US-China Trade Friction Impacts Essential Clean Energy Metals

As tensions between the United States and China escalate, crucial metals required for clean energy technologies are caught in the crossfire. The focus has shifted to gallium and germanium, two rare elements that are pivotal in the manufacturing of semiconductors and renewable energy systems.

In 2023, Vasileios Tsianos, a corporate development executive at Neo Performance Materials, began receiving inquiries from government officials due to the increasing importance of gallium. Neo, based in Ontario, Canada, is currently the only industrial-scale producer of high-purity gallium in North America, primarily recycling it from semiconductor chip production waste. This metal is vital not only for semiconductor applications but also for clean energy technologies and military equipment.

China, which dominates gallium production globally, imposed new export controls on this metal in response to potential restrictions from the US government regarding semiconductor sales to China. This led to a heightened interest among various stakeholders in North America in increasing gallium production capabilities.

As of December 2023, China enacted a complete ban on the export of gallium and germanium to the United States, following the US's further limitations on chip exports. This development has prompted companies in the US and Canada to explore the expansion of their production of these critical metals to satisfy domestic demand.

The geopolitical landscape surrounding these metals is complex, with Canadian producers potentially facing repercussions from increased tariffs proposed by the US administration. However, US metal manufacturers may benefit from federal initiatives prioritizing funding for critical mineral projects. Industry experts note that China's export ban is accelerating global efforts to diversify critical mineral supply chains, preventing reliance on any single nation for essential resources needed for a sustainable future.

Gallium and germanium may not be well-known to the general public, but they play significant roles in technologies essential for contemporary life and a sustainable energy landscape. Gallium, for instance, is integral in the production of semiconductor chips used in cell phones, electric vehicles, and LED lighting. It is also utilized in the manufacture of rare earth magnets for electric vehicles and wind turbines, as well as in solar cells that enhance performance and longevity.

Germanium serves as a key material in fiber optic cables, contributing to the infrastructure of the internet. Its unique optical properties make it useful in various applications, including infrared lenses and high-efficiency solar cells for satellites.

The market for gallium and germanium is relatively small and predominantly controlled by China, which accounted for nearly all low-purity gallium production and over half of the refined germanium output in 2022. Both metals are primarily byproducts of other mining processes, with gallium often extracted during aluminum production and germanium sourced from zinc refining waste.

The US currently relies on imports for its gallium and germanium needs, consuming approximately 50 tons of both metals annually. A recent US Geological Survey study indicated that a complete export ban from China could result in significant economic repercussions for the US, reinforcing the urgency of establishing domestic production capabilities.

In response to the recent export restrictions, companies like Neo Performance Materials are exploring new avenues for gallium sourcing. They aim to partner with bauxite miners globally to create additional supplies. Meanwhile, Teck Resources in British Columbia is looking into increasing its germanium production, leveraging its existing operations that process zinc ore.

Experts predict that the US will seek to build new supply chain relationships with other nations, particularly Canada, to ensure access to gallium and germanium. This situation remains fluid due to the ongoing trade tensions, with potential tariffs posing challenges for cross-border trade.

In the longer term, there may be a renewed focus on recycling efforts, particularly from military equipment, to recover germanium and gallium. The Department of Defense has initiated programs to recycle optical-grade germanium, highlighting an emerging strategy to bolster the domestic supply of these critical metals.

Additionally, there are possibilities of untapped resources in existing waste streams, such as those from zinc processing facilities in Tennessee. Companies are exploring methods to extract these metals from industrial byproducts, which could enhance domestic production capabilities.

The challenges of producing gallium and germanium outside of China include the need for substantial investment and the fluctuating market conditions of primary metals like aluminum and zinc, which directly impact the feasibility of extracting these valuable elements.

Despite these challenges, the geopolitical climate has prompted a significant shift in market dynamics, with gallium prices outside China nearly doubling, creating a viable business case for production in other regions.