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China’s recent move to limit the export of two minerals crucial for semiconductors, solar panels, and missile systems serves as a significant reminder of its strong control over global mineral resources. This action also serves as a warning, indicating China’s readiness to utilize these resources as part of its growing competition and tensions with the United States.
China holds a significant position in the global supply chain for essential minerals used in electric vehicles (EVs) and renewable energy. Approximately two-thirds of the world’s lithium and cobalt, vital for EV batteries, undergo processing in China. The country is also a major source, accounting for nearly 60% of aluminum used in EV batteries and 80% of polysilicon found in solar panels. Additionally, China has a dominant control over rare-earth minerals used in critical technologies such as smartphone touch screens and missile-defense systems, with around 90% of their refining attributed to China, as per the International Energy Agency.
Chinese companies have a strong influence over various processing activities that occur outside of China. For example, a significant portion of the global nickel supply originates from China. Additionally, many Chinese companies have control over the refining process in other countries like Indonesia and Papua New Guinea.
Following the United States’ actions in October to restrict Chinese access to equipment utilized in the production of advanced chips, Beijing has now imposed limitations on the export of gallium and germanium. These restrictions from China are anticipated to accelerate Western initiatives aimed at finding alternative mineral sources.