UAE-US gallium project is an attempt to loosen China’s grip

• Element critical to tech industries
• Byproduct of aluminium mining
• China controls supply and price

A new UAE-US effort to produce gallium, a chemical element that is critical to making semiconductors, may bring some relief to Western and Asian users choked by China’s stranglehold on the metal.

But relevant manufacturing plants need years to come to fruition, and require technology and know-how that for the moment are almost entirely confined to China, industry experts say.

The ultimate success of the initiative to make gallium in Abu Dhabi hinges on how growing geostrategic competition between Washington and Beijing plays out, and its impact on everything from demand to pricing for the soft silvery metal. 

The initiative was announced during President Donald Trump’s trip to the Gulf in May and centres on Emirates Global Aluminium (EGA), which is jointly owned by the governments of Abu Dhabi and Dubai.

Gallium is central to making gallium arsenide and gallium nitride, which in turn are used in solar cells, high-speed transistors and Light Emitting Diodes or LEDs.

Gallium is not found in free form in nature but extracted as a byproduct of aluminium or zinc mining; it is present as a trace element in bauxite, the primary ore for aluminum. 

Willis Thomas, who leads Bespoke Services and Special Reports at commodity research company CRU Group, says China’s restrictions on gallium exports, and forecasts of rising demand for the metal driven by growth in advanced technology, underscore the need to diversify sources of production.

“A non-integrated China means that you need a lot more capacity, and [the EGA project] is an extremely good idea,” Thomas tells AGBI. “But, regardless, I think there will still be an important need in the market for new supply.”

Gallium is used in tiny quantities in the manufacturing of semiconductors. Only about 760 metric tonnes were produced last year, according to the US Geological Survey, for a total market value in the hundreds of millions of dollars. 

Nevertheless, it powers everything from smartphones to rare earth magnets; the latter are key components in the aviation and car industries, and increasingly deployed in defence applications.

China produces almost all the world’s gallium, but limited its exports through a worldwide licensing regime in 2023 and then banned them to the US at the end of last year.

Beijing further restricted global sales of gallium-based and other rare earth magnets in early April as part of heightened trade tensions with Washington. 

This latest move is causing shortages and anxiety among governments and companies in Europe and Asia, The New York Times and Reuters reported this week.

Johnny Lazar, principal consultant at CRU, says that, while the moment calls for changes in the gallium supply chain, “the capital intensity required to put a refinery in place when you know that China can just ramp up production and really push the price down puts a lot of people off”.

But that is not the case for the UAE, says Lazar, as it is well-positioned to pursue “a strategic imperative” even in the face of uncertain economic realities.

As prices of gallium skyrocket outside China, the group of companies formed by EGA, US defense conglomerate RTX (formerly Raytheon) and the Emirates’ military procurement authority, the Tawazun Council, aims to turn the Gulf nation into “the world’s second largest producer” of the metal, according to a May press release. 

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Two other projects to extract and refine gallium in the Western hemisphere were announced in recent months. 

One is run jointly in Canada by British-Australian company Rio Tinto and the US’s Indium Corporation; the other is from Greece’s Metlen and seeks to cover European Union demand of 50 metric tonnes annually by 2028.

Although the ingredients are in place for the Abu Dhabi-based project to come to fruition, just how successful it is depends in part on China’s restrictions on gallium exports. 

Solomon Cefai, of global price reporting agency Fastmarkets, calls the prospect of substantive gallium production outside China “exciting” but says there is risk that China may again boost sales, “potentially leading to plentiful supply of cheap gallium to international markets”. 

Producers will also have to secure “technical expertise and technology that would allow them to produce the metal both economically and at scale”, a challenging task if China moves forward with threats of imposing export controls on those as well, he says.