Weekly News Review December 16 – December 22 2024

Critical raw material markets are far from quiet despite the upcoming holiday season. This week, industry leader China released its second export data batch, disclosing gallium and germanium shipments. Meanwhile, Rio Tinto and Sumitomo, two major internationally operating firms, made announcements regarding critical minerals.

The Strategic Metals editorial team wishes you a Happy Holiday Season.

CHINA EXPORTS MORE GALLIUM LESS GERMANIUM IN NOVEMBER:

China, the world’s leading producer, significantly increased its gallium exports in November compared to October. According to customs data, 5,500 kilograms were exported in November, a substantial rise from just 600 kilograms the previous month. In contrast, germanium exports saw a modest decline of 4.6%, totaling 1,698 kilograms.

In November, Germany and South Korea were the sole destinations for gallium exports. Meanwhile, Belgium, Germany, Russia, and the United Kingdom were the primary recipients of Germanium.

China banned all exports to the US in November citing national security reasons.

MODERNIZATION PLAN FOR CHINA’S STRATEGIC METALS INDUSTRY:

China aims to upgrade (again) and modernize its raw materials industry by 2027. This week, the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment, the Ministry of Emergency Management, and the National Committee for Standardization Management released an action plan to be implemented by various industry sectors. The goal is to achieve a qualitative improvement.

Key areas of focus include industry digitalization and environmental sustainability. New standards for handling chemical and other waste are planned.

Additionally, raw material extraction, including the mining of by-products, is set to become more environmentally friendly and efficient. Many critical raw materials, such as indium, are primarily sourced from the material streams of zinc or lead production.

According to the action plan, more than 100 sustainability-related standards will be implemented by 2027.

In recent years and decades, China has already extensively consolidated its rare earth industry, and Beijing expects further upgrades.

JAPAN SECURES RARE EARTHS FROM AUSTRALIA:

Australian mining company Victory Metals aims to cooperate with the Japanese conglomerate. Focus on particularly valuable heavy rare earths.

The Australian mining company Victory Metals Limited plans to supply the Japanese conglomerate Sumitomo Corporation with rare earths.

A non-binding Memorandum of Understanding outlines an offtake volume of 30% of the annual production from Victory’s North Stanmore Heavy Rare Earth Project. The site contains heavy rare earth elements like terbium and dysprosium, which are more challenging to extract and highly coveted. Victory describes the deposit as Australia’s largest known clay resource, where heavy rare earths are mainly mined.

Currently, such mining occurs only in southern China and neighboring Myanmar.

The agreement is set to run for five years, with an option to extend for another five. By October 31, 2025, the two parties aim to finalize a binding term sheet as a basis for the contract.

Victory’s CEO and Executive Director, Brendan Clark, stated that the partnership will strengthen Victory’s position in global rare earth supply chains and as a supplier for the energy and defense sectors. Sumitomo is a global leader in resource development, metals and minerals trading, advanced technology investment, and supply chain management.

Alongside Victory, Sumitomo collaborates with other companies in countries like the USA and Kazakhstan to broaden rare earth supply chains. However, it also maintains partnerships with China, which has dominated rare earth refining for decades.

CANADA: RIO TINTO PLANS PILOT PLANT FOR GALLIUM EXTRACTION:

Rio Tinto plans a research and development program.

Bauxite is the primary source of aluminum, but the ore also contains gallium, which is not always targeted for extraction. Rio Tinto aims to change this at its Saguenay–Lac-Saint-Jean, Canada production facility.

The mining company announced on Friday that a research and development program is underway, which could be followed by constructing a demonstration plant. This plant could produce 3.5 tons of gallium per year, and in the long term, a scaled-up refinery could reach a capacity of 40 tons. The company stated that this would account for five to ten percent of current global production.

The government of Quebec is supporting the project with up to five million US dollars. According to the US Geological Survey, gallium is already extracted from production waste in Canada and refined into high-purity gallium.

China is the leading source of primary gallium by a wide margin. Earlier this month, the country banned the export of this raw material and other metals to the United States, affecting supply through third countries as well. If Rio Tinto succeeds, this would be good news for the high-tech industry in the United States, which needs the material for computer chips, LEDs, and fast chargers.

