How China uses its power over the minerals we need every day for technology as leverage against the West

China is a global giant when it comes to critical minerals, one of the world’s most important resources.

These minerals are essential for making advanced technologies such as smartphones, semiconductors, lithium batteries, laptops and electric vehicles. The list goes on.

China produces 60 percent of the world’s rare earth elements and processes 90 percent.

It gives this country unparalleled power; the power he is willing to use.

Since July last year, China has imposed export restrictions on three important critical minerals: gallium, germanium and antimony.

The U.S. Geological Survey says China produces 98 percent of the world’s gallium and 60 percent of germanium.

Both are used to make semiconductor chips that power the world’s advanced technologies.

Export controls are the latest frontier in the trade war between China and the West, and it’s escalating.

The US is trying to deny China access to advanced technology and semiconductor chips.

Chim Lee, senior Asia analyst at the Economist Intelligence Unit “This is about how China still feels threatened,” he says.

“It is using critical minerals to gain stronger influence in trade negotiations with Western countries,” Mr. Lee says.

“He’s showing he can do it, and he will retaliate.”

Mountains and mines of Yunnan Province

Yunnan province in southern China is known for its mountains rather than its mines.

But once you move away from the main highways, you encounter valleys full of small mines that process critical minerals.

On a rainy, foggy day, we come across the three of them, just a short drive away from each other.

Even the nearest village is called ‘Kuangshan Zhen’ or Mining Town.

We met a local farmer named Mr Tan across from a mine. He says the mines are a national asset.

“This means a huge amount of economic revenue,” Mr Tan explains. “This mine produces lead, zinc and germanium. These are the treasure of our country.”

China is determined to protect its treasure and says its export restrictions are “fair, justified and non-discriminatory” and are not targeted at any particular country.

The country’s latest export restriction concerns antimony. It came into force in September.

China mines half the world’s supply of antimony, a key component for military applications including night vision goggles, flares and infrared sensors.

‘Potential price shocks’ to come

The northern British city of Durham seems far removed from the global competition to dominate resources.

But on the outskirts of the city, a pioneering British company called Pragmatic Semiconductor is preparing to expand its production center for ultra-thin, flexible semiconductor chips.

“This will introduce shocks to the supply chain as countries like China – but also other countries around the world – look at tariffs, safeguards and export controls,” says Richard Price, co-founder and chief technology officer of Pragmatic Semiconductor.

“We’re likely to see potential price shocks.”

Resource-rich countries around the world are racing to develop their own critical mineral reserves.

But demand for these precious metals is growing, and China has already moved quickly in this regard.