US president-elect Donald Trump has declared several times that when he commences office on January 20th one of his immediate priorities will be to impose 25 per cent tariffs on all goods coming into the USA from both Mexico and Canada, and a 10 per cent additional tariff on all goods imported from China.
Mexican president Claudia Sheinbaum has given a bristly response, criticising US spending on weapons and hinting at reciprocal tariffs. Canadian president Justin Trudeau has sought a cross-party national response, including retaliatory tariffs. He then became the first G7 leader to meet with Trump since the November election, at a dinner at Mar-a-Lago, after which both leaders indicated a productive discussion.
Concurrently president Joe Biden has announced a third round of export restrictions on China’s semiconductor industry, targeting 140 Chinese companies. In response the Chinese commerce ministry immediately banned exports specifically to the USA of key raw materials for semiconductor manufacturing. Among the metals banned for export from China to the USA are gallium and germanium, both essential for semiconductor manufacturing and with germanium also used in solar cells and fibre-optic cables.
China controls 94 per cent of the global production of gallium and 83 per cent of germanium, and thus the Chinese restrictions could have a serious impact on US production. Beijing has further possible reprisals in its arsenal against any tariffs implemented by Trump, including the potential to disrupt supplies of nickel and cobalt which also have a broad applicability across manufacturing.
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Rare earth metals are critical to the microelectronics industry. Your own smartphone likely contains more than half of the various metals appearing in the periodic table, albeit sometimes in tiny amounts but nevertheless essential to its semiconductor chips, touch sensitive surface, display brightness and colour, vibration alert and its battery.
It’s not just the semiconductor sector. The global transition to renewable energy is almost Faustian. Harnessing carbon-free energy requires prodigious quantities of critical metals which must be mined as raw ore, then extracted and refined. Solar panels, batteries for electric vehicles, storage batteries to smooth demand across the electricity grid, wind turbines and all the associated control electronics for managing renewables have together led to a substantial acceleration of mining and smelting of crucial minerals.
Extracting just a kilogram of copper requires the processing of about half a tonne of ore. Extraction of other critical metals is as wasteful. Manufacturing your 30 gramme smart watch required the processing of the order of 8kg of ore.
In its Global Critical Minerals Outlook published earlier this year the International Energy Agency forecasts that for carbon-free energy by 2050 then in turn by 2040 global demand for copper will increase by 50 per cent; for nickel, cobalt and rare earth materials all double; graphite demand will quadruple; and finally lithium supplies will need to grow eight-fold.
The goal of carbon-free energy may be dismissed by the new Trump administration as it reverses Biden’s various green initiatives. Nevertheless rare earth metals will remain critical for semiconductor manufacturing and in particular for the US defence industry. China’s new export ban is specifically due to national security concerns on the use of its exported critical metals for military purposes.
Mining is unlikely to meet the growing market demand for critical minerals, and thus those who control supply may be able to name their price and political quid pro quo. On the other hand the world currently produces about 70 million tonnes of e-waste from electronics and consumer devices each year. The United Nations estimates that less than a quarter of this is recovered, with the remainder going to landfill. Some annual €55 billion worth of critical metals are inherent in this discarded waste despite their being essential both for the transition to renewable energy and for semiconductors.
We routinely recycle bottles, cans and paper products but recovering trace amounts of the various metals from discarded electronics and consumer goods is challenging. Recycling sites in some developing countries have small armies of scavengers diligently eviscerating circuit boards, burning off plastic coatings, and dissolving parts in acid in a complex and frequently hazardous disembowelment. Parts such as chips, batteries, smartphone cameras, and sensors have value, particularly since the e-waste from which they are recovered is low cost or even free.
China has become dominant in e-waste recycling and leads in the recycling of electric vehicle and lithium-ion batteries. Recognising the medium term challenge of raw materials supply, in 2018 China mandated that its manufacturers must collect and recycle lithium-ion batteries, and furthermore that new batteries must contain at least a minimum amount of recycled materials. The EU has followed with similar regulations for batteries since 2023 but has yet to catch up to the Chinese levels.
Despite the MAGA politics of reminiscence, a return to the glory days of unchecked manufacturing and conspicuous consumption seem improbable. As well as accepting decarbonisation we are facing a finite supply of critical minerals. Politically palatable or not, this mandates a transition away from manufacturing brand new products instead into reuse and repurposing of our existing goods and gadgets.
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