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On November 30, 2023, the Ministry of National Security of China published an article entitled: How to firmly control ‘vitamins’ in strategic industries.
The article defines the critical minerals as “those irreplaceable metal elements and mineral deposits used in advanced industries, such as new materials, new energy, next-generation information technology, artificial intelligence, biotechnology, edge-cutting equipment manufacturing, national defense, and military sectors.”
In addition to manganese, chrome, tungsten and vanadium, the other resources on the list are as follows: aluminium, antimony, beryllium, boron, coal, cobalt, copper, fluorite, gallium, germanium, graphite, indium, iron, lithium, molybdenum, natural gas, nickel, niobium, petroleum, potassium, rare earths, rhenium, tantalum, tin, titanium, uranium and zirconium.
But why are manganese, chrome, tungsten and vanadium so important to China, what is the country doing to secure supplies and what impact might that have on global markets?
For a start, all four minerals are critical to the main downstream steelmaking industry – a sector that far eclipses all others in terms of its size, importance and centrality to China’s economy – and each has role to play in vital energy transition applications, including vanadium redox batteries, among other things.
Manganese is an essential ingredient in the production of steel, with manganese ore smelted to manganese alloys before being used for desulfurization and deoxidization in steelmaking.
“The scarcity of manganese in China and its reliance on imported materials are [the main] reasons why it is [regarded as] a critical mineral, with around 80% of the manganese consumed in China imported from the seaborne market,” a Chinese manganese ore trader source told Fastmarkets.
According to Chinese customs data, the country imported 31.4 million tonnes of manganese ore in 2023 – a 5% increase on the 29.93 million tonnes imported in 2022.
“From 2023, China started to add to its strategic reserves of manganese alloys and [that] will continue in 2024,” a Chinese manganese alloy producer source said.
In addition, the government is likely to continue imposing a 20% export tariff to limit the outbound shipments of manganese alloys, the source added, because while China’s silicon-manganese output in 2023 was about 12 million tonnes – which was a near 15% increase on 2022’s 10.43 million tonnes – the country’s exports amounted to just 48,134 tonnes only – a 41.7% drop on 2022’s 115,387 tonnes.
More than 90% of the world’s chrome output is used in the form of ferro-chrome in the production of stainless steel – the essential component that makes it resistant to corrosion.
But while China produced 35 million tonnes of stainless steel in 2023, accounting for around 60% of global output, the country lacks its own chrome resources and is heavily dependent on imports, according to the China Ferroalloy Industry Association.
According to Chinese customs data, total chrome ore imports amounted to 18.33 million tonnes in 2023, up 22% from 15.0 million tonnes in 2022.
Even with the significant imports of chrome, domestically-produced ferro-chrome is still insufficient to support the output of the country’s stainless steel industry and 3.25 million tonnes of ferro-chrome was imported to China in 2023 – an increase of 36% on 2022’s 2.28 million tonnes, according to Chinese customs data.
“Critical materials should satisfy the demands of domestic production,” a ferro-chrome trader source said, “so high export tariffs are applied to those materials.”
China’s export tariff for ferro-chrome is currently 40%, and customs data shows that, in 2023, China exported 61,165 tonnes of ferro-chrome.
“It is small share, compared with the 7 million tonnes produced in the country,” the trader added.
Tungsten is widely used to manufacture hard alloys, steel alloys, molybdenum tungsten alloy and electronic components such as filaments among other products.
“I suppose the reason why tungsten was listed as a critical alloy is because tungsten has a high melting point and can be used to make many top-class weapons, such as tanks, armor-piercing bullets, aircraft engines and so on,” a tungsten trader said.
China’s export tax on tungsten concentrates was increased from 15% to 20% from January 1, 2022.
China is the world’s largest tungsten producer and exporter, has about 60% of the world’s tungsten reserves, and accounts for about 80% of global tungsten production and about 40% of global tungsten exports, sources said.
“As the world’s largest producer of tungsten, China has a large amount of tungsten resources. And by restricting exports of tungsten, China can protect its [domestic] reserves and ensure that it will not be affected by resource shortages in the future,” a second tungsten trader said.
Vanadium is widely used in metallurgy, chemical engineering and in steelmaking, among other industrial uses, such as vanadium redox batteries.
“Around 80% [of all the] vanadium produced is used in steel production, with 7% used in vanadium-alumina alloy production, 8% in chemical engineering and around 5% in [the production of] vanadium redox batteries,” sources told Fastmarkets.
According to data from China’s, Huajing Research Institute, in 2022, China accounted for up to 68% of global vanadium production, Russia 18%, South Africa 8% and Brazil 6%.
China is the world’s largest consumer of vanadium, accounting for above 50% of global consumption in 2022, according to the institute.
“Most Chinese vanadium producers and traders have preferred to sell domestically rather than export overseas in recent years since the offers from domestic steel mills are OK and domestic demand for vanadium is still quite big. They can make quite considerable profits,” a China-based vanadium trader source said
“Admittedly, vanadium is a critical alloy because [of its use in] the chemical engineering sector and, in particular, in aerospace. But China’s vanadium export volumes are quite small and most of the exports are from Panggang Group, which exports only a small amount of vanadium pentoxide, mainly on long-term contracts,” a second China-based vanadium trader source said.
“If China limits exporting vanadium since it is a critical alloy, the overseas buyers can purchase from Russia, South Africa and Brazil vanadium producers instead,” the same second China-based vanadium trader source added.
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