- NATO’s first-ever list identifies 12 defense-critical raw materials facing “high risk” to “very high risk” supply constraints amid ongoing global conflicts.
- Germanium prices have surged 115% since Russia’s 2022 invasion of Ukraine, driven by military demand for infrared sensors in missile systems and surveillance equipment.
- Three years of war in Ukraine has fundamentally altered traditional supply routes for defense-critical metals, with over 10,000 germanium-containing Javelin missiles deployed to the battlefield.
- Military use of metals like germanium and tungsten in consumable munitions is disrupting recycling patterns, as these materials cannot be reclaimed after deployment.
- NATO defense spending has dramatically shifted, with members meeting the 2% of GDP guideline increasing from just three countries in 2014 to 23 in 2024.
- Maritime disruptions by Houthi militants have forced shipping to abandon Red Sea routes, increasing delivery times and costs for metal cargoes worldwide
The Russia-Ukraine war, entering its third year, has fundamentally altered traditional supply routes and trading relationships for key metals from tungsten to manganese due to trade and banking sanctions, while the Israel-Hamas conflict in Gaza has added new layers of regional instability.
These tensions reached beyond immediate conflict zones when Houthi militants began disrupting maritime trade routes in late 2023, forcing vessels to abandon the Red Sea corridor and instead navigate around Africa — a move that has increased shipping costs and delivery times for metal cargoes.
“Europe became more vulnerable to disruptions in Asian trade routes, a concern highlighted by the attacks related to the Israel-Hamas conflict, which caused disruptions to Red Sea shipping and raised freight costs,” Fastmarkets steel and ferro-alloy analyst Emre Uzun said.
As peace negotiations emerge on multiple fronts, with the US and Russia discussing potential talks over Ukraine and a ceasefire taking hold in Gaza, questions remain about whether metal markets can return to pre-conflict patterns or if these geopolitical upheavals have permanently redrawn the map of global metals trade.
NATO’s recent list of 12 defense-critical raw materials
In a significant move to identify defense supply chain vulnerabilities, the North Atlantic Treaty Organization (NATO) published its first-ever list of 12 defense-critical raw materials on December 11, 2024, with materials such as gallium, germanium and graphite identified as facing “high risk” to “very high risk” supply constraints for critical military applications.
According to NATO’s risk assessment chart based on The Hague Center for Strategic Studies’ January 2023 report, these materials, along with tungsten and chromium, present concerns for fighter aircraft and main battle tank production, where they are essential for key components.
The list, last updated on December 16, 2024, forms part of NATO’s broader defense-critical supply chain security roadmap endorsed by defense ministers in June 2024, and includes other strategic materials such as beryllium, cobalt, lithium, manganese, platinum, rare earth elements, titanium, and aluminium.
The initiative reflects growing concerns about supply chain resilience, particularly as consecutive global disruptions — from the COVID-19 pandemic to Russia’s war in Ukraine — have exposed vulnerabilities in accessing these essential materials for military capabilities.
Defense systems rely on specialty metals for their unique properties. According to graphite and machining company MWI, graphite is used in fighter aircraft for reducing weight through composites and managing heat in engine components. It is also used in submarine hulls to reduce acoustic signatures and in artillery barrels to handle extreme firing temperatures.
According to the Joint Research Centre (JRC), the European Commission’s science and knowledge service, chromium metal strengthens steel used in torpedo casings, artillery barrels, and submarine pressure vessels while providing crucial corrosion resistance for naval applications.
Meanwhile, according to the Wassenaar Arrangement Secretariat, a multilateral export control regime — whose 42 participating states include the EU, UK, US among others — tellurium and tungsten serve significant roles in fighter aircraft. Tellurium is harnessed in electronic systems and sensors, while tungsten’s high density and temperature resistance make it ideal for flight control counterweights and engine components.
Germanium: changes in export flows to Russia post-sanctions and lack of reclaim opportunities owing to missiles exploding
Germanium metal is used in infrared sensors, including those in the Javelin missile system, which has been widely deployed in Ukraine and noted for its effectiveness against armored targets. The missile uses germanium in the lenses in its seeking unit, according to a report by the Center for Technology and National Security Policy at National Defense University (NDU) in Washington, DC.
More than 10,000 javelin anti-armor systems have been sent by the US to Ukraine since Russia’s full-scale invasion of the country, according to US White House documents.
But javelin missiles are one of several missile types that use germanium, whose optical qualities make it well-suited for infrared imaging and sensing applications. Germanium optics are also thought to be used in the drone and surveillance systems that have become widespread on the battlefield in Russia’s invasion of Ukraine.
