China’s critical minerals curb has billion-dollar impact on US GDP: Macquarie

China’s export controls on certain critical minerals could reduce US GDP by more than $1 billion a year, even if America’s reliance on Chinese imports is not as strong as publicized, according to analysts at Macquarie Group.This estimate — a product of modelling by a team led by chief economist Ric Deverell — was based on Chinese export curbs placed on four rare earths (samarium, lutetium, terbium, dysprosium) plus gallium. All five appear on the US government’s recently updated list of critical minerals, which now has 60 items including copper and silver.In a report published on Tuesday, Deverell and his team outlined the degree of US dependence on foreign sources of these minerals. They found that last year, the US was 100% import reliant on 12 of them, and over 50% reliant on a further 33.Credit: MacquarieIn calendar 2024, US domestic primary mine production was worth about $17.5 billion, while its total import value was $65 billion, Macquarie’s report also showed. China, the main economic rival, was unsurprisingly the biggest producer and processor by value.Impact of Chinese controlsHowever, their estimates reveal that China was not the main provider to Washington, as its minerals accounted for just $2 billion of 3% of total US imports. Rather, its biggest sources of critical minerals were Canada (32%), Chile (10%), Mexico (8%) and South Africa (7%). This suggests the US has on the surface avoided overreliance on China.However, this also does not change the fact that the US remains highly dependent on a range of minerals used for defence and high-end technologies. Macquarie estimates the country is about 80% import reliant for rare earth compounds and metals, with approximately 70% of those coming from China.Credit: MacquarieAccording to the Macquarie analysts, this also does not suggest that the impact of China imposing export controls on key critical minerals would be small. Again, using rare earths as an example, it estimates that the US imported $170 million of those minerals in 2024, with $120 million coming from China.As such, China’s export controls on rare earths, namely samarium, lutetium, terbium and dysprosium, would have the largest short-term GDP impact on the US, they wrote, estimating a loss of over $1 billion over a one-year period. However, the biggest cost would be strategic, they added, with several key industries in the US relying on Chinese sources of rare earths. Also included in the estimate was gallium, a key material to the semiconductor industry.Credit: MacquarieAustralian opportunityLooking ahead, Macquarie sees Australia, with which the US recently signed a critical minerals framework, as a potential new hunting ground for critical minerals.According to the bank’s estimates, Australia currently holds over 15% of the world’s critical minerals reserves and produces nearly half of the US critical minerals list. While its production has fallen over the past five years due to a weak market environment, that is expected to reverse in the coming years, with over $50 billion worth of investment in the pipeline as of October 2024, Macquarie said.Similar to China, Australia accounted for a tiny portion (2%) of US critical mineral imports, but Macquarie analysts see a scenario where Australia replaces all US imports from China.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com