China has upped the ante in the trade war with the U.S. by imposing stringent export restrictions on critical minerals essential to U.S. semiconductor and defense industries.
Following the U.S. Department of Commerce’s announcement earlier this month of additional export restrictions and rules designed to “further impair [China’s] capability to produce advanced-node semiconductors that can be used in the next generation of advanced weapon systems and in artificial intelligence (AI) and advanced computing,” Beijing was quick to respond tit-for-tat.
The Chinese Commerce Ministry promptly announced it is banning exports to the U.S. of three high-tech materials with military applications, including antimony, gallium and germanium. In each case, China is the dominant global producer, refiner, and exporter of these critical minerals. The U.S. has no active domestic source of any of them, and essentially no production capacity (other than some old but working smelters for reclaimed antimony).
Each mineral is critical to the U.S. economy and its tech and defense industries in particular. Antimony is a metalloid used in a wide range of applications, including car batteries, flame retardants, nuclear weapons production, and other weapon systems and military applications including bullets and explosives. Gallium is used in semiconductors, LEDs, thermometers and solar panels, while germanium is used as a semiconductor in many electronic devices and transistors, along with infrared optics and in production of solar cells and LEDs.
The U.S. is counting on being able to source and process these critical minerals onshore, or at least near-shore. This may prove to be difficult. While germanium may be more easily brought online in the U.S. (some limited production was restarted last year), gallium and antimony sourcing and production may be more challenging and require more time to onshore. According to the U.S. Geological Survey, the U.S. has no stockpile of gallium, and China produces an estimated 98.4 percent of the global total. As fears of further restrictions mount, gallium prices have risen over 56 percent in the past two months in China.
Antimony provides another challenge, but also an interesting opportunity for the U.S., where manufacturing demand exceeds 50 million pounds each year. China controls the supply chain and nearly half of global refining. No antimony has been mined in the U.S. for decades. Only 18 percent of U.S. demand is supplied domestically, and that is from recycled car batteries. Before China’s ban, the U.S. received 63 percent of its imports from China. Anticipating the ban, antimony prices have risen 230 percent on global markets since 2023.
The U.S. has only three percent of known global antimony reserves, and all of that is one location. While exploration is taking place in Alaska and elsewhere in the hopes of identifying other resources, for the moment, domestic antimony mining is a one-horse race. Perpetua Resources states its Stibnite Gold project has an antimony reserve of 148 million pounds, enough to supply 35 percent of U.S. demand. During World War II, the Stibnite, Idaho mine produced 90 percent of domestic antimony, and is credited with saving countless American lives protected by antimony-based fire retardants. Now, nearly a century later, the U.S. government has brought its vast resources to bear behind Perpetua and Stibnite, with a $25 million award from the Department of Defense, a potential $1.8 billion loan from the Export-Import Bank, and fast-track environmental clearance from the U.S. Forest Service, to re-develop the Stibnite mine for antimony extraction.
Only one company, U.S. Antimony Corp (USAC), has any antimony refining capacity in the U.S. To date, this has been used to refine and repurpose recycled stock. USAC and Perpetua have recently entered an agreement to test antimony sourced from Stibnite, a step presumed to lead to a longer-term relationship and formal supply agreement. Shares of both Perpetua and USAC have risen substantially in recent weeks in anticipation of further government support, and ultimately, commercial success in their partnership. As a small new shareholder in both, this author wishes them well in their endeavors.
After decades of neglect, rebuilding critical minerals mining and production in the U.S. has become a strategic priority of the U.S. government. Without it, China will have America in a death grip. The outgoing Biden and incoming Trump administrations seem to agree on this if little else. This strategic shift presents substantial opportunity for the mining industry, and for plucky investors interested in taking some start-up like risk in the national interest.
NOT INVESTMENT ADVICE