Highlights
- China controls 98% of low-purity gallium production, wielding significant economic leverage through export controls.
- Western nations are developing alternative gallium production strategies through recycling, mining, and international collaboration.
- Gallium is critical for advanced semiconductor technologies in defense systems, making its supply chain a national security concern.
The Center for Strategic and International Studies (CSIS) has delivered a sprawling, highly detailed brief (opens in a new tab) on China’s gallium export controls—framing the issue as both a strategic vulnerability and an emerging “economic weapon” against the West. The document offers a rare, data-backed deep dive into gallium’s critical role in defense systems, China’s supply chain chokehold, and Western policy inertia.
Gallium is primarily produced as a byproduct of aluminum and zinc production. It’s not directly mined but is extracted during the processing of bauxite ore (for aluminum) (opens in a new tab) and sphalerite ore (for zinc) (opens in a new tab). China is the dominant producer of raw gallium, with most of it coming from bauxite processing.
On the Money
CSIS is factually accurate in stating China accounts for 98% of low-purity gallium and controls the bulk of upstream production via aluminum refining. Its timeline of export control escalations—from July 2023 licensing to December 2024 full embargo—is well documented. The insight on proprietary resin technologies (e.g., Sunresin’s chelating agents) being essential—and now restricted—is another strong, underreported element. Also, the report correctly identifies gallium’s crucial role in GaN semiconductors used in radar, missile defense (SPY-6, LTAMDS, F-35 AESA), and next-gen electronics. The concern that over 11,000 DoD parts contain gallium is plausible and supported by open-source procurement data.
Market Fragility & Recycling Limits
CSIS accurately flags how recycling and transshipment can mask dependency, and how non-Chinese producers often rely on Chinese feedstock. That nuance is critical for retail investors hoping to “buy the dip” in gallium-exposed equities. While the national security lens is justified, the brief repeatedly dramatizes market trends as strategic aggression, despite similar “defense stockpiling” being underway in the U.S., EU, and Australia. China’s behavior is problematic, but not uniquely escalatory per the report. On the other hand, the CSIS understands China has leveraged a hybrid national system to monopolize at least segments of the rare earth and critical mineral sectors.
Selective Pricing Interpretation
Rotterdam price surges (150%+ since 2023) are mentioned without comparative pricing context (e.g., GaN chip cost ratios). No mention is made of how oversupply in China may reflect internal sector contraction, not purely “weaponized withholding.”
Overconfidence in Government Fixes?
The policy proposals—stockpiles, subsidies, NATO-style procurement—assume smooth execution. But past failures (e.g., Clarksville, Pinjarra) reveal that even with funding, domestic capacity remains vulnerable to commodity price cycles. CSIS offers a necessary wake-up call—but one that occasionally leans into Cold War stylings. The facts are solid. The bias lies in tone, not fabrication. We live in unprecedented times, so monitor the market carefully for extraordinary opportunities and risks.
Beyond Rare Earths: Gallium’s Spotlight & the West’s Response
In mid‑2025, gallium—an obscure by‑product of aluminum and zinc production—has emerged as a linchpin in geopolitical supply chains. With China controlling an estimated 98% of low-purity gallium and enacting export curbs since mid-2023, global markets are scrambling as noted in the CSIS report.
The squeeze hit headlines when gallium prices more than doubled, crossing $700/kg, spotlighting vulnerabilities in defense-grade semiconductors and high-performance electronics. Analysts estimate a full halt in exports would shave several billion dollars off U.S. output, with the semiconductor and defense sectors most at risk.
Western Play: Reclaiming Supply Chain Security
- Neo Performance Materials (Canada) remains North America’s sole high-purity gallium producer (opens in a new tab) (recycling-based, ~30–50 t/yr)
- Rio Tinto + Indium Corp. (Canada/US) has successfully extracted primary gallium at Quebec’s Vaudreuil refinery (opens in a new tab). A 3.5 t pilot is underway, targeting 40 t/yr by 2027—about 5–10% of global output.
- MTM Critical Metals (rebranded Metallium) is building a Texas e-scrap plant to recover gallium, germanium (opens in a new tab), and indium using flash joule heating; first commissioning expected Q1 2026.
- RareX + Gega (Australia) aims to build Australia’s first vertically integrated gallium supply chain, reflecting growing interest from allied nations.
- METLEN (Greece/Europe) announced plans to produce 50 t/yr by 2028, backed by ~€295m investment.
Policy Imperative
Market forces alone—especially in a niche market like gallium—won’t reverse dependence as suggested by CSIS. Strategic incentives, stockpiles, and allied cooperation are recommended (e.g., U.S. Defense Production Act support, international offtake agreements). In President Donald Trump’s second administration, more has been done to accelerate critical mineral and rare earth supply chain reshoring than any other president (e.g., executive orders, Big Beautiful Bill, etc.). However, considering the confluence of factors and forces at play, time is not on the side of American supply chain resilience. Ideally, more will be done in a coordinated, orchestrated manner involving critical minerals industrial policy.
Conclusion
The gallium story is rooted in solid, reported facts—price surges, export controls, and supply moves in Western nations. Yet, forward-looking production numbers and policy prescriptions remain contingent on pilot outcomes and political will. Retail investors should track actual production milestones (e.g., Rio Tinto pilot results, MTM’s commissioning, RareX’s progress) rather than relying solely on projections.
Yes, investors should also remain mindful of gallium’s extreme price volatility, low market liquidity, and the high technical and environmental barriers to scalable production in the West. Many reshoring ventures depend not only on pilot success but also on stable government support (industrial policy preferred), secure offtake agreements, and long-term cost competitiveness—none of which are guaranteed. China’s ability to flood the market, as seen in the past with rare earths, could erase margins overnight, while regulatory delays and ESG constraints could stall domestic ramp-up. In short, gallium reshoring plays are high-conviction bets that require careful due diligence on project execution, supply agreements, and geopolitical alignment.
Discuss Gallium at the Rae Earth Exchanges Forum (opens in a new tab).
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