2 Mining Stocks to Play the Mining Shortage

Gallium prices are up 141% since the start of 2025 to about $2,269 per kilogram, driven by China’s export limits and Middle East supply disruptions, creating a favorable backdrop for non-China processors. Alcoa highlighted a $200 million Australian government-backed gallium recovery project, $3.19 billion in Q1 revenue, and $1.60 EPS, while Teck reported 2025 revenue of $10.8 billion and EPS of $2.84 versus a $0.90 loss last year. Both stocks have risen more than 70% over the past year and could benefit further from critical-minerals processing demand and government-supported supply-chain diversification.

Analysis

This is less a simple commodity upcycle than a repricing of “industrial sovereignty” assets with embedded processing optionality. The market is starting to value not just ore bodies, but jurisdictionally safe midstream capacity that can capture scarcity rents when China weaponizes export controls and when geopolitics interrupts refining nodes elsewhere. That helps explain why the multiple expansion can persist even if headline metals prices cool: the real scarcity is qualified processing capacity and government-backed infrastructure, not raw feedstock.

AA’s cleaner second-order setup is leverage to premium realization plus balance-sheet repair, which can produce outsized equity torque if aluminum premiums stay elevated for another 2-3 quarters. The more subtle angle is that every incremental dollar of government support lowers the cost of capital for future critical-minerals projects, potentially turning AA from a cyclical aluminum name into a quasi-strategic platform with recurring policy support. The main risk is that gallium economics are still small versus consolidated corporate earnings, so the market may be extrapolating a narrative that takes years to monetize rather than quarters.

TECK is the more interesting structural trade because it is morphing into an infrastructure toll collector, not just a miner. If Anglo Teck gets approved and synergies land, the upside is not only cost reduction but a higher-quality earnings mix with longer-duration processing revenue and less commodity beta. The contrarian miss: investors may be underestimating how quickly substitution, recycling, and inventory drawdowns can cap gallium’s price spike, which would hurt the “strategic scarcity” thesis before it fully translates into cash flow. In that case, the stocks can still work, but the trade becomes one of earnings quality and capital return rather than a pure critical-minerals squeeze.

Key Decisions for Investors

• Long AA on a 3-6 month horizon; use dips toward the forward P/E multiple floor as entry. Risk/reward favors upside if aluminum premiums and policy support persist, but trim if gallium headlines fade without incremental earnings evidence.
• Long TECK vs. short a more commodity-pure copper/mining peer over 6-12 months. The pair isolates the valuation premium for processing optionality and M&A synergies while reducing exposure to spot-metal volatility.
• Buy TECK call spreads into merger-related volatility over the next 1-2 quarters. The structure captures upside from Anglo Teck approval/synergy realization while limiting downside if antitrust or integration risk delays re-rating.
• Avoid chasing NVDA/INTC on this headline; the direct read-through is negligible and any benefit is second-order only. If anything, wait for evidence that supply-chain localization lowers component risk premiums before adding semiconductor exposure.
• Set a tactical profit-taking level on AA and TECK after a further 10-15% move unless earnings revisions accelerate. The crowd is already leaning into the trade, so the next leg needs fundamental confirmation, not just narrative momentum.