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China Allows Export Of Small Amounts Of Critical Minerals

Back in July, China announced export restrictions of germanium, gallium and their chemical compounds used to make parts for chips, telecommunications equipment and electric vehicles. Graphite, a key material for EV batteries, is also set to come under export controls on Dec. 1. Although Beijing has claimed that the export ban of these critical minerals was done on national security grounds, observers have cried foul play and claim China has just escalated its tit-for-tat trade war with the U.S. and Europe. 

After a two-month hiatus, China has now resumed export of the minerals, albeit half-heartedly. Chinese traders looking to export germanium and gallium are now required to apply for licenses from the government and also provide information on the identity of their customers and how the minerals are used. Chinese traders exported small quantities of germanium and gallium in October after exporting almost nothing in the preceding two months. Just 0.65 tons of germanium was exported in  October compared to 8.78 tons in July while the numbers for gallium were  0.25 tons vs. 7.58 tons. China exported 44 tons of germanium and 94 tons of gallium in 2022.

It's likely that there will be some improvement in strained relations between the two countries after presidents Xi Jinping and Joe Biden met in San Francisco last week. However, investors should not expect too many concessions from China given that the U.S. and the EU have not relaxed trade restrictions on specialized semiconductor chips and solar equipment on China. Last month, the U.S. Department of Commerce announced that it will prevent the sale of some advanced artificial intelligence (AI) chips to China over concerns they could be used for military development purposes. To wit, companies will not be allowed to export chipmaker Nvidia 's A800 and H800 chips to China. Related: China's Global Economic Dominance Begins to Wane

In July, the United States' Senate overwhelmingly passed an amendment to the annual defense bill that prohibits China from purchasing oil from the United States' emergency stockpiles. The amendment aims to restrict sales of U.S. oil from the Strategic Petroleum Reserve (SPR) to companies under the control of the Chinese Communist Party. 

Nordic Countries Could Be The Answer 

The U.S.' unenviable position of utter dependence on China's rare earth minerals is in full glare now. China accounted for 70% of world mine production of rare earths in 2022, with the U.S. importing nearly three quarters of its rare earth supply from the Middle Kingdom. That leaves the country in a particularly precarious position as has become abundantly clear.

Luckily for the country and its western allies, there's a way out. The Nordic countries, particularly Greenland, Norway, Sweden, and Finland, are rich in cobalt, nickel, lithium, graphite and a variety of rare earth elements (REEs) which remain largely unexploited. According to the Nordic Council of Ministers, the Nordic bedrock hosts over 43 million tons of economically viable deposits of rare earth minerals. According to Bloomberg New Energy Finance, Finland, Sweden, and Norway are among the top eight countries highly favorable for critical minerals and battery supply chain development. Further, Nordic governments have a history of commitment to sustainable mining practices, making them ideal for western industries looking for responsibly sourced minerals away from China.

The U.S. and its allies have already laid the groundwork that makes establishing future supply deals possible. In June 2022, the United States and its G7 partners launched the Partnership for Global Infrastructure and Investment (PGII) that is intended to build clean energy supply chains by friendshoring clean energy supply chains. The countries also signed the Minerals Security Partnership to produce, process, and recycle critical minerals. In January 2023, European Commission President Ursula von der Leyen announced that a key element of the bloc's new industrial strategy will be forging global partnerships to access inputs necessary for industry. This builds on existing EU initiatives, including the Critical Raw Materials Act and the European Battery Alliance, both of which aim to secure and onshore supply chains.

All these initiatives mark the emergence of a "joint industrial policy" whereby the G7 states aim to coordinate their industrial strategies at the international level and also build their supply chains collaboratively. This, in effect, means these countries will be working together to secure supplies of needed technologies and create markets in pursuit of net-zero industries in their individual countries. 

It's not such a long shot: Studies done by the Net Zero Industrial Policy Lab at Johns Hopkins University have concluded that democratic countries have the potential to produce enough minerals to enable the world to limit global warming to not more than 1.5 °C above pre-industrial levels. However, the same studies say that it would require extraordinary technological and financial cooperation between these countries if they are to successfully exploit these resources.

By Alex Kimani for

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Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for  More