Metal Wars: China Restricts Exports of Gallium and Germanium

China’s Ministry of Commerce and China Customs recently announced export controls on gallium and germanium products (including compounds), effective August 1.

This action, aimed at “safeguarding national security and interests,” according to Chinese officials, has stirred global panic within various industries and governments.

Although these two rare metals only account for several hundred million dollars in global trade—a figure that pales in comparison with the chipmaking industry’s value of over $600 billion—they are critical strategic resources in the defense and high-tech sectors.

Infrared optics, fiberoptic communications, solar cells, and compound semiconductors are useless without them. Any disruption in the supply of these metals would therefore unsettle downstream markets valued in the trillions of dollars.

Further exacerbating the anxiety is China’s dominance in the global supply of these metals. In 2022 alone, China manufactured 90 percent of gallium-related products and 68 percent of germanium-related products.

Chinese authorities argue that export restrictions on products involving these metals are standard international practice and not targeted at any specific country.

Extraction of gallium and germanium uneconomical

Both gallium and germanium are classified as dispersed metals that occur in deficient concentrations in the Earth’s crust, rendering extraction highly uneconomical.

For instance, gallium primarily exists as a secondary element in bauxite ore, with its production primarily being a by-product of aluminum refining. Likewise, germanium rarely forms independent ores and is typically found within minerals composed of other elements.

The EU has urgently called on aluminium and zinc companies to investigate producing the key semiconductor metals.

EU approaches Greek company to produce gallium

It has approached Mytilineos Energy & Metals, a Greek aluminium producer, and asked it to explore producing gallium as a byproduct at its refinery that turns bauxite into alumina, a starting material for aluminium, in Agios Nikolaos in mainland Greece.

“The EU has reached out to us with regards to evaluating how alumina refineries can contribute to a way out of this crisis,” Nick Keramidas, executive director of EU affairs at the company told the Financial Times.

The EU sources 71 per cent of its gallium and 45 per cent of germanium from China, according to the EU, but there are only a handful of companies outside of China capable of producing the high-purity metals used in chipmaking, solar photovoltaic cells and optic fibres.

“We realize China can twist our arm. Europe said ‘oh let’s ramp up production, alumina refineries can look at that’ but last time I looked, half of them were down,” said Keramidas.

“When you can’t competitively produce your main commodity because the conditions are so absurdly problematic, it might be idiotic to invest in a side-product that is gallium.”