Wedoany.com Report-Nov 21, US Geological Survey researchers have developed a new model to assess how disruptions of critical mineral supplies may affect the US economy. Using the model, the researchers estimate there could be a $3.4 billion decrease in US GDP if China implements a total ban on exports of gallium and germanium, minerals used in some semiconductors and other high-tech manufacturing.

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 US GDP.

Economic losses to the US from decreased gallium and germanium imports would be concentrated in the semiconductor device manufacturing industry, which would account for more than 40% 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% and germanium prices by 26% in the case of a total ban, but the decreased economic activity would be primarily driven by reduction in supplies.

Another major driver of the impacts is the lack of significant production outside of China.