China's New Export Restrictions Highlight Supply Chain Issues for Critical Minerals

Highlights

• China cuts exports of key minerals, including gallium, germanium, and antimony, amid ongoing trade tensions.
• Geopolitical pressures and declining resources compound the supply chain challenges for these critical minerals.
• Australian companies, including Felix Gold (FXG), position themselves to provide strategic solutions to the US market.

This week, China introduced new export restrictions targeting the United States, impacting the critical minerals gallium, germanium, and antimony. The move follows earlier restrictions on antimony, gallium, and graphite, reflecting ongoing concerns over national security as trade tensions with the US continue to escalate. With these recent actions, Beijing has raised alarm about the potential disruption of supply chains for minerals crucial to industries ranging from defense to technology.

The minerals in question have diverse and vital applications. Gallium and germanium are essential in semiconductor production, while germanium also plays a role in infrared technology, solar cells, and fiber optic cables. Antimony, on the other hand, is used in military applications such as missiles, night vision goggles, and flame retardants. Antimony is also key for nuclear weapon systems. As demand for these minerals increases, concerns are growing that China might extend its restrictions to other critical minerals, including nickel and cobalt, which are widely used in a variety of industries.

For many resource companies, these developments represent both a challenge and an opportunity. Some players in the Australian market are looking to capitalize on these supply chain disruptions, particularly those with projects in the US. Felix Gold (ASX:FXG), for example, is focusing on its operations in Alaska, where it controls several projects, including the Treasure Creek project, which hosts the historic Scrafford antimony mine. This mine once produced antimony at some of the highest grades ever recorded, positioning the company as a potential key supplier of this military-critical mineral.

Felix Gold's executive director, Joe Webb, emphasized that the supply chain issues are not solely a response to geopolitical posturing. According to Webb, the antimony supply problem is rooted in the depletion of resources and declining production, which cannot meet growing demand. "There’s a fundamental issue with the supply chain of antimony at the moment," Webb explained, noting that China's export restrictions are partly due to its own struggles with maintaining a stable supply of the mineral.

The US has already taken steps to address supply chain vulnerabilities, with over US$370 billion allocated to bolster domestic production through the Inflation Reduction Act and the Defense Stockpiling Act. According to Webb, these legislative actions underscore the long-term concerns about supply security for critical minerals such as antimony, even before the recent export restrictions from China.

Felix Gold is positioning itself to provide a solution to the US’s growing demand for domestic sources of critical minerals. The company plans to enter production by the end of next year, focusing on antimony and gold at its Alaska projects. Webb is confident that Felix Gold’s projects, with their strategic location and existing infrastructure, make it well-positioned to meet the US’s needs for these critical minerals.

The Australian stock market is also seeing increased interest in companies focused on antimony production. In 2024, there are now approximately 40 companies on the Australian Stock Exchange (ASX) involved in antimony exploration and development, a significant increase from previous years. Other companies, such as Larvotto Resources (ASX:LRV) and Trigg Minerals (ASX:TMG), are actively exploring high-grade antimony deposits, adding to the growing momentum in the sector.

As geopolitical pressures and resource depletion continue to strain the global supply of critical minerals, Australian companies are well-positioned to play a key role in securing supply chains, particularly for the US market, which faces increasing demand for these essential materials.