Prices of the metal germanium, critical for making infrared military equipment including in fighter jets and missiles, hit a 14-year high this month as the Chinese export restrictions of critical and rare earth metals are hitting the supply chains of the West’s military systems.
The market has dried up and there is panic among customers who are desperate to find supply of germanium, traders have told the Financial Times.
As a result of the supply crunch from China, first announced in 2023, the price of germanium has soared to $5,000 per kilogram this month, five times higher than the $1,000 per kg price in early 2023, per data from price reporting agency Fastmarkets cited by FT.
The current price is the highest in Fastmarkets data going back to 2011.
China dominates the global market for critical minerals, putting Western defense manufacturers and their governments in a rather awkward position of depending on China for key raw material supplies amid tense bilateral relations.
The heavily concentrated supply of critical minerals in a handful of countries and China’s export controls are raising the risk of “painful disruptions” in the market, the International Energy Agency (IEA) warned in its new annual report, Global Critical Minerals Outlook.
Despite major deals and government support in the West for building domestic supply chains, China has raised its market share over the past few years, the IEA’s report found.
The most recent market shortages have prompted companies to source materials directly from suppliers outside China or to look to establish domestic manufacturing chains.
Lockheed Martin, for example, signed last month a strategic deal with Korea Zinc to procure germanium and cooperate in the critical minerals supply chain. The memorandum of understanding stipulates that Korea Zinc will supply Lockheed Martin with germanium smelted (covering the entire process from mining to production) outside of China, North Korea, Iran, and Russia, and that Lockheed Martin will pursue an off-take agreement, securing priority rights to procuring this output.
Metals producer Nyrstar, a subsidiary of trading giant Trafigura, is currently assessing a project to build a germanium and gallium recovery and processing facility at its Clarksville zinc smelter in Tennessee. The Clarksville smelter is currently the only primary zinc producer in the United States.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com
