Don’t Worry About China’s Gallium and Germanium Export Bans

 Don’t Worry About China’s Gallium and Germanium Export Bans

What Happened: New Chinese government restrictions on exports of gallium and germanium – two critical minerals used in semiconductor production – took effect on August 1. That month, China exported none of either mineral, despite producing 80 percent of the world’s gallium and 60 percent of germanium. But the world shouldn’t worry about a shortfall of the critical minerals.

Our Focus:  mining and minerals expert Tim Worstall compares the current ban to China’s 2010 attempt to restrict exports of rare earth elements. “For the little secret about both – in fact the little secret about near all minerals and metals – is that there’s no shortage of them out there,” Worstall writes. Instead, the market is driven by who can provide the needed mineral most cheaply and efficiently. That has often been China, but it’s not the only option. In the case of rare earths, the rest of the world moved quickly to fill the vacuum left by China; for gallium and germanium, the result will be the same. The minerals are easily obtained and processed using known technology.

What Comes Next: “There’s no reason for [a] shortage other than the fact that China has been doing such work cheaply these past years, so Western plants have been idled. If China takes itself out of the supply chain, the world will move on,” Worstall notes. His point is simple: “China’s new export ban is not a strategic issue, nor one that requires any intervention… Gallium and germanium prices are going to rise for the refined material – thus people will increase supply.” In fact, the only long-term impact of China’s export bans might be to hasten the world’s transition away from relying on China to supply critical minerals.