Pentagon commissions industry to extract gallium
Since August 1st, China has theoretically been able to reduce or even completely halt shipments of germanium and gallium at any time. In the case of germanium, the Pentagon is prepared for such a scenario; it has established an emergency reserve sufficient for several months. The situation is quite different for gallium, where the American government is literally high and dry. To prepare for supply bottlenecks, the Pentagon is therefore commissioning American and Canadian companies to extract gallium from electronic waste and semiconductor production scrap.
Obligating companies under the Defense Production Act
To this end, the Pentagon is invoking the Defense Production Act (DPA), a U.S. law enacted in 1950 during the Korean War. It allows industrial companies to be required to produce goods that are essential to national defense. By the end of the year at the latest, contracts for gallium extraction are to be prioritized. Cooperation with Lockheed Martin Corp., a U.S. defense and technology group, is already planned. While it does not operate its own mines, it can extract gallium from semiconductors sourced from various companies. According to a Reuters report, however, some of these companies’ sources are located in China. Recycling has not previously been provided for under the DPA, but is to be included in the law as part of an imminent amendment.
Gallium indispensable for defense systems
The Department of Defense is keeping both the planned investment amount and the quantity of gallium to be stockpiled confidential. What it cannot conceal, however, is the significant military value of this technology metal: gallium can conduct high voltages at high temperatures. It plays a crucial role in radar systems on ships and on land for defending against air attacks, missiles, and drones. As a component of telecommunications technology and semiconductor chips as well as LEDs, it is indispensable to defense technology. Arun Seraphin, Managing Director of the Emerging Technologies Institute, which is part of the National Defense Industrial Association responsible for military technology, agrees. He assumes that supply restrictions would slow the production of defense systems or cause their costs to surge.
Which other metals has the Pentagon forgotten?
The case shows that gallium is more than a “green” energy metal for electric cars and solar cells. The defense capability of entire continents depends on the amount of gallium available for this purpose. An interesting question for investors could be: Which other metals has the Pentagon forgotten to stockpile? Rhenium for vehicle armor? Hafnium for nuclear submarines? Or indium, which is currently rising in price, for office screens? Alongside gallium and germanium, all of these metals offer a good opportunity for private buyers to invest in what is currently the most attractive asset class on the market—largely tax-free as well.