YEAR IN REVIEW: 2024

EUROPE:

De-risking and diversification remained key in 2024, at least when securing critical raw materials. From a European perspective, the Critical Raw Materials Act (CRMA) adopted in May established a legal framework for ensuring industrial supply. It promises faster approval processes and brings hope that the urgency of this issue has made its way onto the political agenda. However, the CRMA does not provide additional funding for building domestic value chains, from extraction to processing and recycling.

Instead, this responsibility is left to individual EU states, such as France, Italy, and Germany, which have set up raw materials funds. The German government has allocated one billion euros for this purpose, with budgets ranging from 50 to 150 million euros per project, provided they are approved by the Kreditanstalt für Wiederaufbau (KfW).

A set of non-energy, non-agricultural raw materials are considered critical due to their high economic importance and exposure to high supply risk, often caused by a high concentration of supply from a few third countries. Given the key role of many such critical raw materials in realizing the green and digital transitions and their use for defense and aerospace applications, demand will likely increase exponentially in the coming decades.

Introduction of the regulation EU-2024/1252 (Critical Raw Materials Act):

Another key element in raw material sovereignty is partnerships with countries rich in natural resources. In response to the call by EU Commission President Ursula von der Leyen in her 2022 State of the Union address, not only Germany but also France and the EU itself have taken action. The free trade agreement between the EU and the Mercosur countries, finalized in the last weeks of the year, also holds the potential to advance resource security. This includes future raw material superpowers like Argentina and Brazil, although the opposition from France and Italy may still jeopardize the preliminary agreement.

However, European states are not alone in this pursuit. High-tech hubs around the Pacific are also securing access to essential resources, including Japan, South Korea, and the United States.

CHINA:

Of course, the often unspoken yet targeted recipient of efforts aimed at greater autonomy is not inactive. The expansion of the ‘New Silk Road,’ a colossal infrastructure and resource project, continues to progress. The inauguration of a cargo port in Peru in the fall demonstrated Beijing’s logistical ambitions in South America. Media coverage was impactful, though not groundbreaking when highlighting the ownership of China’s resource wealth, infrequent earth: it belongs to the state.

This awareness of China’s market power, both domestically and globally, was further underscored by Beijing’s export restrictions. While restrictions on gallium and Germanium marked their first anniversary in the summer of 2024, they were tightened in December. The US was explicitly cut off from gallium, Germanium, and antimony exports for the first time.

Industry experts agree that the reason lies in the US’s attempt to isolate China from access to the most advanced computer chips. This chip war has been simmering since October 2022 and continues to evolve with new developments.

“Rare earth resources belong to the state, and no organization or individual may occupy or destroy rare earth resources.”

Order of the State Council of the People’s Republic of China No. 785

UNITED STATES:

No easing is expected next year, as even the incoming US president, Donald Trump, has announced a tough stance against China, including high tariffs. Even before his inauguration in January 2025, the current administration implemented new tariffs on a range of Chinese materials and minerals, such as tungsten. Additionally, there are reports that a reduction in subsidies for electric mobility is planned.

You see these empty, old, beautiful steel mills and factories that are falling down. We’re going to bring the companies back, lower taxes for companies that make their products in the USA, and protect those companies with strong tariffs.

President-elect of the United States, Donald Trump:

Throughout this year, tariffs have repeatedly been used as a regulatory tool, including by the EU. Since July, preliminary tariffs have been imposed on electric cars from China, which were made definitive in October.

The measure was justified by the extensive subsidies provided by the Chinese government, which enabled manufacturers like BYD to offer their vehicles at significantly lower prices than Western companies. The European Commission has also launched investigations into state aid from Beijing for wind turbines and solar panels.

Given the growing polarization between East and West, will countries with close ties to both sides or those recalibrating their relationships with the US or China benefit? In addition to India, which is also seeking secure raw material sources for its emerging economy, Saudi Arabia is positioning itself as a key player.

The country aims to diversify its economy away from oil wealth, and in developing its mineral resources, it is turning to Western partners like Australia. At the same time, the US ally has recently been seeking closer ties with China. Countries like Brazil also position themselves as suppliers of critical raw materials.

The field of participants in the race for resource security is steadily growing, but in the long run, there is no way around China.