China Antimony Price Surge Disrupts Global Supply Chains

While chips have become the heart of nearly every modern electronic device, the escalating need for ever-smaller and more energy-efficient semiconductors has intensified the spotlight on global supply chains. Increasingly, tensions between China and the West have turned critical minerals—like antimony, rare earths, and gallium—into key strategic resources, fueling concerns about supply disruptions that could reverberate across multiple industries.

What challenges does the semiconductor sector face in light of China's dominance over critical materials, how has China leveraged export bans to consolidate mineral production internally, and what are the broader implications of these pressures on Western economies and technological progress?

China's Grip On Materials

Semiconductors have become the fundamental building blocks of modern electronics, serving as the backbone for nearly every device that powers our increasingly digital world. From smartphones and laptops to military systems and industrial controls, semiconductors play a critical role in the functioning of all electronic devices, and their importance continues to grow as technology advances.

As the demand for more powerful, smaller, and energy-efficient chips continues to surge, the global semiconductor industry has become an increasingly important strategic asset. The ongoing competition between China and Western countries, particularly the United States, has intensified geopolitical tensions, with the semiconductor industry at the forefront of this rivalry. The escalating "semiconductor wars" have become a key point of contention, with both sides vying for control over semiconductor manufacturing technologies, markets, and resources.

China's Economic Expansion and Trade Tensions

China's rise as an economic powerhouse has significantly reshaped the global landscape since its accession to the World Trade Organisation (WTO) in 2001. The country has become the world's largest manufacturer and exporter, exerting a substantial influence on global supply chains. However, tensions between China and the West have escalated in recent years due to trade imbalances, intellectual property concerns, and the growing rivalry over national security.

The United States, in particular, has raised concerns about China's practices in forced technology transfer, intellectual property theft, and human rights abuses. These tensions have spilled over into the semiconductor sector, with the U.S. government imposing various restrictions to limit China's access to high-tech semiconductor manufacturing technologies, such as advanced chip-making equipment from companies like ASML. Through export controls, sanctions, and blacklists (like the Entity List), Western countries have sought to delay China's advancement in semiconductor manufacturing.

The Role of Export Restrictions and Sanctions

The semiconductor industry is not merely an economic sector but a strategic battleground. It powers everything from consumer electronics and automotive industries to national defence systems, making control over semiconductor technology crucial for maintaining global influence and military strength. The United States, through entities like the Department of Commerce, has implemented a series of export restrictions aimed at limiting China's access to cutting-edge semiconductor technology.

One notable example is the restriction on the export of Extreme Ultraviolet (EUV) lithography machines, manufactured by ASML, which are essential for producing the most advanced chips. Without these tools, China's ability to produce chips smaller than 14nm is severely limited, hindering its efforts to reach parity with Western semiconductor giants like Intel, TSMC, and Samsung. In response, China has made substantial investments in developing its own semiconductor capabilities, with the government pouring billions of dollars into the sector.

China's Technological Advancements and Challenges

Companies like SMIC (Semiconductor Manufacturing International Corporation) have emerged as China's primary chipmakers, but despite these efforts, China still faces substantial technological challenges, particularly in areas like advanced chip fabrication and access to critical tools and materials. To overcome this, China has been pursuing technological self-sufficiency while developing indigenous technologies like its own chip architectures, such as RISC-V processors.

Semiconductor production relies heavily on a range of critical minerals, including rare earth elements (REEs), cobalt, lithium, tungsten, and others. These materials are essential for manufacturing chips, as they are used in components such as capacitors, resistors, and the production of semiconductors themselves. China holds substantial control over the global supply of these minerals, with the U.S. Geological Survey indicating that China produces 60% of the world's rare earth elements and controls over 90% of global processing capacity for these minerals.

This control has given China considerable leverage over the semiconductor supply chain, making it vulnerable to potential disruptions. In 2010, China famously imposed a temporary ban on rare earth exports to Japan, highlighting its strategic use of control over these resources to exert influence. The West is now increasingly concerned about China's ability to leverage its mineral control in future economic or geopolitical disputes.

The Impact of Mineral Supply on Western Technology Firms

China's dominance over rare earths and other critical materials has far-reaching implications for global semiconductor supply chains. Any disruption in China's ability or willingness to supply these materials could have widespread effects, leading to shortages and rising prices for semiconductor components. Western companies like Intel, Qualcomm, and Apple rely on a global supply chain that includes materials from China, making them increasingly reliant on Chinese-controlled resources.

As a result, these companies are looking to diversify their supply sources to reduce dependency on Chinese-controlled resources. Efforts have been made by the U.S. government to develop a more secure domestic supply chain, with initiatives to restart rare earth mining in North America and expand processing capabilities in the U.S. and Europe. The shift to alternative sources, however, is not without challenges, as mining and refining rare earths are environmentally taxing and expensive, and many countries lack the infrastructure and technology to compete with China's established dominance in these sectors.

Striking a Balance Between Supply Security and Cost

Global semiconductor manufacturers are caught between the necessity of ensuring access to these materials and the risks of over-reliance on Chinese supply chains. The ongoing semiconductor wars have highlighted the importance of securing access to critical minerals and technologies, emphasising the need for a more diversified and resilient supply chain. As tensions between China and the West continue to escalate, the semiconductor industry will remain at the forefront of the competition, with control over semiconductor technologies, markets, and resources becoming increasingly crucial for maintaining global influence and military strength.

China Squeezes Antimony Prices

In a move that is sending fear across the global market, China has imposed an export ban on critical minerals including antimony, gallium, and germanium to the United States. The move, which has been seen as a retaliatory measure against the ongoing trade tensions between the two nations, is expected to send antimony prices soaring to record highs.

