China has imposed restrictions on exports of two metals — gallium and germanium — which are key to the manufacturing of semiconductors in its bid to protect “national security”.
The Chinese government announced on July 3 that exports of the two metals along with their chemical compounds would be curbed starting August 1. The restrictions come at a time when countries, including India, are aggressively trying to build semiconductor manufacturing capacity to reduce their dependence on the import of equipment.
The restrictions are significant because China produces around 60% of the global germanium output and around 80% of gallium, according to the European industry association Critical Raw Materials Alliance (CRMA).
Here’s how the ban will play out for India’s telecom, semiconductor and defence industries.
What are the restrictions?
Beijing has said that in order to protect Chinese national security the government has decided to restrict the exports of two metals. For shipping the two metals out of China, exporters will have to apply for licences and will be required to report details of the overseas buyers and their applications.
Why has China imposed the restrictions?
The restrictions on the export of the metals—which are primarily used in semiconductors—come amid a technological war between China, the US and Europe.
The move is believed to be retaliation by the Chinese government after the US in October 2022 launched sweeping rules aimed at cutting off exports of key chips and semiconductor tools to China.
Why are these metals important?
Gallium and germanium are not found on their own in nature but generally exist as by-products of other metals such as aluminium and zinc.
The two metals are of importance as they are used in defence and niche technologies for the production of semiconductors, communication equipment and chips.
Where does India stand?
India is majorly dependent on imports of the two metals as the country does not have a primary source of gallium or germanium. Gallium is recovered as a by-product while producing alumina. Two plants, namely, Hindalco at Renukoot, Uttar Pradesh, and Nalco Damanjodi alumina refinery, Odisha, had recovered gallium in the past.
Germanium, on the other hand, is not available in the country and the current requirement is met through imports.
A Ministry of Mining report last month said that 17 out of 33 elements have both high supply risks as well as high economic importance for the country; this included gallium. A total of 7 elements, including germanium, were identified as those having high supply risks.
How will the restrictions impact India?
India would be directly or indirectly impacted by China's restrictions on the export of the two metals given its dependence on imports.
Gallium is used in semiconductors, electronic circuit boards, LED devices, semiconductors, specialised thermometers and barometric sensors, whereas germanium is used in optical fibres, solar cells, camera and microscope lenses, infrared night vision systems and polymerisation catalysts.
The restrictions will hit India’s aspiration of building manufacturing capacities for these items and in the near term, it may impact the import of the equipment using chips.
Also read: Xi Jinping urges open supply chains after curbing exports of key metals
What is India doing to secure its supplies?
The Indian government on June 28 identified 30 critical minerals including gallium and germanium, stating that the listed minerals are essential for the country’s economic development and national security.
The government said the compiled list of critical minerals is designed to identify and prioritise minerals that are essential for various industrial sectors.
“As an emerging global economic powerhouse, it is essential to understand and harness the potential of critical minerals to fuel the country's growth, competitiveness and sustainable development. By developing a comprehensive understanding of India's critical mineral resources, this work empowers policymakers, researchers, and industry stakeholders to make informed decisions and drive the clean energy revolution,” Pralhad Joshi, Minister of Parliamentary Affairs, Coal and Mines, was quoted as saying in the report.
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