(Bloomberg) -- Two obscure yet crucial metals, gallium and germanium, are the latest pawns in the escalating US-China trade war. On Dec. 3, China announced an export ban on both metals to the US in a tit-for-tat move after President Joe Biden’s administration implemented its own new technology curbs on the country. Beijing had already placed initial controls on exports of the materials last year, driving prices higher and upending trade flows.
What are gallium and germanium?
Both silvery-white in appearance and commonly classified as “minor metals,” gallium and germanium aren’t typically found on their own in nature. Instead, they’re produced in small concentrations as a byproduct from refineries focused on other, more mainstream raw materials such as zinc or alumina.
How big is the market for them?
The markets for these metals are tiny, especially when compared with those for commodities such as copper or oil. For example, US imports of gallium metal and gallium arsenide wafers in 2022 were valued at only about $225 million, according to government data. But their use in strategic industries means any interruptions to supply could still have a significant impact.
What are gallium and germanium used for?
The two metals have a vast array of specialty applications in chipmaking as well as the communications and defense industries. Gallium is used in compound semiconductors, which combine multiple elements to improve transmission speed and efficiency. It’s also needed for TV and phone screens, solar panels and radar equipment. Germanium’s uses include fiber optics, night-vision goggles and space exploration. Most satellites are powered with germanium-based solar cells.
How important is China’s supply?
Trade flows in these small and niche markets are difficult to track, but China is far and away the top source of both metals globally — accounting for 94% of gallium supply and 83% of germanium, according to a European Union study on critical raw materials last year.
And while there are substitutions for both metals, the alternatives cost much more and may hinder performance in their intended applications, according to CRU Group, a metals industry intelligence provider.
So can other countries produce more?
Neither metal is particularly rare, but processing costs are high. Because China has exported them relatively cheaply for so long, there are few facilities elsewhere to extract the metals. As China increased its production, other countries — including Germany and Kazakhstan — have pared back.
Gallium prices have risen 80% since last year’s curbs were announced, while germanium has more than doubled. If prices continue to rise, analysts expect production from other suppliers will increase to meet demand.
Where else are the metals produced?
Excluding China, other countries with gallium production capacity include Russia and Ukraine, where the metal has been produced as a byproduct of alumina, as well as South Korea and Japan — as a byproduct of zinc. In North America, germanium is recovered alongside zinc, lead and other metals at Teck Resources Ltd.’s Trail smelter in British Columbia.
Other producers include specialty materials maker 5N Plus Inc. and Indium Corp. in the US. In Europe, Belgium’s Umicore SA is a producer of both metals.
And some mining projects contain higher concentrations of the metals and could offer an opportunity to increase supply — such as the Kipushi zinc project in the Democratic Republic of Congo. In the US, Trafigura Group’s Nyrstar unit is evaluating building a germanium facility in Tennessee.
Recycling could also be key. Factory-floor scrap already accounts for some supply of both metals. Germanium is also already being recovered from the windows of decommissioned tanks and other military vehicles, according to the USGS.
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