Alcoa Shares Jump After Governments Announce Support for its Gallium Project
Following a historic meeting between the United States and Australia, both nations have unveiled a multi-billion-dollar strategic minerals partnership aimed at strengthening supply chains for critical resources which is a move that directly benefits Alcoa Corporation’s gallium production project in Western Australia.
Alcoa corporation (ASX: AAI)
has secured big international backing for its gallium recovery project at the wagerup alumina refinery in western Australia and this move is seen as an important step for the global supply of critical minerals.
Following a major agreement between U.S and Australia, both countries decided to invest US$200 million under the critical minerals framework. Alcoa is targeting a final investment decision of the project in 2026
This funding will help speed up the project together with Japan’s sojitz corporation and the Japan Australia Gallium Associates. The gallium extraction facility is expected to produce 100 metric tons of gallium annually which can meet around 10% of the world’s gallium need.
Alcoa posted sales of around US$3.02 billion for Q2 FY2025, compared to US$2.91 billion last year. Net income also jumped sharply to US$164 million from only US$20 million before. its operating cash flow reached US$563 million and cash reserves stood at about US$1.51 billion. the company also declared a dividend of US$0.10 per share, keeping its capital return policy steady.
The gallium project at wagerup will be managed through a special purpose vehicle with joint funding from the US and Australian governments. Gallium is critical to semiconductors, optoelectronics and defence technologies and is mainly extracted from bauxite, giving Alcoa a natural edge as it is a vertically integrated alumina producer.
Operationally, Alcoa also moved forward with its San Ciprian joint venture in Spain and sold off its 25.1% stake in the Saudi joint venture with Ma’aden. These steps show that the management is trying to make operations simpler and put money into projects that can give better returns like the new gallium facility which will help them to improve focus as well.
With strong support from governments, growing global demand and a solid balance sheet, Alcoa looks well placed to become an important player in the new era of critical minerals.
(Source: Reuters, Company Announcements)
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