Rattled by China, West scrambles to rejig critical minerals supply chains

But new mines can take years to develop, leaving players like Henkel scrambling to find alternatives, which are often more costly.

“Please note that we are in close contact with our suppliers and using all commercially reasonable means to leverage our global supply chain to address this situation and support our customers,” Henkel also wrote in the letter.

Meanwhile, some Western miners and processors have started to build up capacity.

United States Antimony (USAC) (UAMY), the only North American processor of the metal, made plans to lift output at its Montana smelter, which was running at 50% of capacity after China announced curbs on antimony exports in August.

“Our decision to ramp up production was predominantly triggered by the more than tripling of worldwide Rotterdam antimony prices,” the company’s chairman, Gary Evans, told Reuters.

China’s restrictions “created significantly more demand for our finished products,” he added.

Mining at the Montana site was halted in 1983, when it was cheaper to source antimony from mines outside the United States, and environmental curbs now prevent extraction there, according to the company.

USAC, which does not rely on China, is in talks to receive the material from four other countries and one domestic supplier as early as December, Evans said, declining to name them for competitive reasons.

Orders at Ottawa-based Northern Graphite, which touts itself as North America’s only producer of natural flake graphite, jumped 50% in the aftermath of China’s graphite curbs announced in October 2023, CEO Hugues Jacquemin told Reuters.

“When the export controls came into effect in December last year, there was quite a surge in demand. We started ramping up capacity,” said Jacquemin, whose firm is developing projects in Namibia and Ontario to add to its mine in Lac des Iles, Quebec.

China accounts for over 70% of supply of both natural mined graphite and its synthetic variety.

Mark Jensen, CEO of ReElement Technologies, an arm of American Resources (AREC) that specialises in recycling and refining rare earths, said China’s most recent export ban means the company has this week fielded at least 10 calls from U.S. miners offering zinc ore, which can be a source of germanium during processing.

Those shipments had previously gone to China for processing given lower labour cost and different environmental standards, he said.

“We have been reaching out to U.S. suppliers of these feedstock to sell these byproducts to us instead of sending it to China as we are now an alternative to China,” Jensen told Reuters.

Canadian miner Teck Resources, which produces germanium as a byproduct at its Red Dog zinc mine in Alaska and is the only supplier of the metal in North America, told Reuters it was studying whether to boost output of the critical material there now that China has blocked exports to the United States.

Disrupted markets

China’s export squeeze has triggered a surge in prices for many strategic minerals.

Gallium sold outside of China was 30% to 40% more expensive than in the People’s Republic in the first half of 2024 from a year before, according to Toronto-based Neo Performance Materials (N14.F), which produces gallium by recycling manufacturing scrap, said in August.

In China, the restrictions have forced some weaker players out of the market, traders and analysts told Reuters.

Two Chinese germanium traders told Reuters they had given up on exports as they were unable to secure licenses either because overseas clients were unwilling to provide specific details on end-users or because they are from the United States.

Even before Beijing’s latest curbs singling out the United States, no Chinese germanium or gallium was shipped there this year through October, Chinese customs data show. Over the same period in 2023, the U.S. ranked as the fourth- and fifth-largest export market for the minerals.

For end-users, China’s restrictions underscore the importance of supply diversification.

“When you de-risk, you need to de-risk with different levers,” said Maxime Picat, chief purchasing officer at automaker Stellantis (STLA). “If you are a one-solution company, knowing that your battery suppliers are all Chinese or all Korean, then you are at risk.”

(Reporting by Amy Lv in Beijing, Divya Rajagopal in Toronto, Ernest Scheyder in London and Alessandro Parodi in Gdansk; Additional reporting by Giulio Piovaccari in Milan and Sabine Siebold in Berlin; Editing by Tony Munroe, Veronica Brown and Lisa Jucca)