Impact of China's Trade Restrictions on Strategic Minerals

By Amy Lv, Divya Rajagopal, and Ernest Scheyder
BEIJING/TORONTO/LONDON (Reuters)

China's trade restrictions on strategic minerals are severely affecting Western companies.

Henkel's Force Majeure Declaration

In August, China announced curbs on antimony exports, leading German company Henkel to declare force majeure, suspending deliveries of four types of adhesives and lubricants used in the automotive industry. Henkel reported supply delays due to license application hold-ups by the Chinese government. The company's adhesive technologies division, which includes Bonderite and Teroson products, generated €10.79 billion ($11.4 billion) in revenue last year. Henkel is unable to predict the duration of its supply challenges while actively seeking alternative sources.

Rising Antimony Prices

The price of antimony, essential for military equipment and other applications, has surged nearly 230% to around $39,000 per metric ton this year. China remains the largest global producer of antimony and several other strategic materials. Export limits have extended to gallium and germanium, used in semiconductors and renewable energy technologies, compounding troubles for Western manufacturers.

Urgency for Alternatives

In light of these challenges, Western firms are intensifying efforts to reduce dependence on Chinese minerals. Companies like Perpetua Resources are developing new mines in the U.S., while the United States Antimony (USAC) aims to increase production at its Montana smelter in response to high prices.

Market Disruption

Exports from China have already declined significantly, with some traders exiting the market due to the inability to secure necessary licenses. Despite strong demand, end-users are emphasizing the need for diversified supply chains to mitigate risks. Stellantis’ chief purchasing officer advocates for broader sourcing strategies to avoid being overly reliant on specific countries.

Chinese restrictions have resulted in fluctuating market conditions and heightened prices for strategic minerals, indicating the substantial impact of geopolitical tensions on global trade dynamics.