Ge buyers seek new supply, alternatives as demand rises

Market: Metals
30/09/24

Germanium consumers around the world are looking for alternatives while producers aim to lift output, as demand increases while restrictions on exports from China reduce availability.

Prices for 99.999pc germanium metal exported from China have soared to $2,580-2,680/kg fob from $1,450-1,550/kg at the start of June and $1,110-1,210/kg at the start of 2023, according to Argus assessments. The upper end of the range in Europe tipped past $3,000/kg cif at the start of September and remains there. Germanium dioxide prices have similarly climbed.

Demand for germanium for defence and advanced computing applications is growing. The adoption of artificial intelligence (AI) in a range of industries is driving strong demand for silicon-germanium owing to the compound's ability to operate at higher frequencies and lower power. That makes it well suited to the higher performance and efficiency that AI requires, according to Israeli firm Tower Semiconductor.

Tower expects the utilisation rate of its Fab 3 facility to hit full capacity in the third quarter, up from 55pc in the second quarter in response. Beyond AI and data communications, automotive manufacturers are exploring the use of silicon photonics in light detection and ranging (LiDAR), the company said. As advanced driver-assistance systems (ADAS) become standard and autonomous vehicles are rolled out, consumption of germanium in infrared optics for thermal imaging cameras and night vision devices is increasing.

But consumers are concerned about security of supply. The US increased its imports of germanium metal and dioxide in 2023 by around 20pc year on year to 38t, according to the US Geological Survey. Exports from China, the world's largest germanium producer and exporter, dropped sharply after the government introduced export controls in August 2023.

Given the use of germanium in optical components, power devices and sensors, the US Department of Defense (DoD) is working with suppliers to ensure it has sustainable access.

The Defense Logistics Agency has a partnership with LightPath Technologies to replace germanium in certain DoD applications. LightPath is working to reduce the amount of optics it produces from germanium, to reduce the risk of supply chain disruption and help customers convert their systems to use optics made from its Black Diamond chalcogenide materials, the company's president and chief executive, Sam Rubin, said in its second-quarter earnings call.

LightPath's infrared component sales fell by $1.7mn, or 36pc, primarily after its largest customer did not renew a large annual contract for germanium-based products. The company last week announced a $500,000 initial production order for thermal imaging assemblies using Black Diamond from a new tier-1 defence customer.

But for other products, the DoD is working to support an increase in its germanium consumption. It is investing in Canadian semiconductor materials firm 5N Plus to expand its capacity to produce space-qualified germanium wafers used in solar cells for defence and commercial satellites. It has awarded the company $14.4mn via the Defense Production Act Investment programme to upgrade and expand the production facilities and tools at 5N's facility in St George, Utah.

The four-year project will work to improve germanium sourcing, recovery and refining, the DoD said, and supports product diversification to ensure the long-term viability of the business. It also aims to address process integration to meet solar cell producers' changing germanium substrate requirements.

Germanium producers are looking to capitalise on the rise in demand by increasing output, as the higher prices make refining the metal more profitable. Mining exploration companies such as Anson Resources and EV Resources in Australia and Cantex Mine Development in Canada are pursuing projects with germanium content for potential production. But the fastest way to do so is by processing tailings to extract germanium.

For instance, Hong Kong Sinomine Rare Metals, which has acquired the Tsumeb copper smelter and polymetallic tailings pile in Namibia, recently estimated that the tailings contain 746.21t of germanium metal. The company plans to add a germanium-zinc smelting production line to the copper smelting line, to commercialise output "as soon as possible".

Earlier this year, Belgium's Umicore signed a long-term agreement with STL1, subsidiary of Democratic Republic of Congo state-owned mining firm Gecamines, to optimise germanium production at STL's processing facility commissioned in 2023 at the Big Hill tailings site in Lubumbashi.

STL's germanium previously entered the market through third-party refiners outside the country. The company is looking to increase the value it generates from the metal by refining it domestically, while Umicore will diversify its sources of germanium supply with an offtake of "substantial volumes" for its downstream optical and electronic products. Umicore expects to refine the first test volumes of concentrates in the fourth quarter, and help analyse the germanium content in the tailings to further develop downstream products.

A continued rise in prices could see further refining and recycling capacity come on line, unless substitution in germanium's various growing applications becomes more widespread.

By Nicole Willing

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