A Chinese export ban on titanium is likely coming soon, and will kill the Western robotics industry
Bullets:
Over past months, China's export bans on gallium, germanium, and antimony have upended supply chains for weapons makers.
China is taking a hard line on materials that have "dual use" applications, across military and civilian sectors.
Titanium poses a unique problem for supply chain managers in North America and Europe. Besides defense and aviation, titanium also has huge dual-use applications for robotics.
Industrial automation is critical to increase manufacturing in Western markets, to bring down the cost of production. And access to low-cost titanium makes robotics manufacturing possible.
But China and its close allies have huge advantages in the mining of titanium, and in the production of titanium sponge. Alternative sources of sponge, such as Japan, are entirely dependent on imports of titanium ore. And alternative sources for titanium ores tend, also, to run through Chinese Belt-and-Road Investments.
Report:
Good morning.
Over the past year China has put several critical materials on export ban lists, in particular those with a dual-use purpose. Dual use means that they have both civilian and military applications. They began with gallium, germanium, and antimony. When this article was published, supply chain managers were already having serious problems sourcing those, and prices went straight up. Now there are concerns that more will be added; in fact, China announced an export ban on tungsten last week.
Let’s look now at what a similar ban on titanium—which is likely coming-- would do. Titanium is yet another metal crucial to weapons systems and aviation, and the dual use aspect of titanium is intriguing for another reason. Titanium is a very important metal for the production of industrial robots. Goes without saying that China’s military wouldn’t care to see their titanium being used to build military-grade robots in other countries. But industrial robots installed in North America and Europe would undermine China’s factory sector. Our policymakers know that the only way to re-shore production to the US or Western Europe is by automating our factories, because only that has a chance to be cost-competitive against Chinese industry. But we need a lot of titanium to build robots in our markets, and China and the other BRICS have the titanium.
Russia has already floated the idea of a titanium ban, last year, along with some other metals that also show up on that list we were worried about in the beginning. And the announcement that they were even thinking about it scrambled the market, and got supply chain analysts busy working out the numbers. Just one Russian company, VSMPO-Avisma, produces 15% of the world’s titanium sponge comes from. More than half the world’s sponge comes from China, about 25% from Japan, and 10% from Kazakhstan. Just that paragraph, alone, should be enough to cause titanium buyers to worry. Russia, China, and Kazakhstan are friendly countries—with each other —- and together make up more than three fourths of the world’s supply of titanium sponge, with Japan providing the rest.
So the focus shifts to Japan, which sounds like a good Plan B in case Russia, China, and Kazakhstan cut us off. Nikkei Asia is a Tokyo paper, and this features how Japanese producers are positioning themselves as reliable sources. Japan takes titanium ores, and converts them into titanium sponge. Japanese titanium sponge production has increased by a fifth since 2021, and it is now the second largest producer of titanium sponge.
But there is a big problem: Japan doesn’t have titanium ores. Japan imports the titanium ore which it then turns that into titanium sponge. In 2023, Japan was the world’s 2nd largest importer of titanium ore. The takeaway here is that an export ban of titanium ore puts much of the Japanese titanium sponge industry out of business, until new sources of ore can be found.
Consider this too. In 2023, Asia Pacific was most of the end-user market for the world’s titanium. China and India alone take more than half of it, for their own markets. Titanium is vital in construction, aerospace, and automotive, and here is where most of that consumption is. China is also by far the number one miner of ilmenite, 3.4 million tons, which is 3 times higher than Mozambique, which is at #2.
So that’s a natural next question—maybe Mozambique is a Plan B, for the titanium ores. But we bump into China there, too, and their Belt and Road investments in Mozambique. China built the longest suspension bridge in Africa in Mozambique, which shaved 100 miles off road travel between the capital and Katembe. That ran $786 million. And in 2014 Chinese companies ramped up heavy investments in Mozambique to produce one million tons per year of ilmenite there, and ship it to China for the next 25 years for processing.
Here's a quick update on how that’s going. In one month—April 2024, China imported 328 thousand tons of titanium ore. Mozambique was 143,000 tons of that. Norway—oh look, one of our friends made the list—35,000 tons. Mozambique is 4 Norways, in other words. Vietnam at 32,000 tons. In addition to China being the biggest miner of the ore, it’s also the biggest importer of it, and we should probably assume that Mozambique is happy with this relationship, and they like having the biggest bridge in Africa.
