3 weeks ago
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The US Department of Defense is putting $93 million into a new gallium production facility at Alcoa Corporation’s Wagerup alumina refinery in Western Australia, part of a broader effort by Washington, Canberra, and Tokyo to chip away at China’s near-total dominance over a mineral essential to modern semiconductors and defense systems.
China currently produces somewhere between 98% and 99% of the world’s refined gallium.
The deal’s architecture
The final investment decision was announced on July 14, 2026, with groundbreaking expected about six weeks later on August 25. Once operational, the Wagerup plant is projected to churn out roughly 100 metric tons of gallium per year, which would represent up to 10% of global supply from a single facility.
Australia is the biggest financial backer, contributing up to $200 million in concessional equity financing. In return, Canberra secures offtake rights, meaning it gets dibs on a portion of the output. The US equity investment of $93 million comes directly from the Department of Defense, also with offtake rights attached.
Japan rounds out the trio through JAGA, a joint venture between trading house Sojitz Corp and JOGMEC, Japan’s state-backed energy and metals agency.
On the jobs front, the project is expected to create around 200 construction roles during the build phase and approximately 20 permanent positions once the plant is running.
Why gallium matters more than you think
Gallium is a critical input for gallium arsenide and gallium nitride semiconductors, which power everything from 5G base stations and LED lighting to radar systems and electronic warfare equipment.
Gallium exists in trace amounts in bauxite ore, the same stuff used to make aluminum. Beijing imposed export controls on gallium and germanium starting in mid-2023, weaponizing its supply chain dominance in response to US semiconductor restrictions.
The Wagerup facility solves this in an elegant way. Gallium will be extracted as a byproduct of Alcoa’s existing alumina refining operations, meaning no additional bauxite mining is required.
A broader critical minerals chess match
The $93 million US investment through the Department of Defense is notable for its source. This isn’t a commerce or energy department initiative. It’s the Pentagon writing checks, which underscores how seriously Washington views gallium supply as a defense issue.
The 10% global supply figure is worth sitting with for a moment. A single plant in Western Australia producing one-tenth of the world’s gallium would immediately make it one of the most strategically significant mineral processing facilities outside China.
The financing structure pairs concessional equity from governments with guaranteed offtake agreements, substantially de-risking the project for Alcoa.
With construction starting in late August 2026, first production is likely still a couple of years away.
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