Germanium contents in munitions systems can be difficult to glean, owing to the inherent sensitivity, but a 1991 report commissioned by the US Assistant Secretary of Defense detailed germanium usage in munitions and weapons systems. The data is old, but much of the equipment sent to Ukraine has come from historic stockpiles, too.
It found that a TOW missile, similar to the javelin, uses 0.7lb (0.32kg) of germanium in its sites. The US has sent over 10,000 of these missiles to Ukraine since Russia’s full-scale invasion of the country began in February 2022, according to the White House.
The Forward-Looking Infrared System on an M113 personnel carrier uses 1.5lb (0.68kg) of germanium, according to the report. The US has sent over 900 of these vehicles to Ukraine, according to the White House.
These are a small selection of the germanium-consuming munitions that have been sent to Ukraine, and some of the more modern variants may use smaller quantities of germanium. Some of the weapons sent may also have come from historic stockpiles and not replaced, meaning they do not represent new germanium consumption, yet.
Similar information about germanium requirements for Russian munitions is harder to come by, but germanium is likely to be used in similar quantities in Russia’s weaponry.
Germanium, according to the Institute For Defense Analyses, is also utilized in military optics and infrared systems, enabling night vision and thermal imaging in tanks and aircraft.
For a sector where a major proportion of supply comes from secondary recycled or reclaimed material, the increase in germanium used in munitions – where it will not be reclaimed – is also notable.
The biggest sources of reclaimed germanium – from reclaiming waste in the production of germanium wafers or crystals – is unaffected, but the greater proportion of germanium removed from the circular supply suggests a greater need for primary material, multiple contacts involved in minor metal recycling in Europe explained to Fastmarkets.
Fastmarkets’ assessed price for germanium 99.999% Ge, in-whs Rotterdam was $3,000-3,200 per kg on Friday February 21. This is up by 115% from $1,400-1,480 per kg in the first session of 2022, the year of Russia’s full-scale invasion of Ukraine.
Recent price firmness in the Western world has been driven not only by supply tightness relating to China’s 2023 export control, but also due to an uptick in buying in China itself.
Tungsten: increased demand from NATO countries?
Demand for tungsten in the defense sector has been increasing due to a significant rise in EU military expenditure amid heightened geopolitical conflicts, given its use in military applications such as bullets and missiles, sources said.
In fact, the war in Ukraine has reshaped NATO membership in recent years – in terms of both nominal growth in defense budgets and rising share of military expenditures as percentage of gross domestic product (GDP), sources added.
From 2014 to 2024, the number of NATO’s 31 members whose defense expenditure was at the group’s guideline of 2% of GDP has risen from just three to 23, according to a NATO report published in 2024.
“The war in Ukraine motivated both the US and the EU to ramp up defense production to supply Ukraine and to rearm themselves. EU countries are increasing defense spending, which creates demand for those 12 raw materials on the NATO list,” Lewis Black, chief executive officer of tungsten miner Almonty Industries, told Fastmarkets.
But weak manufacturing activity in Europe over the past two years has limited demand growth, capping the upward momentum in prices.
“On military, yes, we see increasing demand. However, in parallel we have seen stagnating or reducing demands in areas like cutting tools over the last few years, basically due to strong Chinese competition. I do not see a real increase in total [demand],” a tungsten market participant in Europe told Fastmarkets.
The latest Global Trade Tracker (GTT) data shows that the EU imported a total of 3,581 tonnes of ferro-tungsten in the year to November 2024, representing only a 0.3% increase from the same period of 2023.
“Increased geopolitical tensions have supported demand for tungsten in defense industry, which is essential in some military applications such as bullets and missiles,” Fastmarkets’ Uzun said. “But weakening manufacturing activity in Europe in the last two years curbed demand growth, limiting the upside for prices.”
“The tungsten used in manufacturing activities can be recycled through tungsten scrap with the help of advanced and mature tungsten scrap recycling technologies in European countries, but this is not the case with military-used tungsten. [The material] will be consumed and used up if the missiles are used,” a China-based tungsten trader said.
“[Because of the] ongoing Russia-Ukraine military conflict, there will be increased demand for tungsten raw material for EU countries,” a second China-based tungsten trader said.
As geopolitical tensions rise, how vulnerable is the war industry’s supply chain to China and Russia? The next part of our series examines this dependency and evaluates the US and Europe’s shifting stockpiling strategies. What should we anticipate in 2025?
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