Indium and Gallium Overview - 2011

Mining & Minerals - Evaluations / Critical Mineral Resources

Gibson and Hayes report in 2011on the principal uses, market drivers and price trends for two little-known but increasingly in-demand metals, indium and gallium. Supply-side constraints due to Chinese export restrictions and the marginal cost benefit of production to bauxite and zinc miners offer an opportunity to western mining companies to exploit this niche sector of the metals market by developing alternative deposits.

Strategic metals akin to heavy-rare earths On the periodic table indium and gallium lie separately from the much-touted rare earth group of elements, and are deemed strategic metals due their rarity, restrictive supply base and increasing demand for use in high-end technologies (flat-screen TVs, smartphones and photovoltaic cells used in solar panels). In fact, indium is one of six materials assessed as most critical along with some key rare earths in the short term (zero to five years) by the U.S. Department of Energy in its Critical Materials Strategy.

Most indium and gallium production results from processing zinc, bauxite, tin and, to a lesser extent, silver ores, and so relative market supply is governed by the respective health of these commodity markets. The long-term growth for zinc is estimated at 1-3% pa versus c 15% for indium presenting a clear supply deficit, especially if indium market growth continues at this pace and remains primarily a by-product of zinc refining. Further, with silver’s diversified set of end uses and its characteristic as a store of value, it could be seen as a best-case scenario for stable mine production of indium and gallium. Indium and gallium recycling, specialist and expensive Due to indium and gallium production being a by-product of processing ores, a growing global industry has arisen to recover the metals, either in a spent form from manufacturing processes or from recycling indium- and gallium-bearing scrap materials.

Recycling as a new source of material, though expensive and highly specialized, has exceeded primary production in recent years. Reduction in carbon emissions driving future demand Policymakers worldwide are being driven towards cleaner forms of energy, including solar and nuclear. Both are consumers of indium and gallium and, outside of the consumer electronics industry, drive strong demand growth (estimated at 15% per year for indium and c 15-20% for gallium). 

The authors concluded that The current market prices for indium and gallium have recovered well from the lows of 2008 caused by the global financial crisis. Demand continues to be driven by the electronics industry, with particular demand for indium in the production of flat-screen display panels, LEDs and thin-film solar technologies and demand for gallium in the manufacture of LED lights and, again, thin film solar technology. The long-term outlook for growth in the zinc market is forecast at c 1-3% per year, compared to c 15% for indium. This presents a clear supply deficit, especially if indium market growth continues at this pace and remains primarily a by-product of zinc refining. This may well lead to electronics manufacturers pursuing alternative sources, not through recycling metals (which is unlikely given the small amounts used and the cost of extraction from scrap materials), but rather from development of primary indium resources in the ground.

Substitution of both metals could affect demand, especially for gallium. However, with so many new technologies being developed (i.e., beyond those end-uses, of which some are mentioned in this report) it is hard to envisage a complete collapse in the commodity prices from current trends. The ever-increasing development of new technologies provides as much an opportunity as substitution presents a risk to the demand of such metals. The argument over substitution may well develop into whether lower-quality goods that employ very little indium and gallium may be acceptable to the consumer (this seems unlikely with the current trends in smartphone use and propensity to consume high-end electronic goods).

Finally, the supply of indium and gallium by relatively few countries, particularly China, which is increasingly protectionist over its natural resources, plus costly and highly specialized recycling of the metals leads to an opportunity for western countries to capitalize on such supply-shortfalls (and therefore elevated commodity prices) by developing projects in other countries. Such projects would secure ex-Chinese supply routes to western electronics manufacturers – a further parallel to the forces driving western development of so-called rare earths deposits. With such increases in high-end electronics demand, it is now apparent that relying on supply of specialist metals (rare earths, indium, gallium etc) from either a protectionist China or via by-product refining is unsustainable. This will inevitably lead to development of ex-China primary deposits of the metals, which has already started with likes of the development-stage companies outlined in this report and elsewhere.