By David Willey, Benzinga
Tensions appear to be flaring up again between China and the United States, as the Chinese government restricts the export of two critical metals, germanium and gallium. These metals are key strategic resources that are used in semiconductors, solar panels, and even military applications.
Restrictions on exporting these metals have been made in the interest of national security, according to Chinas Commerce Ministry. 60% of the global supply of germanium and 80% of the global supply of gallium comes from China, which indicates the fragility of certain supply chains and the importance of establishing onshore supplies of critical resources.
Another product that could be threatened by fragile supply chains is lithium iron phosphate (LFP) batteries. Currently, 30% of EV batteries are LFP, and because of the advantages offered by LFP, it is predicted that this chemical compound will make up the majority of EV batteries by 2028. However, 90% of LFP batteries are currently made in China, meaning this supply chain could be vulnerable to disruptions.
A key component of LFP batteries is phosphate, a natural mineral that has a wide range of applications, including in agriculture, animal feeds, cosmetics and advanced battery technology. The market size for LFP batteries was $17 billion in 2023, and it is predicted to reach $35.5 billion by 2028 at a compound annual growth rate (CAGR) of around 15% over 2023-2028.
Historically, global demand for phosphate increases by 2% or 3% every year, with demand primarily driven by its use in the agricultural sector. However, as companies like Tesla (NASDAQ: TSLA) and Ford (NYSE: F) invest in the adoption of LFP batteries, demand for phosphate will likely grow at a considerably higher rate fueled by its role in battery technology.
Bringing Phosphate Home
Among the lessons countries have learned from the pandemic is the fact that more diverse supply chains with domestic production produce greater supply chain resilience. Now, with restrictions like the ones China has placed on the metals gallium and germanium, companies may look again at ways to reshore or find friendly supplies of other critical resources, as well. That is why Canadian phosphate mining company Arianne Phosphate Inc. (OTCQX: DRRSF) hopes to solidify supply chains by providing Western economies with stable and secure access to phosphate.
Arianne Phosphate owns the Lac Paul project approximately 27,000 hectares of land in Quebec with enough resources to support over 50 years of mining operations. The project has acquired all the necessary permits and is construction ready.
Arianne Phosphate reports that the project is located in a mining and investment-friendly jurisdiction, which could prove an advantage for the company as it develops the single largest greenfield deposit of phosphate. The project is an igneous deposit, meaning it produces a higher phosphate concentration than 90% of the worlds phosphate, including over 78 million tons of high-grade phosphate.
With some off-take and marketing agreements already in place, Arianne Phosphate believes it is positioned to provide a reliable onshore supply of phosphate to support the growing LFP sector in North America and Western Europe.
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