Shares in the $14.4 billion aluminium giant Alcoa Corporation (ASX: AAI) jumped in early trade on Tuesday after a joint US and Australian government announcement that they would pump US$200 million into a new gallium refining project in Western Australia.
At a historic first meeting between US President Donald Trump and Australian Prime Minister Anthony Albanese, a much-anticipated critical minerals framework was announced, under which the two countries would cooperate to bring mining and processing projects to fruition.
The two countries will invest at least an initial US$1 billion over the next six months with a view to bringing a US$8.5 billion pipeline of projects into production over time.
Alcoa project wins backing
Two projects were also singled out for immediate investment, with Alcoa's gallium recovery project at Wilgerup in Western Australia winning a US$200 million concessional equity finance package.
The US government will also make an equity investment in the project, which is a joint venture with Japan's Sojitz Corporation.
Mr Albanese said in a statement that the project, when in production, would provide up to 10% of the world's total production of gallium.
Mr Albanese went on to say:
Gallium is an essential input for defence and semiconductor manufacturing. This is a trilateral project with Japan, the United States and Australia, which will strengthen our collective economic security. Japan has already provided 50 percent of the project costs to date.
Feasibility studies underway
Alcoa said in a statement released overnight that the project would be expected to produce 100 tonnes of gallium per year.
It was anticipated that after a feasibility study on the project is completed, a special purpose vehicle (SPV) would be set up to manage it.
Alcoa added:
Under the terms of the non-binding agreement, the U.S. and Australian governments and Alcoa would provide capital to the SPV and receive gallium offtake in proportion to their interests. Among other purposes, the capital would be used for preparation of final feasibility studies, and the development and construction of the project. Definitive agreements for the gallium joint venture will be prepared among the governments of the United States, Australia and Japan, and Alcoa and Sojitz.
Alcoa said gallium was a critical mineral which was naturally present in bauxite, but global supply was currently concentrated from a single source, "and market controls have heightened interest in establishing and securing alternate supply chains''.
China is the world's largest gallium producer and last year banned exports of the mineral to the US.
Alcoa Chief Executive Officer William F. Oplinger said the company welcomed the opportunity to supply the US and Australia with a critical mineral.
The investment support from the U.S. and Australian governments underscores Alcoa's role in supporting the development of the critical mineral supply chain, and the importance of our Australian operations not only to the aluminium industry, but also as key to manufacturing, technology, and defence industries.
Alcoa is targeting a final investment decision on the project in 2026.
Alcoa shares were 9.1% higher in early trade on the Australian share market, changing hands for $60.60.
