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Gallium, used in smartphones, radar kit and much in between, punches way above its weight. Selling for pennies above production costs, many producers outside of Asia bowed out of the metal at the end of the noughties when China began expanding capacity. China now controls 98 per cent of primary low-purity gallium production, according to the US Geological Survey. Buyers in the rest of the world were left reeling when Beijing imposed export controls last year.
That has sparked a near-doubling of gallium prices in Europe and constrained access to a key mineral for chips with civil and military applications.
What now? Ironically, gallium is pretty plentiful. It is a byproduct of bauxite and zinc ore. It used to be mined before the economics made that a busted flush. Metal refiners such as Louisiana-based Atalco, the self-styled “last operating alumina refinery in the US”, could be nudged into stepping back on the gas.
Nyrstar, owned by commodities trading group Trafigura, continues to assess a proposed facility at its Tennessee smelter. It reckons this facility, costed at $150mn a couple of years ago, could meet 80 per cent of annual US demand for both gallium and germanium, another critical mineral under China export curbs.
Governments would probably have to stump up financial incentives, but cash exists for just this sort of purpose. Take the US Defense Production Act Title III, which is designed to mitigate reliance on foreign supplies and strengthen the domestic defence industrial base.
There is also scope for a return of one-time producers outside of the US, which include Germany, Kazakhstan and the UK. Other sources could be corralled. For example, gallium can be extracted from coal fly ash, a waste product from coal combustion.
Recycling is trickier due to the presence of toxic arsenic in the most commonly used compound. Roughly two-thirds of gallium goes into gallium arsenide wafers. These, souped-up as epi-wafers, are key for components that enable 4G and 5G connections in smartphones as well as LEDs and sensors.
But here too there are workarounds. Substituting germanium makes wafers environmentally safer and, due to the availability of larger sizes, more cost-effective. True, germanium is also subject to China export controls, but being more easily recycled gives it a longer life.
The growth in applications, many in defence, for gallium nitride, means demand is burgeoning. Supply may well tighten further particularly if, say, China closes off the loophole that allows US end users to buy from third-party countries such as Japan and South Korea.
Like other switches, substituting one mineral for another takes time and money. But it is clear that alternatives will have to be found.
https://www.ft.com/content/20819d8e-5d2b-4a12-9a50-edbfd07336ef
