China's trade restrictions on strategic minerals are starting to hit Western companies where it hurts…Blaming Beijing's curbs on antimony exports announced in August, German chemicals and consumer goods heavyweight Henkel told customers last month it had declared force majeure and suspended deliveries of four types of adhesives and lubricants widely used by automakers, according to a Nov. 8 letter to clients reviewed by Reuters…The letter from Henkel, which had not been reported previously, and conversations with more than two dozen traders, miners, processors, end-users, and industry experts in North America, Europe and China underscore the severe disruption caused by Beijing's trade restrictions and highlight how Western players' struggle to replace China-based supply chains…The price of antimony, scarce in nature but essential for military equipment such as ammunition, infrared missiles, nuclear weapons, and night vision goggles, rallied nearly 230% this year to about $39,000 per metric ton in Rotterdam's busy spot market, according to market intelligence provider Argus…China is the world's largest antimony producer and dominates the production of many strategic materials…Beijing's restrictions bring added urgency for Western players to cut their reliance on minerals from China…But new mines can take years to develop, leaving players like Henkel scrambling to find alternatives, which are often more costly…Meanwhile, some Western miners and processors have started to build up capacity…United States Antimony, the only North American processor of the metal, made plans to lift output at its Montana smelter, which was running at 50% of capacity after China announced curbs on antimony exports in August…"Our decision to ramp up production was predominantly triggered by the more than tripling of worldwide Rotterdam antimony prices," the company's chairman, Gary Evans, told Reuters…China's restrictions "created significantly more demand for our finished products," he added…Orders at Ottawa-based Northern Graphite, which touts itself as North America's only producer of natural flake graphite, jumped 50% in the aftermath of China's graphite curbs announced in October 2023, CEO Hugues Jacquemin told Reuters…Canadian miner Teck Resources, which produces germanium as a byproduct at its Red Dog zinc mine in Alaska and is the only supplier of the metal in North America, told Reuters it was studying whether to boost output of the critical material there now that China has blocked exports to the United States…China's export squeeze has triggered a surge in prices for many strategic minerals…For end-users, China's restrictions underscore the importance of supply diversification…"When you de-risk, you need to de-risk with different levers," said Maxime Picat, chief purchasing officer at automaker Stellantis. "If you are a one-solution company, knowing that your battery suppliers are all Chinese or all Korean, then you are at risk."

This week, China banned exports of several critical minerals to the US, marking the latest move in an escalating series of tit-for-tat trade restrictions between the world’s two largest economies…In explicitly cutting off, rather than merely restricting, materials of strategic importance to the semiconductor, defense, and electric vehicle sectors, China has clearly crossed a new line in the long-simmering trade war…At the same time, it selected minerals that won’t cripple any industries—which leaves China plenty of ammunition to inflict greater economic pain in response to any further trade restrictions that the incoming Trump administration may impose…The president-elect recently pledged to impose an additional 10% tariff on all Chinese goods, and he floated tariff rates as high as 60% to 100% during his campaign. But China, which dominates the supply chains for numerous critical minerals essential to high-tech sectors, seems to be telegraphing that it’s prepared to hit back hard…China immediately banned exports of gallium, germanium, antimony, and so called “superhard materials” used heavily in manufacturing, arguing that they have both military and civilian applications, according to the New York Times…The nation said it may also further restrict sales of graphite, which makes up most of the material in the lithium-ion battery anodes used in electric vehicles, grid storage plants, and consumer electronics…“The challenge China faces is that most of its techniques to increase pain by disrupting supply chains would also impact China, which itself is connected to these supply chains,” says Chris Miller, a professor at Tufts University and author of Chip War: The Fight for the World’s Most Critical Technology…Notably, the latest announcement could compel US companies to develop their own sources of gallium and germanium, which can be extracted as by-products of zinc and aluminum mining…Wang says that China’s ban might prove “shortsighted,” as any success in diversifying these global supply chains will weaken the nation’s grip in the areas it now dominates…“It’s hard to see a Trump 2.0 de-escalating with China,” Baskaran says. “We’re on a one-way trajectory toward continued escalation; the question is the pace and the form. It’s not really an ‘if” question.”