MINEX Forum

Tag: semiconductors

  • China’s Mineral Export Curbs Could Shave Over $1 Billion from US GDP — Macquarie

    China’s Mineral Export Curbs Could Shave Over $1 Billion from US GDP — Macquarie

    China’s export restrictions on a handful of critical minerals could cost the United States more than $1 billion annually in GDP losses, according to new research by Macquarie Group.

    The analysis, led by chief economist Ric Deverell, modeled the potential impact of Beijing’s export controls on four rare earth elements — samarium, lutetium, terbium, and dysprosium — along with gallium, all of which appear on the US government’s updated list of 60 critical minerals, which now also includes copper and silver.

    While the direct trade exposure may appear limited, Macquarie’s study highlights how supply disruptions to these small but indispensable materials could ripple through the defense, semiconductor, and clean-tech sectors, amplifying the economic impact far beyond their raw import value.

    The Numbers Behind the Risk

    In 2024, the US mined $17.5 billion worth of minerals domestically but imported $65 billion, Macquarie reported. Although China accounted for just $2 billion, or 3% of total US mineral imports, the concentration of value-added processing and material specialization in China means even a limited export ban could have disproportionate effects.

    Macquarie found that the US was:

    • 100% import reliant on 12 critical minerals, and

    • over 50% dependent on imports for another 33.

    For rare earths, the dependency is especially acute. The US relies on imports for around 80% of its rare earth compounds and metals, and about 70% of that supply originates from China.

    While the nominal import value of these materials is small — around $170 million in 2024, with $120 million sourced from China — the knock-on effects of an export halt could dent US GDP by over $1 billion in a single year, Macquarie estimated.

    The report also flagged gallium — a key input in semiconductors, LEDs, and defense electronics — as another potential choke point.

    Strategic, Not Just Economic, Damage

    Beyond direct losses, Macquarie warned that the strategic cost of supply disruption would be significant. Rare earths and gallium underpin advanced manufacturing, defense systems, and energy technologies, sectors that are difficult to substitute or reshore quickly.

    “Even a temporary interruption in these supply chains would carry lasting industrial and strategic repercussions,” the report noted.

    Australia’s Emerging Role

    Macquarie analysts also pointed to Australia as a potential replacement source for US critical mineral imports currently coming from China.

    Australia, which recently signed a Critical Minerals Framework agreement with the US, holds over 15% of the world’s critical mineral reserves and already produces nearly half of the minerals on Washington’s critical list.

    Although Australian exports currently account for just 2% of US critical mineral imports, investment in the sector is accelerating. As of October 2024, more than $50 billion in new projects were in the pipeline, positioning Australia to play a much larger role in diversifying Western supply chains.

    “Over time, Australia could feasibly replace all Chinese-origin critical minerals in the US import mix,” Macquarie said.

  • Greece Emerges as Europe’s Strategic Hub for Gallium Production

    Greece Emerges as Europe’s Strategic Hub for Gallium Production

    A new ARTE documentary has spotlighted a bauxite mine in central Greece as the European Union’s only domestic source of gallium — a critical mineral essential to the production of solar panels, LED lights, and smartphones. The project aims to bolster Europe’s strategic autonomy by reducing reliance on Chinese imports, which currently dominate the global gallium market.

    The gallium extraction initiative, tied to the historic Aluminum of Greece plant operated by Metlen, has been officially designated as a Strategic Project under the EU’s Critical Raw Materials Regulation (CRMA). Gallium is primarily derived as a by-product of alumina production from bauxite, positioning Greece at the centre of the EU’s clean energy and digital transformation plans.

    Prime Minister Kyriakos Mitsotakis highlighted the investment’s national significance, noting it is part of a wider €2.4 billion wave of projects approved across Europe. In his weekly address, Mitsotakis emphasized the role of gallium in creating a domestic value chain for semiconductor manufacturing and Europe’s broader technological independence.

    “This investment lays the groundwork for a high-tech value chain that contributes to Europe’s productive autonomy,” he stated, citing a €3.6 million state-supported plan to launch Greece’s first Semiconductor Competence Center in partnership with HETiA.

    Currently, the majority of the world’s gallium is sourced from China, with additional production in Russia, Germany, Kazakhstan, and Japan. However, Europe’s efforts to scale its domestic production include both primary mining and secondary recycling of gallium-rich electronic waste.

    Gallium-based compounds like gallium arsenide and gallium nitride are used widely in semiconductors, laser diodes, and infrared applications. With 95% of global gallium supply allocated to the semiconductor sector, Greece’s emerging role could prove pivotal in supporting the EU’s climate and digital goals.

