to China to access raw materials. Given that designs have GaAs chips built into existing products any response would be lengthy and reduce performance.

When it comes to Germanium (Ge) there is less information available. About 75% of Ge comes from zinc production and the balance from coal fly ash. The USGS reported in 2020 that refinery production was 130,000 kgs with China having 86,000 kgs, Russia 5,000, and the rest of the world 40,000 kgs, which includes Canada, Belgium, Germany, Japan, and Ukraine. So obviously there are more options available for Ge as opposed to Ga but again the USGS estimates the USA consumption is around 30,000 kgs or 75% of the rest of the world’s output.

As the impact of this announcement is understood it will be interesting to see the global response as China seems to be playing a very advanced level of critical minerals chess.

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10 responses

  1. Rare Earths Investor Avatar
    Rare Earths Investor

    Seems a number of articles today see this move as a shot over the bows by China for the US. Interestingly, it happens just as US Secretary Yellen is going to China. Potentially a warning against intensifying this chip issue with the implication to recognize the impact should a further China move involve RE/related products to the ROW.

    However, IMHO, Xi also knows that this potential further move would be a one-shot event. The political fallout would be huge for such a move that would potentially disrupt US defense manufacturing, etc., (the media onslaught would put the last two years of RE-hyped events to shame). The implication for Ukraine’s arms supply and the perceived direct action by China that would benefit Russia in its conflict would, IMO, illicit the type of ROW responses Jack Lifton has hinted at in terms of the money and (entity) selectivity that would be ‘thrown’ at the ROW critical metals value chains. Such an act would likely make the 2010 China-Japan RE event fade into obscurity.

    Xi (and Biden) are playing a finely balanced game here and these two G’s export controls while making a point are clearly less politically explosive than any potential RE/related component sanctions. However, such a RE Black Swan event (while likely very profitable for informed and positioned RE retail investors) may, in fact, be existential in terms of ROW critical metals; especially, if it may be linked to China’s own intentions towards Taiwan.

    As usual, JMO.

    Thanks for penning.

    GLTA – REI


    It is my understanding that Appia’s early stage Alces Lake rare earth deposit in Canada also contains a monetizable amount of Gallium.

    1. Alastair Avatar

      Louis, Thank you for that information. I think the zinc smelter in Trail BC is a potentially faster opportunity since they likely have a lot in tailings.


    Ex-Top Chinese Official Says Export Curb On Key Metals Is “Just The Beginning”


    WEDNESDAY, JUL 05, 2023 – 08:50 AM
    On Monday, China announced export controls on two rare earth metals, gallium and germanium, starting on August 1. These critical rare earth metals are used in microchip production. On Wednesday, a former top Chinese official was quoted by state media as saying export controls on rare earth metals are “just the beginning.”

    Former vice-minister of commerce Wei Jianguo spoke with China Daily and said Beijing has plenty of tools for countermeasures if the Biden administration continues to ramp up technology restrictions. He said the decision to restrict the export of gallium and germanium would “cause panic in certain countries, but also exert heavy pain in them.”

    Wei said: “This is just the beginning of China’s countermeasures, and China’s toolbox has many more types of measures available. If the high-tech restrictions on China become tougher in the future, China’s countermeasures will also escalate.”

    This is alarming because China controls the world’s processing and refining of rare earth metals.

  4. Tracy Weslosky Avatar
    Tracy Weslosky

    Thanks Louis – I have an interview with Jack Lifton tomorrow about this. And I know that the Critical Minerals Institute Board has had numers Directors be interviewed from numerous outlets in the last 48 hrs. What I personally think is interesting is that Gallium is listed as a critical mineral in the USA, Canada, UK, AUS and EUR. This is 1 of 14 critical minerals on what I refer to as the extra critical – critical mineral list. Thanks for visiting, and as always – the Rare Earth Investor (REI) above’s comments are worth a read.

  5. Ian Chalmers Avatar
    Ian Chalmers

    Thanks for the summary Alastair. FYI, Rhone Poulenc (Solvay) built a gallium recovery plant on the tails stream from a bauxite to alumina production facility at Pinjarra, about 80km south of Perth in the 1990s. I think it had a capacity of around 100tpa but unfortunately was shut down after only a few months operating due to a collapse in the Ga price. The plant was still there in 2010 when I visited (a bit dusty) and I am not sure of its current state. I think Ga plants could be readily attached to many alumina plants currently operating globally to satisfy a strategic demand.
    There is also a “famous” gallium-germanium mine at Apex near St George in Utah which was an unusual stand alone Ga-Ge operation. I think it shut down in the late 1980s.

  6. Matt Bohlsen Avatar
    Matt Bohlsen

    Thanks Alastair. Excellent review.
    Common sense would see both USA and China de-escalate tensions. Hopefully Janet Yellen’s China trip this week can achieve a step in this direction.
    Trade wars and sanctions hurt everyone and there is usually no winners.

  7. Steve Mackowski Avatar
    Steve Mackowski

    Sitting here in retirement listening to the story. Trying to gain some confidence from the hype. Can’t see a model that works. If you don’t realise that China now has the superior technology but needs western resources – wow – a partnership, then you are missing the truth.

  8. Tommy Avatar

    smartest thing is the Europe EU and the administration throw in the towel in a presentable way, stress one goal. Both can’t find a substitute & will waste trillion on a failure. Why? Logic, both are 1-2 % byproduct of a metal creation. So that 98 % of 1 is aluminum. Abd you need to be able to sell that 98% alum on the market for the company to survive. China has 98 % market so that 400 metric tons has to be replaced. So that 380 million of metric ton of aluminum etc need to be sold essentially double the aluminum now. That impossible. And GAN is 2 gen chip material that has a 900 x faster sustain = minuntrsization as jet or field radar f-15 f-35 & it new update. And A,I and super speed 400 + kWh D.C. Charger. They are 14 diffrent compound derive from these 2 metal it’s china trade secrets. Reality is the green movement is dead in the water now. Trillion Stimulus Money will be wasted on experiencing.

    1. Tommy Avatar

      The ministry said in a statement that as of August 1 market participants would not be allowed to export eight listed gallium-related products without permission: gallium antimonide, gallium arsenide, gallium metal, gallium nitride, gallium oxide, gallium phosphide, gallium selenide and indium gallium arsenide.
      The same will apply to six germanium products: germanium dioxide, germanium epitaxial growth substrate, germanium ingot, germanium metal, germanium tetrachloride and zinc germanium phosphide.

      Gallium is not found in natural abundance. The element exists in trace amounts inside deposits consisting largely of other minerals. These include coal, bauxite, germanite, and zinc ores. The metal is very rare and only accounts for about 0.0019 percent of Earth’s crust. It is also the 32nd most abundant element present inside the crust.

      Gallium is almost exclusively extracted as a byproduct of zinc, aluminium and other metal mining. It can be separated from other metals by smelting or electrolysis using a solution of gallium(III) hydroxide in potassium hydroxide. The biggest producers of gallium are China, Germany, Kazakhstan and Ukraine. Annual production is estimated at about 200 metric tons per year.

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