China-US trade tensions could be opportunity for LatAm mining

China's ban on exporting minerals such as gallium, antimony, and germanium to the United States and growing restrictions on graphite could reinforce the focus on Latin American sources and open an opportunity to diversify production.

The Chinese government's move once again reveals the unbalanced nature of the global minerals market, which is essential to the electric vehicle industry and other sectors.

China produces more than 90% of the world’s gallium, about 70% of graphite, 60% of germanium and around 50% of antimony. The US depends on Chinese imports to source over 50% of 24 basic minerals, according to the US Geological Survey. This dependency is considered a threat to US national security, an issue the incoming Trump administration will have to deal with.

Beijing’s move follows a new Washington offensive to hinder the entry of technological components from the Chinese semiconductor industry, affecting some 140 Chinese microchip manufacturers.

The need to guarantee a solid supply chain for critical minerals is where Latin America can play a key role.

Given its growing trade tensions with Beijing, the US may face two options: self-sufficiency, which could be a long-term goal, or seeking more trade agreements with mining countries such as Latin American jurisdictions.

LatAm projects

Gallium is a byproduct of bauxite mining. Mineração Rio do Norte’s Novas Minas project in the Brazilian state of Pará seeks to extend the life of a bauxite mine that currently produces around 12.5Mt/y from 2027 to 2042. This initiative could involve a gallium line to take advantage of the current geopolitical tensions.

Gallium could also be produced from processing waste from zinc mining at projects such as Peru’s Huancapetí expansion, Corani, Colquijirca expansion (Tajo Norte and Marcapunta) and Romina; Ecuador’s La Plata and Curipamba-El Domo; and Bolivia’s Oruro zinc refining plant.

All of these projects are scheduled to begin operating within the next two years.

Graphite is another attraction. Global graphite consumption has increased 200% since 2019 due to the boom in the lithium-ion battery market. In addition, the number of battery manufacturing plants in the United States grew to 10 by 2023 from three in 2019 and 28 additional units are in development, the USGS said in a report.

Last year, Brazil produced 73,000t of graphite and the amount is expected to grow with the Santa Cruz graphite project in Bahia state, where construction is expected to begin in 2025, and through the investment planned by Appian Capital Advisory in another project, also in Bahia.

Mexico, meanwhile, generated US$12.4mn in graphite trade last year, with the US accounting for 67% of purchases, according to data from the economy ministry.

Antimony is a byproduct of gold, lead, copper and zinc production. Last year, Bolivia accounted for 3,000t and Mexico 700t, according to the USGS, and although this year the US Antimony Corporation announced that it would discontinue its activities in Latin America and divest its subsidiary US Antimony de México, it said in a March statement it would maintain its mining concessions in that country due to the high exploration potential.

Germanium is produced mainly from sphalerite, a zinc mineral, and coal ash, but to date there are no projects in South America.

The transition to clean energy requires a diverse mining industry. The International Energy Agency has reiterated calls to diversify supply to achieve the goals set at a global level, and Latin America has potential in this regard.