Alcoa’s Gallium Project Opens a New Door Beyond Aluminum

The US government is investing $243 million to support Alcoa's (AA) new gallium plant in Australia, aiming to diversify supply chains for defense and tech industries. Gallium is crucial for semiconductors in advanced military systems. China dominates global production, prompting US efforts to secure alternative sources. The plant, part of a multinational partnership, will produce 100 tonnes of gallium annually once operational.

Aluminum stocks AA, KALU, and CENX rallied after Emirates Global Aluminium halted operations due to Iranian attacks. Aluminum prices rose 2% on the LME. JPMorgan upgraded AA to 'Neutral' with a $68 target and raised KALU's target to $124. AA, KALU, and CENX gained 32%, 11.5%, and 57.5% YTD, respectively.

Wells Fargo raised Alcoa's (AA) price target to $68, citing eased Middle East energy concerns and strong Q2 earnings of $407M. AA's shares are down 40% from YTD high but up 57% over the past year. The firm sees 36% upside potential, attributing value to asset monetization and production expansion.

Alcoa (ASX:AAI) shares fell 4.17% to A$69.38, with volatility over the past 10 sessions. The company cut 2026 alumina production guidance due to refinery bottlenecks and cyclone disruptions, leading to a 22% profit drop. It plans a US$4.7B acquisition, but market concerns include balance-sheet leverage and falling aluminium prices. Analysts' average target is A$99.74, but technical indicators suggest a downtrend.

Alcoa and Sojitz began construction on a gallium recovery project at Alcoa’s Wagerup Alumina Refinery in Western Australia. The facility, expected to produce up to 10% of global gallium supply, aims to strengthen Australia’s role in critical minerals supply chains. The project is supported by the Australian and Western Australian governments, with Minister Madeleine King and Minister Tim Ayres highlighting its importance for advanced manufacturing and supply security.

Alcoa confirmed a binding 10-year gas sales agreement with Australian developer Equus Energy. Equus will supply 50 TJ/d of gas, about 182 PJ over the term, for Alcoa’s expanding Western Australia alumina refineries. Alcoa will advance $30mn to fund Equus’ FEED study through to final investment decision, which has no set timeline, Equus said.