Recently approved import restrictions in China on the rare metals germanium and gallium coupled with a growing risk of future restrictions on critical metal exports have revived global efforts to find alternative supplies. As the world finally begins coming out of a semiconductor chip shortage that slowed down production and increased product prices across industries such as healthcare, consumer electronics and the automotive sector, the recent announcement underscores just how delicate the critical metal supply chain is.
China’s ascent to global economic supremacy over the past few decades has seen the Eastern Asian country take control of most of the world’s critical metal supply chain. The country’s monopoly on the worldwide rare earth metal sector is especially worrying to Western leaders because it grants China significant control over several critical industries and allows the country to forcibly exert its views and policies on the global stage.
Data shows that China currently accounts for 63% of global rare earth mining, 85% of processing and 92% of rare earth metal magnet productions. Rare earth metals such as scandium, terbium and yttrium are used to develop solar panels, wind turbines, rechargeable batteries and high-powered magnets for defense systems, making the metals essential for the economic and national defense needs of most countries.
Announced last week by China, the restrictions on two key chipmaking metals are in retaliation to efforts by the United States, the Netherlands and Japan to cripple China’s artificial intelligence and semiconductor industries. China announced that it would limit the export of six germanium products and eight gallium products to help protect its interests and national security.
Statements by a top trade advisor in China led some analysts to believe that China has just begun passing chipmaking metal restrictions and will likely restrict the export of critical metals in the future, underscoring the need for alternative suppliers. A spokesperson from the U.S. Department of Commerce noted that America needs to diversify its critical metal supply chain by “engaging with allies and partners” to build up supply chains that don’t rely on China and that will make them resilient to market factors.
Aside from China, which has 34% of the globe’s total reserves of rare earth oxide (ROE), Brazil, Russia and Vietnam each hold more than 20 million metric tons in ROE reserves while India, Australia and the U.S. have 6.9 million, 4.2 million and 2.3 million metric tons respectively in ROE reserves.
Japan, which drew nearly 100% of its rare earth supplies from China, managed to reduce its reliance on Chinese exports to only 58% by 2018 thanks to investments in Australian critical metal producer Lynas.
North American-based rare earths producers such as Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) could find themselves playing a leading role in helping to stabilize the supply of the critical metals which America and its allies need for their defense as well as automotive and new-energy industries.
NOTE TO INVESTORS: The latest news and updates relating to Ucore Rare Metals Inc. (TSX.V: UCU) (OTCQX: UURAF) are available in the company’s newsroom at http://ibn.fm/UURAF
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