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Mass drone warfare boosts demand outlook for key critical minerals
BMO Capital Markets estimates about 15 million drones will be deployed in the Russia-Ukraine war this year, adding new defense demand for gallium, germanium and rare earths whose processing is heavily concentrated in China.
The rapid shift toward mass drone warfare is likely to create fresh defense demand for critical minerals including gallium, germanium and magnetic rare earths, according to BMO Capital Markets.
BMO estimates about 15 million drones are expected to be deployed in the Russia-Ukraine war this year, and that governments and military alliances have pledged about $150 billion over the past two years to develop drone and counter-drone capabilities.
The report highlights that supply chain vulnerability is acute because markets for gallium, germanium and heavy rare earths are relatively small and processing is concentrated in China, with gallium nitride used in high-frequency and power semiconductors, germanium used in infrared and fiber optics and some semiconductors, and rare-earth permanent magnets used in electric drone motors.
It also points to growth in counter-drone spending, noting that counter-drone technologies can increase demand for germanium, gallium and heavy rare earths, while NATO has committed more than $40 billion over five years to counter-drone capabilities and aims to train more drone operators by the end of 2027.