The West is grappling with significant disruptions in critical minerals supply chains as China imposes stringent trade restrictions on strategic materials. This situation is particularly affecting industries reliant on these minerals, prompting urgent efforts to diversify sources.
Key Highlights:
Henkel’s Force Majeure Declaration:
German company Henkel announced a force majeure due to delays in antimony imports, essential for its adhesive products. The company reported suspensions in deliveries of four types of adhesives and lubricants used by automakers, impacting revenues from its adhesive technologies division, which generated 10.79 billion euros ($11.4 billion) last year.
Impact of China’s Export Restrictions:
China’s restrictions on antimony exports, alongside previous limits on gallium, germanium, and graphite, have led to a 230% increase in antimony prices this year, reaching approximately $39,000 per metric ton. China dominates the global production of these critical minerals, making Western companies highly vulnerable.
Urgency for Supply Chain Diversification:
The latest restrictions have intensified the need for Western companies to reduce reliance on Chinese minerals. For example, Perpetua Resources is developing an antimony mine in Idaho with U.S. government support, yet new mines take years to develop.
Western Companies Respond:
Henkel is actively seeking alternative suppliers and monitoring the antimony supply situation closely. U.S. Antimony (USAC) plans to increase output at its Montana smelter, which had been operating at only 50% capacity, driven by surging global demand.
Market Dynamics:
Northern Graphite reported a 50% increase in orders following China’s graphite export curbs, leading to capacity expansions in its operations. Similarly, ReElement Technologies is fielding inquiries from U.S. miners looking to redirect zinc ore shipments to domestic processing.
Price Surge and Market Shifts:
The restrictions have caused gallium prices outside China to rise 30% to 40% higher than domestic prices in the first half of 2024. Some Chinese traders have exited the market due to difficulties in securing export licenses.
Strategic Importance of Diversification:
Automaker Stellantis emphasizes the need for diversified supply chains to mitigate risks associated with reliance on single-source suppliers, particularly those in China or Korea.