Days before Trump's inauguration, proposed Chinese export restrictions target processes for battery components, critical mineral extraction and refinement.

Critical mineral processing and battery tech exports from China appear to be the next casualty in a burgeoning trade war between Washington and Beijing, key players in the global economy with opposing views and a worldwide net-zero emissions goal in the balance.

Earlier this month, China's Ministry of Commerce proposed further export restrictions on critical minerals processing (specifically lithium and gallium extraction) and various technologies used to build battery components, the latest in an ongoing succession of restrictions and bans that reinforce the communist nation's dominance in the global industry.

This announcement came only days before the inauguration of President Trump, whose second term has promised multiple tariffs and trade restrictions against other countries, with China at the top of the list.

Adam Webb, head of battery raw materials at consultancy Benchmark Mineral Intelligence, explains that if implemented into policy, these proposals would strengthen China's current hold on nearly two-thirds of global lithium processing, specifically the tech for converting it into the form used in electric vehicle battery components.

"These proposed measures would be a move to maintain this high market share and to secure lithium chemical production for China's domestic battery supply chains," Webb told Reuters. "Depending on the level of export restrictions imposed, this could pose challenges for Western lithium producers hoping to use Chinese technology to produce lithium chemicals."

However, U.S. battery manufacturers won't be the only parties adversely affected, the recommended restrictions increase could also disrupt the overseas expansion plans of major Chinese battery makers such as CATL.

Beijing is acting on a long-term plan to stay on top of critical mineral and battery production, protecting its dominant 70% global market share in lithium processing for EV batteries, as well as strengthening the positions of its domestic battery manufacturing giants.

Chinese producers have been flooding the global market with rare earth elements and battery metals like lithium, leading to price crashes and weakening competitors. Since last year, lithium is down by more than 80%, while nickel and cobalt have both tumbled over 40%, causing the American push for constructing domestic mines, processing facilities, and battery manufacturing to struggle for funds and lose vital ground in the race to reach net zero emissions through a steady build-out of sustainable transportation and power infrastructure.

A series of troubling actions

Tight supply and growing demand combined to thrust antimony prices to record highs this year, especially in the rapid growth of photovoltaic technology for solar power generation. The U.S. relies on imports for 82% of its supply of this strategic mineral, which is a vital ingredient in a wide range of household, industrial, high-tech, and military goods, with China as the world's largest supplier.

Meanwhile, in August, China announced state-controlled restrictions on the export of antimony.

"A lack of concentrate feedstock remains the key feature of the antimony market at present," said Jack Bedder, co-founder of consultancy Project Blue. "As of today, China is also responsible for nearly 60% of refined germanium output and just shy of 100% of refined gallium production. The move is a considerable escalation of tensions in supply chains where access to raw material units is already tight in the West."

This followed on the heels of Washington's latest restrictions on China's chip sector, the third crackdown on the communist country's semiconductor industry in three years, which included curbing exports to 140 companies. The action was designed to further impair the production of advanced-node semiconductors that can be used in the country's military modernization.

Beijing responded by imposing a strict ban on the direct or indirect exports of any China-produced gallium and germanium widely used in the semiconductor industry and antimony needed for military and high-tech goods to American manufacturers.

"In principle, the export of gallium, germanium, antimony, and superhard materials to the United States shall not be permitted," the Ministry said in a statement.

The latest round of pending export restrictions further enforces existing limits on a host of critical minerals exports that Beijing began rolling out last year. However, these only apply to the U.S. market, marking an escalation in the ongoing trade tensions over green technology.

These moves and countermoves have amplified concerns that Beijing could target other critical minerals with even broader usage, such as nickel and cobalt.

"It comes as no surprise that China has responded to the increasing restrictions by American authorities, current and imminent, with its own restrictions on the supply of these strategic minerals," said Peter Arkell, chairman of the Global Mining Association of China. "It's a trade war that has no winners."

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China's pending export restrictions only apply to the U.S. market in the latest escalation of tit-for-tat blows in what is shaping up to be a none-too-subtle nationalistic green tech trade war.

The bad news

The Chinese Ministry of Commerce proposal includes specifics on several technologies, including:

• The proposed rules would require Chinese firms to get a license before exporting lithium iron phosphate (LFP) preparation technology. Nearly all LFP, an inexpensive material for electric vehicle battery cathodes, is made in China.

• Technology for producing lithium manganese iron phosphate, a similar cathode material.

• Technologies and processes for extracting metallic gallium

If the export restrictions on these technologies are implemented, companies outside of China could struggle to catch up.

"China has been signaling for some time that it's willing to take these steps, so when is the U.S. going to learn its lesson?" said Todd Malan of Talon Metals, which is trying to develop a nickel mine in Minnesota.

For several North American companies, the lesson has been sinking in, and Western governments are investing.

Several firms are already pushing for technology from outside of China:

• ICL Group is planning an LFP plant in St. Louis, Missouri, that will use technology from the Taiwanese company Aleees.

• In September, the U.S. Department of Energy awarded Mitra Chem a $100 million grant to build an LFP plant in Michigan.

• At the end of last year, Nano One received $13 million from the government of Quebec to help commercialize a new LFP manufacturing process.

• The Export-Import Bank of the United States (EXIM) has offered to loan Perpetua Resources Ltd. $1.8 billion for the development of an antimony-producing mine at the Stibnite Gold project in Idaho.

"We must get serious about American mineral sources," said Perpetua Resources CEO Jon Cherry. "It's time to end our reliance on China and secure our future."

China's announcement on the pending bans on battery materials and gallium processing technologies remains ambiguous and did not specify when the proposed changes could come into force.