Growth predicted for gallium market
The fall-off in demand for gallium is attributed largely to the slump in the mobile phone handset market and the effect of this on the GaAs industry. In 2000 the prospect of continued rapid growth in demand, coupled with a real or perceived shortfall in supplies of starting materials, caused the GaAs IC makers to stockpile substrates. This affected the entire supply chain and caused gallium suppliers to expand their production capacity. At that stage, a demand level of 350 tons of gallium was forecast for 2008.
The apparent supply shortfall in early 2001 caused prices to skyrocket; by the end of March, spot prices reached $2250/kg, compared with around $550/kg two years earlier. (The spot price is the current price paid on the open market; large consumers will negotiate long-term contracts with significantly lower prices.) However, the slump in the GaAs IC industry in 2001 caused gallium consumption to fall dramatically, and prices did the same. According to the United States Geological Survey (USGS), prices for high-purity gallium (6N, or 99.9999% pure) were in the range of $400-500 per kg at the end of 2002 (figure 2). Gallium productionIn nature, gallium occurs in very small concentrations in rocks and ores of other metals. Most gallium is produced as a by-product of extracting aluminum from bauxite, while the remainder is extracted (principally by Dowa Mining in Japan) from by-products of zinc processing. Other leading primary producers include GEO Gallium, Pavlodar Alumina of Kazakhstan, and several companies in both Russia and China. Back in 2001, Canadian company Gold Canyon Resources said it was evaluating mineral deposits in Nevada to assess the feasibility of extracting gallium as a principal product (Compound Semiconductor June 2001). CEO Robert Carrington recently said that Gold Canyon s Cordero gallium project was moving slowly at the moment, but production could start by the end of 2004 if the market picks up again.
While a small number of companies operate gallium extraction plants, others including Dowa Mining and Sumitomo Chemical in Japan and GEO Gallium purify the extracted gallium to make it suitable for semiconductor applications. According to USGS, primary production of crude gallium was about 61 tons in 2002, down from about 75 tons in 2001. Refined gallium production was about 81 tons, a figure that includes gallium produced by recycling scrap material. This comes from the production of GaAs and GaP substrates, as well as GaAs IC wafer processing and the LPE and VPE growth of LEDs. Dowa Mining, which has a subsidiary producing substrates and LEDs, is one of the world s largest gallium-refining companies. Recycling companies in Europe include Groupe Arnaud Electronics, MCP Group and PPM Pure Metals, which along with Furukawa is a major manufacturer of high-purity arsenic. Recycling scrap materialBack in 2001, at the height of the gallium price boom, GaAs substrate maker Sumitomo Electric estimated that it was internally recycling 40% of the gallium used for crystal growth. A further 20% was retrieved from GaAs device makers in the form of broken wafers, sludge from wafer thinning and waste from epitaxial source material.
Clearly, now that gallium prices have fallen well below their pre-boom levels, there is much less incentive for recycling. Until last year, Eagle-Picher Technologies refined low-purity gallium, recycled GaAs scrap and manufactured gallium compounds in Quapaw, OK. However, at the end of November 2002, Eagle-Picher exited the gallium products business. According to marketing and sales manager Huey York, the decision was "based on continued soft demand from customers in the telecom and semiconductor markets as well as the downturn in the optical fiber industry."
A management group from Eagle-Picher has purchased the company s gallium assets and formed a spin-off. Greg Evans, vice-president and general manager of the new company, Gallium Compounds LLC, says that its product lines will remain the same. "However, we will not be recovering gallium from GaAs or other scrap material," he said.
Recapture Metals of Blanding, UT, also recovers gallium from scrap material. One of the company s owners, Dale Slade, says that it was badly hit by the sharp decrease in demand in 2001. "We had to lay off about half our staff," he said. "However, demand has been returning gradually in recent months, and we have taken some staff back." Slade says that Recapture Metals plans to recycle at least 20 tons of gallium during 2003. GEO GalliumOne of the largest gallium producers, GEO Gallium, operates an extraction plant in Germany and a purification plant in France. At the start of 2001, the company announced plans to re-open a mothballed gallium extraction plant in Pinjarra, Australia, with the capacity to produce 100 tons of 99.99% (4N) pure gallium per year. In November 2001, GEO signed a supply agreement with Alcoa of Australia (an aluminum producer) to provide feedstock for the Pinjarra plant, but also announced that the plant s start-up would be delayed until at least the end of 2002.
In September 2002, GEO announced that it had exercised its purchase option agreement with Rhodia Chimie SA to take control of the Pinjarra plant. At the time of writing, GEO was unable to comment on whether it had started work to open up the facility. Gallium in ChinaChina is emerging as a large gallium producer, with a total nominal capacity of around 80 tons according to Roskill. Primary producer Great Wall Aluminum recently increased its capacity to 15 tons per year. In late 2001, Sumitomo Chemical announced the formation of a joint venture company in China that planned to build a factory capable of refining 40 tons of gallium per year.
In early 2002, US substrate maker AXT announced that it had created a joint venture, Beijing JiYa Semiconductor Material Co, Ltd, to produce 4N gallium in China. AXT s partners include Shanxi Aluminum Factory, China s largest aluminum producer, with an annual capacity of 1.2 million tons. Gallium is extracted as an impurity from a chemical mixture formed as an intermediate process in the manufacture of alumina. The concentration of gallium is among the highest available worldwide, making its extraction highly beneficial to both parties.
A spokesperson for AXT said that Beijing JiYa Semiconductor Material provided more than 10 metric tons of 4N gallium in 2002, and projects to exceed that volume in 2003. The 4N gallium is typically refined into 6N or 7N material by a third party, before being used in final applications including GaAs substrates.
Despite the large nominal capacity for gallium production in China, Roskill estimates that actual production was about 25 tons in 2001, and dropped still further in August 2002 owing to low prices and demand.
USGS estimates that the price of low-purity gallium (4N, or 99.99% pure) from China was around $250/kg in mid-2002. The cost to primary producers of extracting 4N gallium is thought to be around $400/kg. It now appears that the price of 4N gallium is currently rising back towards the levels where primary producers may restart their activities.
Although any short-term supply shortages could cause prices to rise suddenly, it seems that gallium suppliers have enough dormant capacity to prevent a repeat of the price spike in 2001.
The Economics of Gallium (7th edition) is available from Roskill Information Services, London, UK. Tel: +44 20 8944 0066. Web: www.roskill.co.uk. USGS information is at http://minerals.usgs.gov/minerals.
