China Restricts Key Critical Minerals Exports in Response to US Chip Controls

China's restrictions seen as retaliatory

China's decision intensifies a series of tit-for-tat actions between itself and the US.

In mid-2023, China imposed licensing requirements for exporting gallium and germanium. US companies rely heavily on these minerals, with about half of the country’s gallium and germanium imports originating from China.

This past August, China announced new export restrictions on antimony, effective in mid-September.

The new US measures include controls on chip-making equipment, software tools and high-bandwidth memory chips — all aimed at curtailing China's ability to develop advanced technologies with military applications.

The Chinese government has labeled these actions as an abuse of national security considerations. Both sides justify their respective controls as necessary for safeguarding national security.

Supply chain resiliency in focus

Analysts anticipate that China's critical minerals export ban will push businesses in the US to accelerate efforts to diversify their supply chains and explore alternative sources for these materials.

The semiconductor, automotive and renewable energy sectors are expected to be most directly impacted.

The US Geological Survey notes that while the US holds deposits of these critical minerals, domestic mining and production have been limited. Efforts to develop local sources are underway, but remain in the early stages.

Ongoing tensions between the US and China have already influenced market dynamics, with prices for some minerals, including antimony, more than doubling this year.

The US Department of Commerce has yet to issue a detailed response. However, previous statements highlight the Biden administration's focus on securing supply chains for critical minerals.

Recent initiatives, including the CHIPS and Science Act, aim to bolster domestic manufacturing capacity and reduce reliance on foreign suppliers.