By Joe Quinn, Executive Director of the Center for Strategic Industrial Materials, SAFE
Reports came out earlier this week that the U.S. Department of War (DOW) is investing $150 million in preferred equity into Atlantic Alumina (ATALCO) to produce more than 1 million metric tons of alumina and up to 50 metric tons of gallium per year. Through this deal, the United States will for the first time in decades produce more alumina than it imports and reshore domestic production of gallium, which the U.S. has not produced domestically since 1987. This type of direct federal investment in domestic production is how the U.S. can strengthen its defense industrial base.
ATALCO, America’s One and Only Alumina Refinery
We highlighted last September that domestic production of alumina has been declining for decades, collapsing from 5 million tons in the year 2000 to less than 600,000 in 2024. Three facilities closed over that span, leaving only ATALCO’s refinery in Gramercy, Louisiana as a single point-of-failure risk for the entire sector.
This presents a significant vulnerability to the Department of War which relies on aluminum for a wide range of assets including fighter jets, Navy vessels, unmanned aerial vehicles, missile systems, and more. The transportation sector also relies on alumina to manufacture passenger vehicles and planes, and the U.S. electric grid uses primary aluminum for high-voltage long distance transmission lines that deliver power across regions.
Running counter to the United States’ decades-long decline in alumina production, state-supported producers like China are continuously building alumina production capacity with no regard to profitability or free-market economics. This relentless overproduction is significantly harming both U.S. aluminum oxide and aluminum producers and clearly, a harm that the Department of War recognizes.
Last year, the DOW’s primary aluminum industrial base assessment spotlighted the national security risks of declining domestic production, and the Defense Logistics Agency published their aluminum war game report. Our key takeaways from the report: 1) There’s an immediate need to expand industry capacity for primary aluminum and high-purity aluminum. 2) Affordable and reliable power is crucial to enable increased capacity and production. 3) Recycling aluminum scrap should be prioritized to alleviate domestic demand for primary aluminum. The Department of War’s $150 million investment into ATALCO will finally secure supply of alumina—mitigating the risks to the United States’ national security, transportation sector, and grid.
Progress after 1987, Reshoring Gallium
The DOW deal will also reshore gallium production, a critical byproduct recovered during alumina refining and a vital input to semiconductor manufacturing. China has become the world’s leading producer of gallium, producing 99 percent of worldwide primary low-purity gallium and is keenly aware of its market dominance.
In 2024, China announced export controls on gallium to the U.S, only later to suspend the controls. A U.S. Geological Service analysis that same year found that a total ban could cause gallium prices to rise by more than 150 percent, with economic losses concentrated in the U.S. semiconductor industry. Obtaining 50 metric tons of gallium per year through the ATALCO refinery is great progress in securing a critical mineral that the U.S. has not produced domestically since 1987.
U.S. Aluminum Industry at a Crossroad
The U.S. aluminum industry is facing a critical juncture, balancing rising demand with dwindling domestic supply. A revitalized sector will achieve the Trump administration’s goals of a manufacturing resurgence and fortifying the defense industrial base. This $150 million Department of War investment to boost domestic alumina and gallium production is a significant first step.
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