Beijing’s recent decision to impose export restrictions on gallium and germanium – key components of semiconductor, defense and solar technologies — has ruffled feathers around the world and, as ARPN noted, ratchets up the weaponization of trade in the context of the Tech Wars between China and the West.
While some chipmakers have played down fears of shortages, former Chinese Vice Commerce Minister Wei Jianguo’s comments to the China Daily newspaper “that countries should brace for more should they continue to pressure China, describing the controls as a ‘well-thought-out heavy punch’ and ‘just a start,’” have prompted fears that more export curbs on critical materials, including on rare earths could be on the menu.
With China controlling roughly 90 percent of the global refined output of rare earths, and the specter of more Chinese export controls looming large, analysts suggest that the United States and its partners must kick their efforts to reduce their reliance on Chinese into high gear.
According to Goldman Sachs analysts, “China is the source of more than 70 percent of the world’s [neodymium and praseodymium] and accounts for over 90 percent of the downstream metal and magnet segment.”
To replicate China’s annual output of 50,000 tons, the West would have to invest anywhere between $15 billion and $30 billion, Goldman says.
The Goldman analysis brings into focus the immense challenges associated with decoupling from China — most notably perhaps permitting:
The analysts note that while demand for NdPr could exceed supply from 2028 onward in light of surging demand in the EV and wind turbine segment, “out of more than 20 projects outside China that could produce some 20,000 tons of NdPr annually, (…) only two to three of these projects can get off the ground this decade.”
Both the United States and the European Union have resolved to make permitting reform a key priority. In the U.S. Senate Majority Leader Chuck Schumer (D-N.Y.) just told his colleagues that the push would be a focus in the weeks leading up to the August recess, while the European Union’s recently released Critical Raw Materials Act (CRMA) calls for streamlining the permitting process for raw materials projects.
However, as followers of ARPN well know, all affirmations of a desire to strengthen domestic supply chains aside, the perennial not-in-my-backyard (NIMBY) sentiment is still strong – not just in the United States, but also in Europe.
Meanwhile, the urgency for reform cannot be overstated, as Beijing will not slow down its global quest for resource dominance, and the critical minerals arms race in the context of the Tech Wars will continue to heat up.