Alenium Explosives is the first upgrade for grenades and rockets availble.
In-game Description
The majority of Alenium found inside wrecked UFOs has been run through the vessel's reactor, making it of little use as a fuel. This low-grade Alenium only contains enough power to run an extraterrestrial device for a few minutes, whereas fresh Alenium can do so for hours at a time. However, it turns out there is another use for this relatively abundant low-grade Alenium: explosives.
The amount of energy held in depleted Alenium is usually still appreciably higher than is contained in the equivalent weight of TNT. My team has therefore been able to produce improved designs for the high-explosive rockets and grenades issues to our soldiers, replacing the explosives with an Alenium charge that is up to 50% more powerful than conventional munitions. Given the ample availability of the constituent parts, these can be manufactured and issued to our soldiers in effectively unlimited numbers. Your men seem impressed; they spent so long testing the new devices that the firing range required structural repairs.
The principle behind these devices is simple: the "explosive" is a block of Alenium that dumps all of its energy into the surrounding air when triggered. The warhead on the rocket is sufficiently large that this will generate a sizeable explosion, but the grenade also employs a steel casing that fragments into a deadly cloud of metal shards on detonation. However, be aware that these weapons will inflict as much damage on extraterrestrial equipment as on the aliens themselves - aliens killed with explosives are unlikely to leave a corpse behind, let alone recoverable items.