Gallium, a critical component in smartphones, radar systems, and numerous other technologies, plays a far more significant role than its modest price might suggest. Despite being sold for just pennies above production costs, many non-Asian producers exited the market in the late 2000s when China ramped up its production capacity.
Today, China dominates 98% of global primary low-purity gallium production, according to the U.S. Geological Survey. This dominance left global buyers scrambling when Beijing imposed export controls last year.
These restrictions nearly doubled gallium prices in Europe and created supply constraints for a key material used in both civilian and military semiconductor applications.
So, what’s next? Ironically, gallium is relatively abundant as it is a byproduct of bauxite and zinc ore processing. However, mining it became uneconomical, leading to a decline in production. Companies like Louisiana-based Atalco, the last operating alumina refinery in the U.S., might be encouraged to ramp up production again.
Nyrstar, a company owned by commodities trading giant Trafigura, is evaluating a proposed facility at its Tennessee smelter. Estimated to cost $150 million, this facility could potentially meet 80% of the U.S. annual demand for gallium and germanium, another critical mineral now under China’s export restrictions.
To kickstart such initiatives, government financial incentives would likely be necessary. Funding mechanisms like the U.S. Defense Production Act Title III, which aims to reduce reliance on foreign supplies and bolster the domestic defense industrial base, are designed for this purpose.
There is also potential for the return of gallium production in countries outside the U.S., including Germany, Kazakhstan, and the UK. Additionally, other sources of gallium, such as extraction from coal fly ash (a byproduct of coal combustion), could be tapped.
Recycling gallium presents challenges due to the presence of toxic arsenic in the commonly used compound gallium arsenide. About two-thirds of gallium is used in gallium arsenide wafers, which are essential for components enabling 4G and 5G connections in smartphones, as well as LEDs and sensors.
However, there are alternatives. Germanium can substitute for gallium in wafers, making them more environmentally friendly and, due to the availability of larger wafer sizes, more cost-effective. While germanium is also subject to China’s export controls, its recyclability extends its lifespan, making it a viable alternative.
The growing demand for gallium nitride, particularly in defense applications, suggests that supply constraints could worsen, especially if China closes loopholes allowing U.S. end-users to
source gallium from third-party countries like Japan and South Korea.
Switching from one mineral to another requires time and investment, but it is increasingly clear that alternative sources will need to be developed.