Luisa Moreno, president of mining company Defense Metals, expects China to further restrict exports of metals, which could include rare earths.

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Chinese metal export restrictions on gallium and germanium may prompt some countries to diversify their supply chains away from China.

“This could be a wake-up call for some (countries) to gradually build up production elsewhere,” Stewart Randall of Intralink, a Shanghai-based consultancy, told CNBC.

“If China does nothing, most of the world will be more than happy to remain dependent on China,” Randall said.

China’s Ministry of Commerce announced last week that it would restrict exports of two metals critical to semiconductor manufacturing, gallium and germanium, from Aug. 1, in what was seen as a warning to Europe and the U.S. in a battle over advanced chip technology.

China produces 60 percent of the world’s germanium and 80 percent of gallium, according to the Critical Raw Materials Alliance, an industry body.

We may continue to see (export restrictions), which may affect other materials such as rare earths, again China controls more than 85% of the production of rare earths …

Luisa Moreno

President, Defense Metals

European Commission and the United States expressed concern about china program limitations.

Brady Wang, deputy director of Counterpoint Research, told CNBC: “China’s halt of metal exports is actually a warning. It reminds European countries that they need to own their own supply chains.”

China may impose more restrictions

Luisa Moreno, president of mining company Defense Metals, expects China to further restrict exports of metals, which could include rare earths.

Rare earths are critical to high-tech consumer products such as smartphones and military equipment such as radar systems.Rare earth composition A set of 17 elements Composed of scandium, yttrium and lanthanides.

“We’ll probably continue to see (export restrictions), which could affect other materials like rare earths, which again China controls more than 85 percent of rare earths production,” Moreno said on CNBC’s “Street Signs Asia” on Tuesday.

Miners say China is expected to further curb exports of metals, which could include rare earths

In 2010, China stopped exporting rare earths to Japan due to territorial disputes. China has also threatened to halt rare earth exports to the United States in 2019.

“(The impact of metal restrictions) is not big in the short term, but if China implements (restrictions on other key materials), it will be a long-term problem,” said Counterpoint’s Wang.

“China also has to be careful because blocking exports could hurt Chinese companies while losing foreign customers,” said Intralink’s Randall.

Diversification away from China

A key materials supplier said factories were preparing to start producing gallium. The two metals targeted by China’s upcoming restrictions do not occur naturally but are typically produced through the refining process of other metals.

“We’re getting a lot of calls from customers, there’s a lot of activity out there. We’re engaging with the market to make sure we can secure supply,” said Ross Berntson, Indium Corporation’s president and chief operating officer. CNBC Weekly Three’s “Squawk Box Asia” program.

Indium supplies key materials such as gallium and germanium to electronics and chip companies around the world.

“There are about 10 factories that could start producing gallium right now … If we can start those production units, we’ll have plenty of gallium in other regions outside of China,” Berntson said.

About 10 plants could start producing gallium now, metals maker says

While China produces most of the world’s gallium and germanium, it is not the only producer.

Russia, Ukraine, Japan and South Korea also Gallium productionAccording to a 2021 study by the Government of India. Canada, Germany, Japan, Slovakia and the United States recover gallium from new scrap.

Meanwhile, Belgium, Germany and Russia can Manufacture germanium, based on data from the U.S. Geological Survey. The US can also recycle old and new scrap to produce germanium.

“Metals such as gallium and germanium are not unique metals. China is a major supplier of these metals and that helps keep metal prices down,” said John Strand of telecommunications consultancy Strand Consult.

“My view is that even if they hit hard here, it’s going to have a bigger impact on prices than Impact on overall supply.” Asia” Tuesday.

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