China's gallium and germanium export controls, which started from Tuesday, have sparked discussions about the need to increase production of the metals in Europe, but any such expansion is reliant on a business case that is still not clear, market sources told Argus.
Gallium is a by-product of the processing of bauxite ore for aluminium and zinc ore, while germanium is a by-product of zinc refining. Some of the world's germanium supply is also extracted from fly ash of coal deposits.
Since China's announcement of export controls, aluminium and zinc refineries in Europe have been approached about the viability of extracting gallium and germanium, as there could be room for expansion. Only 3pc of the germanium contained in zinc concentrates is recovered globally, according to the US Geological Survey (USGS).
European aluminium producers, including Norway-based Hydro, have been asked by the EU if they could start producing gallium from dust extraction in their smelters. But Hydro's alumina from Brazil has minimal gallium content, so it is not feasible for it to produce the metal, the company told Argus.
Besides any capacity limitations, market participants questioned whether there is a business case for gallium production by aluminium producers outside China. From a European perspective, the economics are still uncertain. But the increase in production costs for the smelters should be minimal for them to extract the by-products, market sources said.
Primary germanium production previously took place in France and Austria, but these mines were depleted and closed 25 years ago. In recent years, there has not been any recovery of this metal in Europe through mining or from coal ash.
"The only reason Europe decided to curtail production was for economic purposes," Natixis senior commodities analyst Bernard Dahdah said in a webinar. "Western countries could easily and quickly re-start the production of those two metals. For gallium, new production units could be added within two to three years." Dahdah added that the know-how, natural resources and skills are available.
"But to restart those operations, consuming companies will need to commit to long-term offtakes at prices that would incentivise local production…The monetary value of the gallium and germanium contained in those high-end electronics is extremely small compared with the final product's end value," Dahdah said.
European non-ferrous metals association Eurometaux said that some of its members were looking "into improving Europe's resilience for germanium and gallium". The association is open to talking with policymakers about how the EU can take these steps. But the framework needs to be suitable for any future operations to be viable, it said. New production would require significant extra political will to address capital expenditure needs, high operating and energy costs, and the risk from global market distortions, it added.
Gallium and germanium can also be recovered through recycling to differing extents.
Currently, 30pc of all germanium now consumed globally is sourced from recycled material, according to the USGS. It is recovered from end-of-life products but also from industrial by-products.
End-of-life recycling for gallium is more challenging. The metal can be recovered through the recycling of semiconductor wafers. However, once these circuits are integrated into products, the amount of gallium present is so limited that recycling becomes difficult.
"Small amounts of gallium and germanium can be found in solar cells in photovoltaic panels," European Electronics Recycling Association chief executive Julie-Ann Adams told Argus in an interview. "It is important for us to invest in innovative recycling systems that can recover these materials, but we also need a market for them. If it's cheaper to still buy those materials from outside of Europe, then people aren't going to recycle."
"Recyclers are private or public companies who have to look at their capital expenditure and what they're likely to get in terms of a return," she added. "They won't do this without being able to sell the material at the end."
