USGS Critical Minerals Study: Bans on Gallium and Germanium Exports Could Cost the U.S. Billions

Export bans are a risk, given that China imposed export licensing controls on mineral commodities containing gallium and germanium in 2023, requiring state approval for all exports and establishing a pathway to progressive export restrictions. China is the leading producer and exporter of both minerals and the 2022 List of Critical Minerals showed that gallium had the highest supply risk of the minerals analyzed. The new research paper, "Quantifying Potential Effects of China's Gallium and Germanium Export Restrictions" by Nedal Nassar and USGS colleagues, estimates the impact of varying levels of Chinese export restrictions for either or both minerals on U.S. GDP.

"Modern technology and manufacturing depend on reliable supplies of minerals, so it makes sense for the USGS to track mineral supply chains and develop approaches to scan the horizon for potential disruptions," said USGS Director David Applegate. "This research allows us to quantify how important supplies of particular minerals are to the U.S. economy, enabling policymakers, industry and the public to make informed decisions based on science. This cutting-edge research is also improving the analysis behind the U.S. List of Critical Minerals."

Economic losses to the U.S. from decreased gallium and germanium imports would be concentrated in the semiconductor device manufacturing industry, which would account for more than 40 percent of the net loss. Additional losses would be spread across multiple industries including downstream producers dependent on semiconductors. Based on the results of the new model, gallium prices could rise more than 150 percent and germanium prices by 26 percent in the case of a total ban, but the decreased economic activity would be primarily driven by reduction in supplies.

"Losing access to critical minerals that make up a fraction of the value of products like semiconductors and LEDs can add up to billions of dollars in losses across the economy," said Nedal Nassar, lead author. "The USGS has the expertise and the responsibility to help assure access to minerals and supply chain resilience."

Another major driver of the impacts is the lack of significant production outside of China. "We do account for currently available production capacity outside of China and the short-term substitution potential. Our model projects the impacts in the near term and in many cases developing new supply sources or substitute materials takes far longer," Nassar said.

The estimates also help policymakers and industry make informed decisions on:

• maintaining or expanding stockpiles of gallium, germanium, and other mineral commodities,
• investing in new plants to recover gallium and germanium from active and legacy mine waste, and
• investing in postconsumer recycling of e-waste to recover gallium and germanium from discarded products.

Through modeling studies like this one, the USGS supports supply-chain resilience. USGS experts provide scientific expertise and technical advice to numerous government organizations, including the intelligence agencies, the National Defense Stockpile, the Federal Reserve Board, the U.S. International Development Finance Corporation and the U.S. Departments of Commerce, Defense, Energy, Homeland Security and State.  

In addition to identifying mineral supply risks and projecting the impact of supply chain disruptions, the USGS, through its Mineral Resources Program, is the Federal government's primary provider of scientific information and research on mineral potential, production, consumption, and interaction with the environment. This work includes developing the whole-of-government List of Critical Minerals, assessing the Nation's mineral resource potential, and through the Earth Mapping Resources Initiative (Earth MRI), partnering with state geological surveys to modernize the Nation's data and mapping of mineral resources.

The study can be found at https://pubs.usgs.gov/publication/ofr20241057.