Antimony's critical role in flame retardants, batteries, and microelectronics makes the supply disruption particularly significant for the semiconductor and defence sectors. The mineral's scarcity could force industries to explore alternative sources such as Russia and Tajikistan, though their combined output remains limited compared to China's production capacity.

China's Market Share and Production Control

According to data from the U.S. Geological Survey (USGS), China accounted for nearly 50% of the world's antimony production in 2023, with an estimated 83,000 tons of antimony being produced globally. The latest ban will see China's exports of antimony to the U.S. effectively come to a grinding halt, leaving the U.S. to seek alternative sources of the critical mineral.

China's dominance in antimony production stems from its extensive state control over mineral reserves and strategic resource management policies. The recent restrictions align with China's long-term strategy to consolidate mineral production internally while leveraging supply constraints as a tool of economic influence.

As a result of the ban, prices of antimony have already hit an all-time high, trading between $39,500 to $40,000 per metric ton in Rotterdam as of December 31, 2023. Prices have risen by a staggering 250% in 2024, with traders expecting them to climb above $40,000 a ton following China's ban. One minor metals trader in Europe has already reported selling small quantities of antimony for $40,000 per ton, with other traders expecting prices to continue to rise.

The Fragility of a Single-Source Supply Chain

The volatility in antimony pricing highlights the fragility of global supply chains heavily reliant on a single-source supplier. Market analysts suggest that the price surge could further impact electronic manufacturing costs, particularly in sectors reliant on fireproofing materials and microelectronics where antimony plays a key role.

The impact of the ban will be felt across various industries, including semiconductors and military applications. The critical role that antimony plays in these sectors will see manufacturers scrambling to secure alternative sources of the mineral, with some traders already warning of potential shortages. While the U.S. has diversified its supply chains away from China in recent years, the latest ban will undoubtedly put pressure on the U.S. to find new sources of antimony.

In response to the export bans, U.S. policymakers have explored partnerships with countries rich in antimony reserves, such as Bolivia and Australia, while also incentivising domestic production through initiatives like the Defense Production Act. However, scaling such efforts to meet demand could take years.

Expert Analysis on the Long-Term Impact

"This is not a ban, this is a strategy to consolidate mineral production internally," said Ellie Saklatvala, head of non-ferrous metals pricing at Argus. "The U.S. has already diversified its supply chains away from China where possible, buying more from Southeast Asia. However, it is unclear in the near-term how they will be able to fill the gap now left by China."

Additionally, the geopolitical ramifications extend beyond antimony alone. China's recent export controls on gallium and germanium—both vital for semiconductor production—underscore a broader trend of resource weaponisation, pressuring Western economies to reevaluate critical mineral dependencies.

How Does This Affect The West?

Over the years, the U.S. and other Western nations have become increasingly dependent on China for critical minerals, including antimony. However, China's latest export ban complicates this reliance, making it challenging for the U.S. to secure alternative sources of the mineral. While the U.S. has made efforts to diversify its supply chains by sourcing more antimony from Southeast Asia, it remains unclear how the U.S. will fill the gap left by China's restrictions in the short term. The challenge is particularly pronounced because China has the ability to control a major portion of the world's mineral supply, and its export bans leave Western industries with fewer options for securing alternative supplies.

The West's Dependence on Chinese Minerals

The export bans on critical minerals are part of a broader geopolitical struggle between China and the West. China's control of essential resources such as antimony, gallium, and germanium allows the country to exert major leverage in international trade. Reuters notes that the U.S. has already taken steps to diversify its supply chains by turning to Southeast Asia for antimony, but these moves come with their own challenges, particularly when it comes to scaling up production in a region not yet fully equipped to meet the demand. Additionally, these restrictions highlight the ongoing semiconductor wars between China and the West, where access to critical materials is a key strategic priority. China's dominance in the production of these minerals is not just an economic issue—it also has major geopolitical ramifications, particularly as Western nations seek to limit their dependence on China and its control over critical supply chains.

Geopolitical Implications of China's Export Bans

The immediate effect of China's export ban is a dramatic rise in prices for critical minerals. As mentioned in the article, the price of antimony has surged by 250% in 2024 and is expected to continue climbing. This price hike will likely trickle down through various industries, raising the cost of consumer electronics, military equipment, and other high-tech products. The global tech market could see slower growth and increased prices for products reliant on semiconductor components, further exacerbating inflationary pressures in Western economies. For manufacturers in the West, these rising costs could strain profit margins and disrupt product timelines.

The potential for further restrictions by China on critical minerals such as bismuth and manganese raises the stakes for Western industries, which are already grappling with the effects of the current bans. China's dominance in the supply of critical materials has sparked concerns about future vulnerabilities in Western supply chains. The increasing unpredictability of China's mineral supply, combined with the potential for further export bans, forces the West to consider its long-term strategy for securing these resources.

Potential for Further Mineral Export Bans

If China imposes additional bans on essential materials, industries such as semiconductor manufacturing, electronics, and defence could face even greater difficulties in sourcing the raw materials they need to remain competitive. The West's dependency on China's mineral resources underscores the need for diversified and more resilient supply chains, as well as greater self-sufficiency in critical materials.

The Need for Diversified Supply Chains

China's export ban on antimony and other critical minerals highlights the West's increasing vulnerability in the global supply chain for essential materials. For the West to protect its industries from further disruptions, countries like the U.S. will need to make substantial efforts to diversify their mineral sources, secure alternative suppliers, and invest in domestic production. The Reuters article emphasises that self-sufficiency in critical materials must become a short-term priority for the West to reduce its reliance on China and mitigate the risks associated with geopolitical tensions. Additionally, the West must look for creative solutions such as exploring new mining technologies, recycling programs, and developing synthetic alternatives to critical minerals to build a more secure and sustainable supply chain for the future.