Backlash against behavior of Western countries
The Chinese Ministry of Commerce has decided to restrict the export of the industrial metals gallium and germanium from August. In the future, a license will be required for export abroad. This measure is said to protect national security and interests.
Gallium and germanium are needed in the semiconductor, telecommunications and electric vehicle industries. China is the world’s largest producer of these metals.
The new export requirement followed the decision by many Western countries to reduce their dependence on the Chinese market while still keeping China as a partner. In addition, there is the restriction of the USA to exclude the People’s Republic from the supply of semiconductors. The reason for this is considered to be that China is using its economic power to exert political pressure.
Consequences for Germany
Almost the entire share of gallium and germanium traded worldwide comes from China. The restrictions could lead to bottlenecks and drive up prices for these metals, which in turn could make it more difficult to implement green technologies in the EU.
Although gallium and germanium are not rare metals, processing costs are high. This has led many manufacturers in other countries to give up because they could not compete on price with Chinese suppliers, including Germany.
So far, Chancellor Olaf Scholz does not classify the regulation as an export restriction. However, Robert Hack, Germany’s economics minister, warns that the requirement could be extended to other metals.
According to a manager of a Chinese producer of germanium, several international customers have already requested a large quantity of the raw material by August. These fear that the processing time for export applications will be too long from September.
While the West would like to expand its raw material supply chain to several countries, it would need at least ten years to do so, he said.
If China reduces exports because of the new export rules, opportunities could open up for competitors from other countries. In addition, recycling of raw materials could become more important.