China bans export of 2 critical metals: What are they and where can you find ASX-listed exposure?

Thu 06 Jul 23, 12:09pm (AEST)
Renewables - solar panels and wind turbines
Source: Shutterstock

Key Points

  • China has announced export controls for gallium and germanium, two key components for semiconductors, electric vehicles, and fiber optic cables
  • This is seen as a tit-for-tat move in the ongoing trade war between the US and China
  • Battery Age Minerals and Mount Burgess Mining might be the only ASX-listed companies with exposure to the two metals

The US and China are preparing to trade blow-for-blow in an intensifying battle for technological supremacy, spanning everything from cloud-computing to chip manufacturing.

Earlier this week, China abruptly announced export controls for gallium and germanium products – key components for semiconductors, electric vehicles, and fibre optic cables. From 1 August, exporters will need to apply for a license while also disclosing customer details and what they manufacture with those metals. 

The Biden administration is preparing its own set of countermeasures, with plans to restrict Chinese companies’ access to US cloud-computing services such as those by Amazon and Microsoft, according to the Wall Street Journal.

“Just a start” says Beijing adviser

China’s former Vice Commerce Minister Wei Jianguo said the new export controls are “just a start” and “if restrictions targeting China’s high-technology continue then countermeasures will escalate,” Reuters reported on Wednesday.

The article raised concerns that restrictions on rare earth exports could soon follow, with analysts reminding markets about the curb on shipments 12 years ago following a dispute with Japan. 

But the shift away from Chinese supply is easier said than done. Even after the rare earth warning shots from more than a decade ago, China still produces approximately 70% of the world’s mined rare earths as well as 90% of the downstream metal and magnet value chain, according to Goldman Sachs.

Back to gallium and germanium

Gallium and germanium are relatively minor metals compared to household commodities like copper, iron ore and lithium. To add some perspective, US imports of these were valued at approximately US$225 million in 2022. 

But here lies the classic problem – China accounts for approximately 94% of global gallium production, according to the UK Critical Minerals Intelligence Centre.

It’s one of those situations where nobody cares about the commodity until this happens.

Europe is expected to be the most at risk region, as it imports approximately 71% of its gallium and 45% of its germanium from China.

Where can I find ASX-listed exposure?

Gallium and germanium are such niche metals that I could only find two companies with exposure (please feel free to reach out if I’ve missed any).

Battery Age Minerals (ASX: BM8) has exposure via its 15% owned Bleiberg Zinc-Lead-Germanium Project in southern Austria. Both germanium and gallium are byproducts from processing other commodities such as zinc, lead and coal. The company’s flagship project is the Falcon Lake Lithium Project in Ontario, Canada.  

2023-07-06 11 48 03-Window
Battery Age Minerals 3-month chart (Source: Market Index)

Mount Burgess Mining (ASX: MTB) has a market cap of just $4 million and operates the Kihabe and Nxuu Zinc-Lead-Silver-Germanium deposits in Botswana.

2023-07-06 11 48 48-Window
Mount Burgess Mining 12-month chart (Source: Market Index)

For more insights about the ASX-listed gallium and germanium landscape, I spoke to Battery Age Minerals CEO, Gerard O’Donovan.

Battery Age Minerals – At the forefront of germanium exploration

Why is there next to no gallium and germanium exposure on the ASX?

“It’s not the most appealing commodity and because of that, it doesn’t get the market appreciation that it deserves. As you said yourself, you hadn’t even heard of gallium and germanium until this week. So, people don’t understand it,” O’Donovan said.

For context – I said that I had no idea what gallium and germanium was until I read about the Chinese export ban earlier this week. And to elaborate on O’Donovan’s point, the two commodities aren’t difficult to find or mine – but processing costs are high. China has barred new producers by keeping prices relatively cheap.

What was the appeal of germanium for Battery Age Minerals?

The Bleiberg Project is located approximately 130 km south of the city of Salzburg in southern Austria, which is historically a lead-zinc mining region. According to scientific consensus, in 700 years of mining, approximately 3 million tonnes of metal have been produced, with an average grade of 5.0% zinc, 1.0% lead and 200 ppm Germanium.

Bleiberg Project Map-V3-BAM (1)
Source: Battery Age Minerals

“We saw a niche in the market for the sustainable and traceable supply of germanium into the Western world. This is an area that has been neglected and for that reason, we felt there was an opportunity, based on the project’s location, historical results and local mining expertise,” said O’Donovan.

He described the Bleiberg Project as “a bit of a sleeper for us” but emphasised BM8 hasn’t been been sitting on its hands either. 

“We’ve engaged a really good lead-zinc expert because germanium is a by-product of lead-zinc mining and it's not something you just pull out on its own,” O’Donovan said.

What are the next steps for the Bleiberg Project?

O’Donovan pointed out there is a vast amount of historical data available from old mines, which his team is working through, “to form a position on the trend of the ore body and historical resource."

“We will then look to move to some fieldworks to determine prospectivity. Ultimately, if it looks good, we would like to go and drill this,” he said.

What’s something interesting about the Bleiberg Project?

On a more lighthearted note, I asked O’Donovan for something interesting about the project and/or commodity.

“Everyone is a nearology player in the lithium industry right now. But if you look at us, we’re sitting beside one of the biggest historical germanium producers in the world,” he said.

“It’s like having a lithium asset next to Greenbushes or Pilgangoora. So, it’s pretty exciting that people are waking up to this and that we’re at the forefront of it.”

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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