Besides aviation and automotive and construction and defense, manufacturers are looking to titanium to build robotics. This analysis explores the reasons titanium is the most preferred metal for making robots. Strength, and elasticity, and biocompatibility. It is lightweight. Highly resistant to corrosion, and low thermal conductivity, absorbs sound waves, high machinability, titanium allows robots to operate in very hot environments, electrical insulation properties, protection against static electricity, low cost—look for that one to go away on day 1 of an export ban-- high strength-to-weight ratio. Recyclability—there’s some good news, we can probably find some in our junkyards.
China is rapidly building out its robotics industry. China has the highest adoption rate in the world. But China isn’t building robots to replace Chinese blue-collar labor, or Chinese factory jobs. They’re building robots to replace American and European factory jobs. The International Federation of Robotics points out here that even though China is building a lot of robots, they’re exporting basically none of them, except those that go to Chinese-owned factories around the world.
Western companies aren’t supposed to be buying titanium from Russia anyway. But suppliers to Airbus get waivers from the restriction, because without the titanium, our aircraft cannot get built, or repaired. That’s to say that we put our own ban on Russian titanium, and our own companies design workarounds so they can get it, anyway. There is simply no good alternative for titanium in aviation. And there is simply no good alternative to titanium in robotics. And given the export bans we’ve already seen, in those other metals that have broad applications across military and industrial sectors, we should get ready for one on titanium.
Resources and links:
The Benefits Of Titanium For Robotics Industry
https://flyingprecision.com/the-benefits-of-titanium-for-robotics-industry/
Visualizing Asia’s Dominance in the Titanium Supply Chain
https://www.visualcapitalist.com/sp/visualizing-asias-dominance-in-the-titanium-supply-chain/
5 key Chinese 'Belt and Road' projects underway in Africa
https://www.voanews.com/a/key-chinese-belt-and-road-projects-underway-in-africa/7767507.html
Chinese firms to invest US$471 mln in Mozambique heavy sands
https://www.forumchinaplp.org.mo/en/economic_trade/view/280
Titanium ore imports into China in April 2024 were approximately 328,600 tons, a year-on-year decrease of 5.09%
https://www.titanos.com/news/Market/2646.html
Titanium Ore in Japan
https://oec.world/en/profile/bilateral-product/titanium-ore/reporter/jpn
China’s Robots Are Coming of Age
https://www.cigionline.org/articles/chinas-robots-are-coming-of-age/
The Diplomat, China’s Mineral Export Ban Strikes at the US Defense Industrial Base
https://thediplomat.com/2024/12/chinas-mineral-export-ban-strikes-at-the-us-defense-industrial-base/
Statista, Titanium minerals and ores reserves, worldwide
https://www.statista.com/statistics/1233845/reserves-titanium-minerals-worldwide-by-country/
Japan emerges as alternative titanium supplier amid U.S.-Russia tensions
European Commission Report on Titanium: Impact Assessment for Supply Security
https://rmis.jrc.ec.europa.eu/uploads/220616_Briefing_Titanium.pdf
What if Russia blocks the export of its raw materials?
https://www.dw.com/en/what-if-russia-blocks-the-export-of-its-raw-materials/a-70414246
Putin says Russia should consider restricting uranium, titanium and nickel exports
China’s new growth strategy backed by robots
https://ifr.org/news/chinas-new-growth-strategy-backed-by-robots/
Titanium Market: Global Industry Analysis and Forecast (2024-2030) Trends, Statistics, Dynamics, Segmentation by, Deployment Mode, Organization Size, Application End-Users, and Regions.
https://www.maximizemarketresearch.com/market-report/titanium-market/126890/
Reuters, Airbus wins reprieve from Canadian sanctions on Russian titanium
Exclusive: To help Airbus, Macron pressed Canada to ease Russia titanium sanctions
Airbus wins reprieve from Canadian sanctions on Russian titanium
https://www.mining.com/web/airbus-wins-reprieve-from-canadian-sanctions-on-russian-titanium/
Thank you!