China’s recent trade restrictions on critical minerals, including antimony, gallium, and germanium, are significantly impacting Western companies reliant on these materials. The restrictions highlight the vulnerability of global supply chains and the urgent need for diversification.
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Henkel, a German chemical and consumer goods giant, recently declared force majeure on deliveries of adhesives and lubricants crucial to the automotive industry. The company cited delays in antimony imports due to Beijing’s export licensing requirements. These products, marketed under the Bonderite and Teroson brands, are integral to Henkel’s adhesive technologies division, a significant revenue generator. Henkel is actively seeking alternative suppliers and working to mitigate disruptions for its customers.
The scarcity of antimony, coupled with its strategic importance in military applications, has led to a dramatic price surge. Rotterdam spot market prices have skyrocketed nearly 230% this year, reaching approximately $39,000 per metric ton, according to Argus. China’s dominance in antimony production, along with its control over other critical minerals like gallium and germanium used in semiconductors and defense technologies, amplifies the impact of these trade restrictions.
Western Companies Seek Alternatives to Chinese Minerals
China’s actions have spurred Western companies to reduce their dependence on Chinese mineral sources. Perpetua Resources, with U.S. government backing, is developing an antimony mine in Idaho. However, establishing new mines is a time-consuming process, leaving companies like Henkel searching for immediate, often more expensive, alternatives. Henkel affirmed its commitment to leveraging its global supply chain to address the situation and support its customers.
Meanwhile, existing Western producers are increasing capacity. United States Antimony (USAC), the sole North American antimony processor, is ramping up production at its Montana smelter. Chairman Gary Evans attributed the decision to the global price surge and increased demand for USAC’s products. The company is actively diversifying its supply, securing antimony from four international and one domestic source. Similarly, Northern Graphite, North America’s only natural flake graphite producer, reported a 50% order increase following China’s graphite export restrictions.
The export restrictions have also impacted the germanium market. ReElement Technologies, specializing in rare earth recycling and refining, has seen a surge in inquiries from U.S. miners offering zinc ore, a source of germanium, for processing. This shift reflects a move away from sending these materials to China due to cost and environmental considerations. Teck Resources, a Canadian miner and the sole germanium supplier in North America, is evaluating increased production at its Alaskan zinc mine.
Market Disruptions and Price Volatility
China’s export controls have significantly impacted mineral prices. Gallium prices outside China were 30-40% higher in the first half of 2024 compared to the previous year, according to Neo Performance Materials. Within China, the restrictions have forced some smaller players out of the market. Chinese germanium traders reported difficulties securing export licenses due to challenges in providing end-user details or restrictions related to U.S. clients. Chinese customs data confirms a complete halt in germanium and gallium exports to the U.S. this year.
For global businesses, these developments emphasize the crucial need for diversified supply chains. Maxime Picat, chief purchasing officer at Stellantis, highlighted the vulnerability of relying on single-source suppliers, emphasizing the necessity of multi-faceted de-risking strategies.
This situation underscores the complex interplay between geopolitical strategies and economic realities in the global market for critical minerals. The long-term implications of China’s trade policies remain to be seen, but the immediate impact is clear: a significant disruption to Western supply chains and a renewed focus on securing alternative sources for these essential materials.
