News Chinese Export Restrictions Lead to Exploding Rare Metal Prices

[Admin]

According to industry reports, prices for rare metal gallium (Ga) have increased tenfold in less than a month. The price increase follows a supply decrease following the August 1st-imposed export restrictions by China.

Chinese Export Restrictions Lead to Exploding Rare Metal Prices : Read more

 

[bit_user]

But we're not talking about CPUs and GPUs being made with Gallium, right? Isn't it more things like analog chips and solar panels that stand to be affected?

Wikipedia says:

Gallium arsenide is used in the manufacture of devices such as microwave frequency integrated circuits, monolithic microwave integrated circuits, infrared light-emitting diodes, laser diodes, solar cells and optical windows.[6]
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[bit_user]

Unpopular opinion... this is good.

Perhaps in the long-term, but it takes quite a while to ramp up mining and processing. Meanwhile, a lot of economic damage can potentially occur.

At that point, China can just turn around and flood world markets with all the pent-up supply its been withholding and make those new mining and processing operations insolvent, again. Then, switch to another commodity and repeat.

It seems the only way around this is to have an alternative supply chain for everything we get from China, and that will probably come at some non-trivial expense to taxpayers. Let's see if they have the stomachs.

 

[LolaGT]

These aren't rare.

They just weren't being produced in other nations because it was cheaper to get them from china.
It will only be incentive for other nations to build the infrastructure to mine the materials.
Whatever works out to be cheaper. No one is going to run out.

 

[DSzymborski]

You guys do know that you can't just shuffle on down to the ye olde gallium mine and just crank up production, right? You would need to suddenly bump up zinc and bauxite mining by a couple orders of magnitude before you're even talking about smelting for gallium, and the whole permitting processes for a new mine is upwards of a decade. Now, there's certainly merit in increasing production given how crucial many of these rare earth elements are, but that's a solution to get more gallium in 2040, not 2024.

 

[rluker5]

There is some gallium down in Texas: https://www.usgs.gov/news/technical...neral-database-gallium-deposits-united-states

Enough to outlast fossil fuels at least. Texas gov is pretty friendly to extracting resources, but they aren't the only ones you have to get the OK from.

A big potential iron mine in Wisconsin was shut down by EPA regulations and activists. Those two would show up down in Texas as well.

Edit: And I agree with bit_user. If it looked like gallium would start to be produced there, the competition would use noncompetitive practices to make it unprofitable.

 

[bit_user]

There is some gallium down in Texas: https://www.usgs.gov/news/technical...neral-database-gallium-deposits-united-states

I seem to recall reading that China has more of a lock on processing of Gallium than raw supply.

Edit: And I agree with bit_user. If it looked like gallium would start to be produced there, the competition would use noncompetitive practices to make it unprofitable.

I agree that @DavidMV that tariffs could be used to support domestic supply. Especially if you used the tariffs on imports to fund direct subsidies for domestic production.

This is a politically treacherous path to go down, because we can certainly get addicted to such practices. In the end, it would just lead to higher prices (inflation) and hurt international competitive of US-based manufacturers. Therefore, there ought to be a goal of some % domestic production, and then adjust tariffs/subsidies accordingly. Either that, or limit the margins of these producers - if they're going to receive subsidies and protection, then the tradeoff is that they can't make a windfall off it.

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Smoot–Hawley Tariff Act - Wikipedia

en.wikipedia.org

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Fun fact: this is what the teacher was lecturing about, during the famous "Bueller, Bueller... anyone?" scene of Ferris Bueller's Day Off.

 

[rluker5]

I seem to recall reading that China has more of a lock on processing of Gallium than raw supply.

It would definitely take time to build the extraction facilities. On the plus side a lot of other rare earths would be produced.

I agree that @DavidMV that tariffs could be used to support domestic supply. Especially if you used the tariffs on imports to fund direct subsidies for domestic production.

This is a politically treacherous path to go down, because we can certainly get addicted to such practices. In the end, it would just lead to higher prices (inflation) and hurt international competitive of US-based manufacturers. Therefore, there ought to be a goal of some % domestic production, and then adjust tariffs/subsidies accordingly. Either that, or limit the margins of these producers - if they're going to receive subsidies and protection, then the tradeoff is that they can't make a windfall off it.

​

Smoot–Hawley Tariff Act - Wikipedia

en.wikipedia.org

​

Fun fact: this is what the teacher was lecturing about, during the famous "Bueller, Bueller... anyone?" scene of Ferris Bueller's Day Off.

While tariffs could be applied, I doubt they would. I did not see much of them when I worked in the metal casting industry and I'm not seeing much in the chemical industry. They are the exception not the rule and I expect another dirty business like mining will just be neglected.
It is not the primary job of those who make tariffs to protect unpopular industries.

 

[bit_user]

While tariffs could be applied, I doubt they would. I did not see much of them when I worked in the metal casting industry and I'm not seeing much in the chemical industry. They are the exception not the rule and I expect another dirty business like mining will just be neglected.
It is not the primary job of those who make tariffs to protect unpopular industries.

Well, we famously got aluminum and steel tariffs, about 5 years ago. Those are largely still intact, I think.

 

[Co BIY]

The high prices will solve much of the problem on their own by causing all the users to decide if they can do more with less or use substitutes. Those who can most easily substitute will do so leaving fewer to compete for the remaining production.

I have to think that refusing to export is a somewhat unusual tactic in a trade war. Refusing to import or raising tariffs is more common. In fact, it is a little like placing a trade sanction on yourself.