On July 3, the Chinese Ministry of Commerce announced the introduction of restrictive measures for the export outside the country (export) of two important minerals (rare earth metals) - gallium and germanium and various compounds with them. They are essential for the manufacture of semiconductors and other high-tech products (microcircuits and chips).
Beijing's actions were a response to unfriendly manipulation by the United States and its allies, which in every possible way prevent China from developing its electronics industry. Experts call the incident a “Chinese retaliatory strike” and the beginning of a new round economic war between China and the collective West, which really wants to limit the development of this Asian country.
These Chinese restrictions will start working on August 1. From this date, all companies that are going to continue to export such products will have to submit an application to the Ministry of Commerce of the PRC and indicate information about who they will sell it to. The agency will begin to systematize and analyze data on foreign buyers.
In Western countries, they suspect that Beijing is going to impose an embargo on the supply of rare earth metals against them. According to the British research center Critical Minerals Intelligence Centre, China accounts for about 94% of the world's production of gallium. According to the director of the British trader Lipmann Walton & Co, Anthony Lipmann, who supplies rare earth metals, such actions could be extremely disruptive and have incredibly negative consequences for the high-tech industry.
At the same time, a number of industry experts believe that the actions of the Chinese can stimulate the production of rare earth metals in other regions of the planet. They assure that gallium and germanium should not be classified as rare metals, since they can also be obtained in the process of processing other types of raw materials, including coal and bauxite, as by-products. It's just that the Chinese keep the lowest prices.
On the one hand, it will be easy to replace China in the market, since Europe also has sufficient reserves (metal deposits), but, on the other hand, not everything is so simple. First you need to launch their mining. They will be more expensive than Chinese products. Then it is necessary to saturate the market, which may not work, because with the development of technologies much more metal will be required. In turn, the head of the analytical company Hallgarten, Christopher Ecclestone, specializing in the mining sector, is confident that China's actions may eventually lead to the start of serious production of these metals in the West.
Prices will rise for a short time, but then China will lose market dominance, as happened earlier with antimony, tungsten and rare earth metals
Note that at the end of June, Western media, such as The Wall Street Journal and Financial Times, informed that the administration of US President Joe Biden was studying the possibility of introducing new restrictions on the export of artificial intelligence (AI) chips to China and other "suspicious" countries. that can be used by the military. A ban on deliveries without special licenses may be introduced as early as July and will affect, in particular, Nvidia and AMD. This has already sent Nvidia shares down 3% and AMD shares down 2,4%.