Supply Chain Warfare - 337

On the third of December, I watched the news. I do not often watch the news on TV because I do not have a TV. The news was on PBS. At the very end of the program, Amna Nawaz reported in one sentence, "China has prohibited the export of five critical metals to the United States." Knowing this could have grave implications for our clean energy industries, I said, "What? That is all you have to say!"   

After some research, it turns out that the five metals are gallium, germanium, antimony, tungsten, and graphite.

It should be noted that this prohibition is in response to the United States' prohibition on exporting high-tech chips to China. 

Gallium is used in semiconductors, LEDs, and solar cells. China mines 98% of the world's gallium.

Germanium is important for fiber optic cables, infrared optics, and solar cells. China mines 93% of the world's germanium.

Antimony is used in flame retardants, batteries, armor-piercing ammunition, night-vision goggles, infrared sensors, bullets, and precision optics. China mines 48% of the world's antimony, which seems less problematic until you see who number two is. It is Russia, which mines 23% of the mineral used in the world.

Tungsten is used in cutting tools and armor-piercing ammunition. China mines 80.8 % of the world's tungsten.

In the race to save the planet from extreme weather, the restrictions on graphite are particularly disturbing. Here is part of an analysis from the MIT Technology Review: "Any tightened restrictions on graphite could have a pronounced economic impact on US battery and EV makers, in part because there are so few other sources for it. According to the International Energy Agency, China controls about 80% of graphite output from mines and processes around 70% of the material.

"It would be very significant for batteries," says Seaver Wang, co-director of the climate and energy team at the Breakthrough Institute, where his research is focused on minerals and manufacturing supply chains. "By weight, you need way more graphite per terawatt hour than nickel, cobalt, or lithium. And the US has essentially no operating production.

Anything that pushes up the costs of EVs threatens to slow the shift away from gas-guzzlers in the US, as their lofty price tags remain one of the biggest hurdles for many consumers."

This prohibition of exporting critical minerals to the USA was the start of supply chain warfare, which has the potential to have dramatic results on the world economy. The last time the world's supply chain was dramatically disrupted was during the COVID-19 pandemic. As nations, especially China, went into lockdown to contain the lethal virus, the flow of goods from the largest producer, China, to the world's largest consumer, the USA, was choked. The law of supply and demand took over. Supplies of everything shrunk while nations pushed money into their economies to stave off recessions and ease the financial pain of their poorest citizens. Prices rose. We blamed President Biden for inflation, but it was primarily the virus to blame.

You may have noted that President Biden recently made a trip to Africa. His critical goal is to find new sources of metals to support our economy and emerging technologies. Africa holds much of what is needed with many regions yet to be explored. For example, the Democratic Republic of the Congo (DRC) alone accounts for over 70% of global cobalt production. Meanwhile, countries like Namibia, Zimbabwe, and Mozambique are emerging as major sources of lithium and rare earth elements. These resources are indispensable in meeting the growing global demand for clean energy solutions and technological advancements.

The problem for the United States and the free world is China is already in Africa and has invested billions in mines, railroads, and highways.

It is well known that the Biden Administration successfully strengthened military alliances and ties to allies in Europe and Asia.

Less well-known is that our diplomacy did not end there. In 2023, the US announced several agreements with African nations to enhance mineral exploration and sustainable mining cooperation. This includes promoting transparency, environmental stewardship, and local economic development—areas where the US aims to differentiate itself from China. Moreover, partnerships with allies such as the European Union, Japan, and Australia are part of a broader strategy to create resilient, diversified supply chains less vulnerable to geopolitical disruptions. Already, agreements by the Biden Administration with our allies and USA mining companies are starting to meet our critical mineral supply chain needs. But, how successfully we interact with Africa remains paramount.

The competition for Africa's critical minerals concerns more than just resources—it is a defining element of the global race for technological and economic leadership.

The race to secure critical minerals and rare earth metals is not only a race to determine who the world's dominant power will be but also to determine how soon we and the rest of the world will transition to clean energy to save the climate.

The Biden Administration did a commendable job helping us catch up. Will the Trump Administration keep us moving forward?

References for in-depth research: "Context," a product of the Thomson Reuters Foundation. The international "Diplomat Magazine."  The "Atlantic Council" is an American think tank that examines international affairs.

More interesting reading: "Chip War: The Fight for the World's Most Critical Technology" by Tufts University Professor Chris Miller.