2 Mining Stocks to Play the Mining Shortage

Alcoa and Teck are benefiting from supply-chain shifts away from China-controlled critical minerals, with gallium prices up 141% since the start of 2025 to about $2,269/kg. Alcoa reported Q1 revenue of $3.19B and EPS of $1.60, doubled from Q4, while Teck posted 2025 revenue of $10.8B and EPS of $2.84 versus a $0.90 loss in 2024. Both stocks are up more than 70% over the past year, supported by higher commodity prices, government backing, and strategic processing assets.

Analysis

The market is beginning to price a structural rerating for “enabler” assets in critical minerals rather than just the underlying commodity names. The key second-order effect is that governments are effectively subsidizing non-China processing capacity, which should compress the discount rate on projects with existing infrastructure and amplify the value of tolling/royalty models versus pure miners. That favors incumbents with permitted assets, logistics access, and balance-sheet flexibility more than greenfield developers that still face capex, energy, and permitting risk.

Alcoa’s upside is less about one-off gallium economics and more about optionality embedded in a globally diversified refining footprint. If gallium remains elevated for multiple quarters, the market will start capitalizing Alcoa’s process know-how as a strategic asset, not a cyclical aluminum proxy; that can support multiple expansion even if aluminum prices flatten. The real risk is that this becomes a policy headline trade: once non-China supply is visible, governments may overbuild, which could normalize gallium margins faster than consensus expects.

Teck is the cleaner structural story because it is moving toward a capital-light processing/royalty architecture that monetizes scarcity without taking full upstream replacement risk. The Anglo combination could be a catalyst if it improves bargaining power with customers and governments, but integration risk and synergy timing matter more than headline numbers; investors may be underestimating execution drag over the next 6-12 months. Blue Moon’s use of Trail also turns Teck into a bottleneck owner in North American critical minerals, which is strategically valuable if processing subsidies persist.

The contrarian view is that both names may already be discounting a lot of the “friend-shoring” narrative after strong run-ups. What the market may be missing is that the biggest beneficiaries may be adjacent firms with existing metallurgical infrastructure, power access, and permitting, because they can earn spread income without commodity exposure. If gallium prices mean-revert once supply response arrives, the durable value should shift from producers to processors and tolling assets.

Key Decisions for Investors

• Stay long AA for 3-6 months, but prefer call spreads over stock: the setup is positive, yet the run-up already discounts some strategic value; use a bullish risk-defined structure to capture rerating if gallium remains tight.
• Initiate or add to TECK on pullbacks over the next 1-2 months, with a 6-12 month horizon: the toll-processing/royalty model is the higher-quality exposure to critical minerals, and should trade at a premium to pure miners if policy support continues.
• Pair trade long TECK / short a basket of high-capex, single-asset critical mineral developers for 3-6 months: the market is likely to reward infrastructure scarcity and cash generation over speculative resource optionality.
• Avoid chasing BMOOF strength; the asset-transfer structure looks like a financing/ execution story, not a clean commodity beta trade, and the royalty economics cap upside versus infrastructure owners.
• If AA and TECK continue to outperform into the next 4-8 weeks, trim into strength rather than hold for full cyclical upside; the most likely reversal is faster-than-expected supply response plus policy-driven capacity additions.