The trade war over strategic raw materials between China and the USA is heating up again. The Chinese Ministry of Commerce has announced export restrictions on certain technologies used for the production of battery components and for processing critical minerals such as lithium and gallium. Processes for extracting the two raw materials, which play an important role in semiconductor production, are also to be affected. According to the catalog, the planned technologies include those for the production of batteries with lithium iron phosphate (LFP) and phosphate-based cathode materials. The latter play a decisive role in the performance of lithium-ion batteries, which are frequently used in electric vehicles.
Anzeige
LFP is another cathode material used in the production of lithium iron phosphate batteries. These are known for cost efficiency, lower safety risks, longer life and robust thermal and chemical stability. It should be noted that overcharging often directly damages the structure of the battery and therefore requires monitoring electronics. LFP is often used in energy storage devices and batteries for electric cars, balcony power plants and mobile homes. The boom in the latter has driven down the prices of such batteries.
Batteries with LFP cathodes have so far been produced almost exclusively in China. In the past two years, several major international car manufacturers such as Volkswagen, Stellantis, General Motors, Hyundai and Kia have started to use LFP batteries in some of their electric car models. This is usually done in partnership with Chinese e-mobility giants such as CATL and BYD, according to the South China Morning Post.
Great risk of escalation
There is one clause in particular: it would also prohibit companies in third countries from reselling the metals to US companies after purchasing them from China. Beijing is threatening legal consequences in the event of non-compliance. The Chinese government is thus forcing buyers worldwide to choose between the US market and the Middle Kingdom as a supplier. Until now, Beijing has been reluctant to impose such bans on third countries. The measure could put even more pressure on global supply chains.
“This move marks a significant escalation of the ongoing technology war between the US and China,” said Jens Eskelund, President of the European Chamber of Commerce in China, according to the newsletter service Table Media. European companies are increasingly concerned about being caught in the crossfire.
According to forecasts by market research firm Mineral Intelligence, China will have the highest production capacity for lithium-ion batteries in 2030, which would then account for 67 percent of global manufacturing capacity. The augurs see the USA in second place, albeit with only 14 percent of the global share or a fifth of China’s share.
Consultation runs until the beginning of February
The Ministry of Trade has not yet announced when the stricter conditions will come into force. Interested parties have until February 1 to comment on the plan as part of a public consultation.
It was only at the beginning of December that China banned the export of important raw materials and goods with civil and military purposes (“dual use”) to the USA. Gallium, germanium and the semi-metal antimony are affected by this measure. These raw materials are essential for the defense industry and chip manufacturers. Global controls on graphite exports are also to be tightened once again.
Reaction to US sanctions
The two latest steps are in response to further chip sanctions imposed by the USA. The new measures prohibit the export of key technologies such as high-performance memories and semiconductor tools manufactured by US companies or using US technologies. The US government has also blacklisted 140 other Chinese companies, making access to US technologies in this area virtually impossible. A Chinese counterattack has now followed: Beijing banned the export of dual-use products to 28 US defense companies on Thursday. These include General Dynamics, Boeing Defense, Space & Security, Lockheed Martin and Raytheon Missiles & Defense.
Beijing made the announcements shortly before Donald Trump’s second inauguration on January 20. The US President-elect wants to impose high tariffs and various trade restrictions on countries such as China and blocs such as the EU. According to Siyamend Ingo Al Barazi from the German Raw Materials Agency (Dera), the US recognized certain dependencies on China early on and introduced measures to diversify. The germanium processor Umicore is an example of this. However, China is still by far the most important producer of gallium and antimony. The Middle Kingdom has a great interest in maintaining the dependence of other countries to control sales. The problem with production capacities in Europe is low price phases in which the market is flooded.
(nie)