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Only weeks before a planned November summit between Chinese President Xi Jinping and his U.S. counterpart, U.S. President Joe Biden, China’s commerce department has announced a new set of critical mineral export restrictions against what Nikkei Asia refers to as “a backdrop of domestic calls for a response to stricter limits on U.S. semiconductor exports to China.”

According to Nikkei, as part of the new restrictions, which will be in place until the end of October of 2025, the commerce department has added rare earths, including compounds and alloys to its “list of mineral resources and other items requiring disclosure of information such as material type and export destinations.”

The move ties into an overall context of export controls are gaining in popularity as the global race for resources heats up. India joined the ranks of countries considering export restrictions this August, and Kenya made similar headlines in October.  Zimbabwe banned lithium ore exports last December, and Namibia recently banned the export of unprocessed lithium and other critical minerals.

All these announcement tie into a larger trend, which has been noticeable particularly in Latin America, a region with a historic penchant for nationalism, but also elsewhere. ARPN has featured recent nationalist moves in Chile, Mexico and Bolivia, as well as in Myanmar, Indonesia, and China, and has showcased that even in the Western world, government involvement in the critical minerals sector is on the rise.

Of course, in light of Beijing’s dominating role in critical mineral supply chains and the current state of global affairs, China’s announcements relating to critical mineral export restrictions are not only highly consequential for U.S. domestic industry stakeholders, but must also be viewed through the prism of geopolitics, and as such U.S. national and economic security.

As Nikkei outlines, the U.S. has in recent years worked with Western allies to tighten exports of top-end semiconductors and chipmaking equipment to China, prompting Beijing to respond by considering banning “exports of manufacturing technology for high-performance magnets and other products that use rare earths” at the end of 2022.

Earlier this summer, China announced export restrictions on gallium and germanium, followed by controls on certain drones and drone-related equipment.  On October 20th, Beijing tightened the export control ratchet further – this time by announcing that to protect national security, the country require export permits for certain graphite products – a move analysts see as a play “to control supplies of critical minerals in response to challenges over its global manufacturing dominance.”

From a functional perspective, Chinese restrictions now extend to three of the key tech building blocs of the 21^st century:

-       Semiconductors (gallium/germanium)

-       Lithium-ion battery technology (graphite)

-       Permanent magnets (REEs)

As geopolitical tensions soar, this may not be the end of it. As ARPN stated before:

“As China ratchets up its export control regime (…) U.S. stakeholders would be well-advised to kick their efforts to bolster U.S. critical mineral supply chains into high gear.   For China – a ‘country of concern’ as per an August 9, 2023 Executive Order - it may be a short step from export controls to export embargoes.”

Trade policy in an integrated global economy can take some unexpected twists and turns.  Today’s post highlights returns to one development under discussion that could lead to a result diametrically opposed to the original intent, in this case, of the U.S. Congress and Biden Administration.

Earlier this month, in a letter to Biden Administration officials, U.S. Senators registered their concerns regarding media reports of a potential “limited free trade” agreement between the United States and Indonesia – sometimes dubbed the “nickel capital of the world” — on critical minerals in the context of the Administration’s effort to expand the number of countries to qualify for the tax credits afforded under the recently enacted Inflation Reduction Act (IRA).

Senators argued that forging ahead with negotiations with Indonesia without having developed a comprehensive accounting of domestic sourcing options, and the opportunities from countries with which the U.S. already has trade agreements, would “undermine the intent of Congress and undermine the jobs and futures of our workers.” (See ARPN’s earlier post on the issue here) 

But that’s not all.  Now a news story from Asian media examines whether such a pact might actually provide U.S. taxpayer-funded subsidies that would benefit Chinese mining companies.  For a U.S. law meant to encourage U.S. resource development and reduce foreign resource dependence not least on China, it’s an unintended consequence, to say the least.

As Nikkei Asia picks up the story, the senators’ opposition is throwing “a wrench int the Biden Administration’s plans to host [Indonesian] President Joko Widodo at the White House this month, to coincide with the Indonesian leader’s attendance at the Asia-Pacific Economic summit in San Francisco.”

Nikkei cites North American mining industry representative Todd Malan who points out that “[t]he idea behind the IRA was that free trade agreement countries have high standards and was a proxy for saying ‘let’s build up a supply chain outside of China and to do it with allies that have free-trade agreements,” adding that “The point of the letter is to say that giving a free trade agreement to Indonesia is just a backdoor for Chinese companies and that U.S. taxpayers should not be giving a subsidy to Chinese miners in Indonesia.” 

Indeed, Chinese companies are heavily invested in the country. Benefiting from long-standing relationships with Indonesia, they have “poured upwards of $14 billion into two ore-rich islands to lock in supplies for battery production,” according to Bloomberg reports.

Malan is chief external affairs officer at Talon Metals, a mining company focused on advancing U.S. domestic nickel projects which have been awarded federal funding in recent months – along with several other domestic projects for other battery and defense criticals. (See ARPN’s  recent coverage here and here)

All of which underscores, as ARPN has previously pointed out, that “Critical Mineral resource development can begin at home, where political risk is low and environmental, labor and mine safety standards are high” – principles that should guide stakeholders when it comes to sourcing nickel and other Criticals, particularly as geopolitical tensions surge across the globe. 

In keeping with its known penchant for weaponizing trade, Beijing is tightening its export control ratchet again this week. Now in the Tech War crosshairs:  Graphite. According to Reuters, China announced today that to protect national security, it will require export permits for certain graphite products – a move analysts see as a play “to control supplies of critical [...]

As Western nations continue their push to reduce their over-reliance on China for their critical mineral needs, some of the key players, including the United States and the European Union, have increasingly turned their eyes on Africa, a continent that is home to an estimated 20% of the metals and minerals required in EV battery [...]

At ARPN, we have long highlighted the importance of geopolitics in mineral resource policy.  Recent supply chain shocks, growing trade tensions and ever-increasing critical mineral needs have brought the geopolitical challenges associated countries’ and stakeholders’ efforts to build resilient and diversified supply chains into focus. A new piece by the Office of Applied Innovation at Goldman Sachs illustrates [...]

Against the backdrop of surging demand in the context of the green energy transition and rising geopolitical tensions, India recently stepped up its critical mineral resource policy game. Along with releasing a comprehensive Critical Minerals List, consisting of 30 metals and minerals considered critical for India’s clean technology goals, the country’s government announced its joining of [...]

Late last month, China announced a new set of export controls — this one on certain drones and drone-related equipment — to “safeguard national security interests.” According to Reuters, the export restrictions on equipment will enter into effect on September 1. The move follows on the heels of recently-announced export restrictions on gallium and germanium, which are [...]

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 [...]

Earlier this week, China placed export restrictions on gallium and germanium – key components of semiconductor, defense and solar technologies.  The unspecified restrictions are set to take effect on August 1, 2023. Beijing’s move is considered a “show of force ahead of economic talks between two rivals that increasingly set trade rules to achieve technological dominance,” according to the Wall Street [...]

Against the backdrop the accelerating global push toward net zero carbon emissions and escalating tensions, worries about strategic vulnerabilities and the specter of supply chain disruptions have prompted the United States and its allies to forge new alliances designed to bolster supply chain security – and, to the extent possible, decouple their critical mineral supply [...]