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Chinese Ga, Ge controls could squeeze US supply

New Chinese export controls could hamper US supplies of gallium (Ga) and germanium (Ge), trickling down to semiconductor, electronics and defense industries.

China announced plans on 3 July to impose export controls on the two metals, requiring licensing procedures with provincial governments to export freely.

The US could be among a handful of countries impacted by any possible supply squeeze because of limited options for alternative supplies.

Germanium is a key component in infrared, fiber optics and high-end semiconductors, while the US primarily relies on gallium in gallium-arsenide and gallium-nitride for semiconductor components.

Germanium

The US imported just over 10 metric tonnes (t) of germanium, both metals and oxides, in January-May, up 21pc from the same period last year, according to customs data.

China accounted for just under three-quarters of this volume followed distantly by Belgium and Germany with a combined 24pc share.

The US does have some North American supplies on which to draw in China's absence. Canadian miner Teck Resources refines zinc ores, producing germanium dioxide as a byproduct, at its Trail refinery in British Columbia. These ores are mined at the company's Red Dog mine in Alaska.

The company does not publicly report on its germanium production from Trail, but its zinc throughput, likely directly correlated to germanium, fell by 11pc from the prior year to 249,000t in 2022.

Additionally, Dutch zinc producer Nyrstar operates the only primary zinc facility in the US at its Clarksville, Tennessee, plant, according to a company website. The plant — supplied by ores from Nyrstar's two Tennessee mines — recovers germanium concentrates.

Still, Tennessee enacted a law in April 2022 supporting a recovery plant in Clarksville capable of producing 40t and 30t of germanium and gallium, respectively. The bill requested US government support to move ahead with the proposed $90mn project, but the US has yet to announce any planned spend.

The US can also source some germanium from scrap. Optical device manufacturers typically recycle as new scrap in excess of 60pc of the germanium used for production, according to the US Geological Survey (USGS). Old scrap can also be recovered from windows in decommissioned tanks and military vehicles.

Although it is unclear how much germanium scrap the US generates annually, the US Defense Logistics Agency (DLA), the organization responsible for securing strategic materials, had 6,910kg by gross weight of scrap stockpiled as of 30 September 2022.

The DLA also had 14t of germanium metal but had planned to sell 5t of that metal in the year ending 30 September 2023 in its annual materials plan from October 2022.

The agency in June 2022 also began a program with an unnamed contractor to recycle spent infrared equipment, primarily from its Tobyhanna depot in Pennsylvania. The program is estimated to be able to generate 2.2-3 t/yr of recycled germanium, the Department of Defense said at the time.

Gallium

Although entirely reliant on imports for its primary supplies of gallium, the US imports far more intermediary gallium products — chiefly gallium-based wafers.

Wafers are thinly sliced semiconductors and serve as substrates for integrated circuits. The US imported nearly 424t of doped and undoped gallium-arsenide wafers in 2022, according to customs data, compared to just 11.3t of unwrought gallium.

China accounted for just 7pc of the gallium-arsenide volumes, but if other partner countries such as Finland, which supplied over 56pc of total wafer volumes, experience supply cuts for gallium then wafer supplies would ultimately tighten as well.

Gallium is mainly produced as a byproduct of refining bauxite, which is the ore for aluminum.

US buyers and sellers of gallium and germanium expect some spike in buying and stocking ahead of August but so far are not overly concerned.

Some expect any curtailment of flows to take time as the Chinese government avoids sharply cutting exports amid a generally slow macroeconomic environment.

"I have had all my customers reach out to me," one trader said. "[There is] a little bit of concern and panic, but for the moment nothing has changed."

As a result, suppliers are waiting to see how many permits are issued and to whom they are issued before drawing conclusions about the severity of supply drops.

By Zach Schumacher and Andrew Saucer

Learn about Argus Non-Ferrous Markets service below and view a sample report.

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