Metlen signed a long-term agreement with a major Japanese chemicals company for up to 16% of its annual gallium production from its facility, “with the commercial terms remaining confidential”.
It follows the July agreement with a leading American technology company, which covers about 25% of production, raising the announced contracted volumes to as much as 41% of projected capacity, a Morgan Stanley analysis notes.
Management “expects that the entire production will have been sold before the start of commercial production in the third quarter of 2027”.
The facility is part of Metlen’s broader investment of approximately €200 million in an integrated bauxite, alumina and gallium system.
The second agreement provides further commercial validation and reduces volume risk ahead of the start-up of the gallium investment. While pricing remains confidential — and may include discounts or caps — the market environment is materially stronger than the financial figures presented at the CMD, which projected about $1,000/kg and about €40 million in annual EBITDA from gallium.
European prices have risen sharply since then. Based on the Argus benchmark at $3,350/kg, selling the entire production on terms similar to the spot market would imply an EBITDA run rate of about €140 million, more than triple the indicative EBITDA presented at the CMD.
Metlen’s production cost is below US$200/kg, according to a FT article dated September 15 citing the company. At present, we incorporate a gallium price of US$3,000/kg in our model and view the agreement as a further de-risking factor and as a potential source of upside for the metals segment’s EBITDA in 2028.