  • Kazakhstan to Become World’s Second-Largest Gallium Producer as ERG Commits $20M Investment

    Kazakhstan to Become World’s Second-Largest Gallium Producer as ERG Commits $20M Investment

    Eurasian Resources Group (ERG) announced plans to invest $20 million into facilities for producing gallium in Kazakhstan, marking the country’s entry into the global gallium supply chain. Starting in 2026, ERG will begin extracting the critical mineral from bauxite ore processed for alumina, with initial production targets set at up to 15 metric tons per year.

    Gallium, essential in the production of semiconductors, radar systems, and missile guidance technologies, is listed as a critical mineral by both the United States and the European Union. ERG’s initiative comes at a time of growing concern over China’s dominance in the gallium market, which currently accounts for the vast majority of the world’s 760-ton annual output, according to the US Geological Survey.

    “ERG plans to become a significant player in the global market for gallium, starting production in 2026 to supply OECD countries,” said ERG CEO Shukhrat Ibragimov. The move could make Kazakhstan the world’s second-largest gallium producer, directly challenging China’s supply monopoly.

    China imposed a ban on gallium exports to the U.S. in December 2024, following a broader crackdown by Washington on Beijing’s chip industry. This followed a series of tighter export controls and licensing regimes applied to gallium, germanium, and antimony over the prior 18 months, raising alarm bells among Western nations dependent on Chinese supply.

    ERG’s investment also reflects Kazakhstan’s rising profile as a key critical mineral supplier. With its bauxite-processing infrastructure already in place, the country is well positioned to enter strategic supply chains for electronics, defence, and advanced manufacturing across Europe and North America.

  • Explained: The EU’s handicap in the global race for critical raw materials

    Explained: The EU’s handicap in the global race for critical raw materials

    The EU is highly dependent on third countries for the raw materials needed to engineer its energy transition and digital transformation.

    Russia’s war in Ukraine and the need to wean itself off fossil fuels in order to reach climate targets have prompted the EU to accelerate its green transition in recent months but also forced it to acknowledge its dependencies over access to critical raw materials.

    In the global race for raw materials, the EU faces multiple challenges.

    The first one is China, which recently started restricting exports of gallium and germanium, two metals essential for the production of semiconductors, in response to Western curbs on Beijing’s access to micro-processing technology.

    The EU considers both materials of high strategic importance. As well as semiconductors and other electronic devices, they are used for military applications such as missile defence and radar systems.

    Beijing’s restrictions come as a stark warning as the EU attempts to diversify and boost domestic supply of raw materials to reduce dependency on third countries.

    Reliance on ‘low-governance’ countries

    But diversifying supply chains could mean the EU has to source these materials from countries that don’t adhere to the same standards.

    Recent data suggests the EU’s supply is highly dependent on countries that have a low governance level, based on indicators including political stability, rule of law and corruption control.

    The EU’s Critical Raw Materials Act (CRMA), adopted in March this year, stipulates that EU strategic projects to scale up supply must be assessed taking into account all aspects of sustainability, including environmental protection, socially responsible practices and respect for human rights such as the rights of women.

    But many countries feeding EU supply are not aligned with European values. This raises concerns about the impact on the local communities where materials are mined, as well as the potential exploitation of natural resources.

    For example, the Democratic Republic of Congo, whose governance indicators are among the lowest in the world, supplies 63% of the EU’s cobalt, which is essential for manufacturing batteries for electrical vehicles.

    Diversifying supply a challenge

    The EU is also highly dependent on single countries for key materials such as Magnesium (China, 97%), Lithium (Chile, 97%), Iridium (South Africa, 93%) and Niobium (Brazil, 92%). These dependencies make supply chains vulnerable.

    The Critical Raw Materials Act aims to ensure no third country provides more than 65% of the Union’s annual consumption of any raw material.

    But diversifying supply is complex when refineries of many essential materials are monopolised by one or more global powers. China dominates the refining market for many critical raw materials.

    Russia’s invasion of Ukraine and the ensuing energy crisis has shown the acute dangers of over-reliance for supplies of raw materials. China’s increasingly antagonistic stance and the political instability in many African countries have also served as reminders of the fragility of the EU’s trading relationships.

    A spiralling global demand

    The demand for raw materials is growing steeply, as developed countries race to digitalise and decarbonise their economies. This can only happen with sufficient supply of raw materials, meaning countries must scale up extracting, refining and recycling operations.

    The global demand for lithium, for example, is set to increase a staggering 89-fold by 2050, according to the European Commission. Demand for gallium will multiply 17-fold during the same time.

    The Critical Raw Materials Act sets targets for the Union to extract 10%, process 40% and recycle 15% of its annual consumption of raw materials by 2030.

    To meet these targets and compete on the global stage, European Commission President Ursula von der Leyen has said the EU needs to speed up investments in research and development, recognising that the bloc’s global share of R&D expenditure has fallen 10% in the last 20 years.