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How US buyers of critical mineral bypass China's Export Ban

According to records from customs and shipping, at least one Chinese company is involved in this trade. China is the largest supplier of antimony, gallium and germanium used in semiconductors, telecommunications and military technology. Beijing banned the export of these minerals to America on December 3, following Washington's crackdown against China's chip industry.

The shift in trade flows highlights the struggle for vital minerals, and China's struggle for enforcement of its curbs. It is competing with the U.S. to achieve economic, military and technology supremacy.

Trade data shows that U.S. shipments are being rerouted via third countries, a problem which Chinese officials have admitted.

Three industry experts, including two executives from two U.S. firms who claimed to have obtained restricted minerals in China recently, confirmed this assessment.

Customs data shows that the U.S. imported 3,834 tons of antimony oxides between December and April from Thailand and Mexico. This was almost three times more than the previous years combined. Thailand and Mexico meanwhile shot up to the top three markets for Chinese antimony exports this year according to Chinese data until May. In 2023, which was the last year of exports before Beijing began to restrict them, neither country made it into the top 10. According to RFC Ambrian consultancy, Thailand and Mexico both have one antimony smelter. The latter was only reopened last April. According to RFC Ambrian, neither country has significant quantities of antimony.

The U.S. is on track to import antimony, germanium, and gallium at the same or higher levels than before the ban. However, prices will be higher.

Ram Ben Tzion is the co-founder and CEO at Publican's digital platform for vetting shipments. He said that although there were clear signs of transshipment in trade data, it was not possible to identify companies involved.

He said, "We're seeing a pattern and it's consistent." He added that Chinese companies were "super-creative" in their efforts to bypass regulations.

In May, China's Commerce Ministry stated that "unspecified" overseas entities "colluded" with domestic lawbreakers to circumvent its export restrictions and that stopping this activity was vital to national security. It did not respond to any questions regarding the change in trade flows that occurred since December.

Similar questions were not answered by the U.S. Commerce Department or Thailand's Commerce Ministry, nor Mexico's Economy Ministry.

The U.S. does not prohibit American buyers from buying antimony, germanium, or gallium of Chinese origin. Chinese companies can export the minerals to other countries than the U.S. with a valid license.

Levi Parker, founder and CEO of U.S. based Gallant Metals told us how he gets about 200 kg gallium per month from China. He did not name the parties because of the possible repercussions.

Firstly, agents who buy in China purchase material from the producers. He said that a shipping firm then routes the packages via another Asian nation, with re-labeling as art supplies, iron, or zinc.

Parker stated that the workarounds weren't cheap or perfect. Parker said that he would love to import 500kg regularly, but that he was concerned about the risk of attracting scrutiny. Chinese logistics companies are "very cautious" due to this.

BRISK TRADE

Thai Unipet Industries is a Thailand-based branch of Chinese antimony manufacturer Youngsun Chemicals. According to previously unreported records, the company has done brisk business with the U.S. over recent months. According to 36 bills recorded by ImportYeti, Export Genius and ImportYeti, Unipet shipped 3,366 tonnes of antimony-based products from Thailand to America between December and may. This was about 27 times more than the volume Unipet transported in the same time period last year.

They do not always indicate the origin of raw materials. The records do not provide specific proof of transshipment. Thai Unipet could not be reached for a comment. A person answered when I called the number for the company listed on the shipping record. She said that the number did not belong to Unipet. No response was received when I mailed my questions to Unipet’s registered address. Youngsun Chemicals - Unipet's parent company - did not respond to any questions regarding the U.S. shipment.

Unipet's U.S. shipments were purchased by Texas-based Youngsun & Essen. Before Beijing's antimony trioxide ban, Youngsun Chemicals imported the majority of its antimony from Youngsun Chemicals. Jimmy Song, the president of Youngsun & Essen, did not respond to questions regarding imports.

China launched a major campaign against the transshipment of minerals and their smuggling in May.

Offenders may be fined and banned from exporting in the future. James Hsiao of the Hong Kong-based law firm White & Case said that serious cases could also be classified as smuggling and lead to jail sentences exceeding five years.

He said that Chinese laws are applicable to Chinese companies even when transactions take place overseas. Hsiao said that in cases of transshipment the Chinese authorities could prosecute sellers who failed to do enough due diligence to identify the end-user.

For those willing to risk it, there are big profits to be made overseas where the shortages of gallium, antimony, and germanium have sent prices to record highs.

China's antimony and Germanium exports are still lower than before the restrictions.

Ben Tzion, a Beijing-based economist, says that Beijing must now ensure that its export control regime is effective.

"While all of these policies are in place, the enforcement of them is a totally different scenario," said he.

(source: Reuters)