Let the Cold War Begin
In a recent InvestorIntel interview, Tracy Weslosky spoke with Christopher Ecclestone, Principal and mining strategist at Hallgarten & Company, regarding China’s new export ban on critical minerals germanium and gallium. The ban, enacted on August 1st, is seen as a strategic retaliation against Western restrictions on key semiconductor supplies to China.
Ecclestone explained this as an extension of the modern “Cold War,” where conflict is expressed through trade embargos, rather than on battlefields. The aim, seemingly, is to disrupt Western semiconductor production by limiting access to essential materials like gallium arsenide, which is critical in chip manufacturing.
Despite China’s dominance in gallium and germanium production (98% and 66% respectively), the U.S. government has been reticent to admit this ‘stranglehold.’ Companies in the West, Ecclestone highlighted, have failed to stockpile these critical metals, leaving them exposed to the current ‘rainy day’ scenario.
However, this new restriction has sounded an alarm for Western companies to reevaluate their dependencies and take necessary actions. Companies like Trafigura Beheer B.V. are already looking at byproduct production of germanium in their zinc refineries. Over time, this could eventually lead to Western self-sufficiency in these metals, negating Chinese leverage.
As Ecclestone concluded, the Cold War may have indeed restarted in the realm of trade. To read Ecclestone’s latest report, “Let the Cold War (re)Begin,” visit the Hallgarten & Company website.
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