This week, China announced a ban on exports of certain rare minerals to the United States – threatening to shake up tech manufacturing operations stateside.
It’s the latest escalation in tensions between the superpowers, and comes after the Biden administration this week announced new export restrictions on chips to China.
Gabe Collins is the Baker Botts Fellow in Energy and Environmental Regulatory Affairs at Rice University’s Baker Institute for Public Policy. He joined Texas Standard to talk about what’s behind the move and how it could affect global supply chains. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: What do we know so far about this export ban by China?
Gabe Collins: It appears to be a response, as you alluded to earlier, to the United States continuing to tighten down export restrictions on certain types of semiconductors and associated technologies to China.
And what minerals are involved here? What are they typically used for?
So the minerals that have been explicitly named are gallium, germanium, antimony and also there was a reference in the Chinese release discussing this to super-hard materials, and it was left a little bit vague. There’s a good chance that means tungsten, for which China is among the world’s largest producers.
And basically gallium and germanium tend to be used in various types of high tech applications. You know, everything from weapon seekers to all different types of civilian uses. Antimony is used for making flame retardant, and it’s also used to harden certain types of alloys. For instance, if you’re making ammunition, you can add a little bit to your head to make it harder.
Tungsten is very useful for both the civilian and military economies. On the civilian side, all different types of machine tools and cutting tools will often use tungsten carbide inserts because it’s extremely hard and tough and temperature resistant. You can cut other metals with it. And then in terms of military applications: armor piercing ammunition, and also it’s often used to make armor plates.
And so all of these, they’re not super high-volume materials, but they’re very, very important.
I guess that maybe the way that listeners could think about it is their industrial vitamins. A living organism doesn’t need a huge quantity of vitamins, but if it’s deprived of those vitamins over time and can’t find substitutes, its health suffers. And I think it’s a reasonable analogy for thinking about the situation that we’re facing now.
Texas, where we have a lot of chip manufacturing, do we expect this to be a disruption if it goes forth and continues for a while?
So it’s a little tough to give a concrete answer because I don’t know what kind of inventories are currently held in the various tech supply chains that use these minerals.
One thing to give a little bit of perspective is when you think about the actual volumes of these that are used, like if you’re thinking about gallium, the United States probably consumes around 20 tons per year. That’s basically an amount of metal that you can literally move in a single shipping container if you did it all at once.
Antimony is larger. It’s something that’s probably closer to 18,000 tons a year maybe, which would be, you know, hundreds of containers.
But the point with this is one of the things I think that people under appreciate so far is like if you look at the U.S. export controls directed toward China, the restrictions we put on various types of advanced semiconductors, we’ve seen this burgeoning smuggling economy emerge where everything from people flying through Singapore with NVIDIA chips in their suitcase headed back to China to all kinds of other covert channels – licit or illicit.
What I think may happen if China continues down this path of restricting some of these mineral exports is given that these are often low-volume, very high unit value items is we’ll start seeing some of these smuggling channels flowing to ways where we’ll still see leakage of tech goods into China most likely. But we may also increasingly see leakage through various channels of minerals out to consumers that the Chinese government doesn’t want to go into because, you know, they may end up being willing to pay two, three, four times the price.
