Investors are turning their attention to little-known critical mineral gallium as its significance surges amid a brewing trade war with China.
Used extensively in the semiconductor, LED, and solar panel industries, gallium has become increasingly essential for high-tech and green energy applications.
As China, which dominates global gallium production, moved to limit exports, the metal’s price jumped 17% in December, reaching $595 per kilogram.
China's decision to restrict gallium exports to the US is part of a broader effort to control critical raw materials. The gallium supply chain is heavily concentrated in China, which accounts for over 90% of global refining. The impact has been particularly felt in the US and Japan, both of which are now actively seeking alternative sources to reduce their reliance on Chinese exports.
Globally, the demand could necessitate a tenfold boost in primary gallium production by 2050.
As gallium's significance grows, its production is becoming a focal point for companies worldwide. Rio Tinto Ltd (LSE:RIO, ASX:RIO, OTC:RTNTF) is exploring opportunities to produce gallium in Canada, particularly in Quebec, where it plans to build a demonstration plant capable of producing up to 3.5 metric tons per year. The project has garnered financial support from the Quebec government, further highlighting the importance of securing a stable supply of gallium.
Cerro de Pasco Resources (CSE:CDPR, OTC:GPPRF), a Canadian-listed resource development company, is also hoping to capitalize on the soaring demand for gallium.
The company recently completed its 40-hole drilling program at the Quiulacocha Tailings Project in central Peru, uncovering significant gallium upside at the project.
Preliminary assays revealed promising insights into gallium concentrations. Gallium was detected at an average grade of 34.61 grams per ton (g/t), with a peak concentration of 144 g/t located near the tailings' center.
The findings demonstrated the continuity of gallium content, extending both at depth and across a lateral area of 400 to 600 meters.
CEO Guy Goulet said that the insights provide a potentially significant upside to the project's economics.
“With China’s recent move to ban exports of this rare metal to the US, gallium prices have soared, with its significance now emerging for many,” Goulet told shareholders in a recent statement.
For investors, recognizing gallium’s pivotal role in modern technologies and its scarcity-driven value presents an opportunity to tap into a market poised for sustained growth. With no sign of geopolitical tensions cooling, companies involved in gallium extraction or exploring gallium-rich deposits stand to benefit.