- Often grouped with the rare earth family, scandium has long been considered an “if” metal.
- Its primary use has been as an alloy with aluminum, but solid oxide fuel cells are a major growth area.
- Production is tight, but demand is expected to reach US$802 million by 2027 with a CAGR of 7.6%
Not many geologists in the world know much about scandium: there are few reliable sources, its adoption in commercial applications is very limited, and it is usually produced as a by-product of other metals (nickel, uranium, and titanium). ).
World production of scandium is meager, to say the least, ranging from 15 to 20 tons per year in the form of scandium oxide, with the main producers being Russia, China, and the Philippines.
Often lumped in with the rare earth family, the light silver metal has long been considered an ‘if’ metal, as in “if only it were available in large volumes to meet potential demand, it could transform fuel consumption and accelerate the hydrogen economy”.
The main and longest use of scandium has been as an alloy with aluminum to increase strength and weldability, protect against corrosion, and make products such as baseball bats and bicycle frames lighter.
Only the smallest amount of scandium (between one and two percent at 98 or 99 percent aluminum) is needed to achieve this, which means planes and fighter jets can be assembled faster and with reduced cost. 15-20% weight.
In the longer term, experts believe that one of the biggest markets for scandium will be the aerospace industry, but John Mavrogenes, a professor at the Australian National University, said butt another exciting future opportunity for scandium is as a ‘super alloy’ for electric vehicles.
“Electric vehicles are extraordinarily heavy due to the weight of the battery, so one area of opportunity to lighten a vehicle is to make the aluminum frame lighter by using a scandium-aluminum alloy for the frame,” he said. .
Primary Growth Area: Solid Oxide Fuel Cells (SOFCs)
Another major growth area for scandium is in solid oxide fuel cells (SOFCs) for utility and commercial scale applications, where California-based Bloom Energy has most, if not all, of the market share. market.
SOFCs are one of many types of fuel cells, but unlike the rest, they produce electricity using natural gas, methane, or biofuel gas as input.
This type of power source is commonly used for data centers and hospitals, as well as in niche products like lasers and lighting for stadiums and studios.
According to experts, scandium provides the highest known rate of oxygen transport, and this allows SOFCs to operate at temperatures of around 700°C, much lower than the approximately 1000°C of conventional yttrium-doped SOFCs.
This lower operating temperature makes the system much more mechanically robust, and the end result is that Bloom’s SOFCs essentially never stop working, making them the ultimate in uninterruptible power supply.
Bloom Energy is believed to use around 15kg of scandium oxide per 100kW fuel cell assembly.
Storage and transport of hydrogen.
Marty Weems, president of American Rare Earths (ASX:ARR) North America, says these cells could also be used in the storage and transport of hydrogen.
“Hydrogen storage in metal tanks is very corrosive to metal, so companies have been looking for alloys that resist hydrogen corrosion,” he explains.
“An aluminum alloy with scandium would be very resistant to corrosion on that front, so it could be part of the fuel cell and as an alloy in pipes, as well as in tanks that store and transport hydrogen.”
What stocks have exposure to scandium?
Hallgarten and Company, a New York investment bank dedicated to the natural resources space, says scandium mining players are concentrated in Australia, while two others, Imperial Mining and Niocorp, are based in North America.
The most recent producer to enter the scene is mining giant Rio Tinto (ASX:RIO), which recently began producing scandium as a secondary stream for the purpose of alloying with aluminum at the Rio Tinto Fer et Titane (RTFT) metallurgical complex. in Sorell. -Tracy, Quebec, Canada.
In January 2021, RIO invested $6 million to build a first module at the plant, with an initial capacity to produce 3 tons of scandium oxide per year, or about 20% of the current world market.
In May 2022, the company produced its first batch of high-purity scandium oxide and is now focusing on ramping up production to bring the plant up to nameplate capacity.
The company is considering short-term expansion options to increase production capacity in line with market demand.
Some reports suggest that the global scandium market could reach US$802 million by 2027 with a compound annual growth rate (CAGR) of 7.6% during 2022–2027.
In December 2021, SRL’s Sunrise Battery Materials Complex near Condobolin in the New South Wales region was awarded Major Project status by the Commonwealth Government.
Intended to support a 50-year mine life, the project will produce high-purity cobalt-nickel sulfates along with scandium, with strong economics.
These include life of mine (LOM) revenue of $16.3 billion, LOM EBITDA of $10.8 billion, average free cash flow (after tax) of $308 million per year, and NPV8 of $1.2 billion.
In August 2021, ARR achieved a massive 216% increase in total rare earth element (TREE) grade and 90% increase in scandium grade, along with a 76% drop in ore mass during preliminary test work on samples from La Paz and its flagship La Paz project in Arizona.
This was a great economic result for ARR at the time, indicating that ore from La Paz can be processed using conventional methods and at lower cost.
This news sent shares up more than 10%, thanks to continued success in La Paz and several positive moves by the US, which is seeking to secure its rare earth supply chain.
The La Paz project has a current exploration tonnage in the range of approximately 742.5 to 928.1 million tons with an average TREO grade of 350 to 400 ppm and a scandium oxide grade of 20 to 24.5 ppm, which is in addition to the 170.6 Mt existing and improved resource in the northwest of the La Paz project area.
This long-standing market favorite disappeared from the map when a comprehensive nickel-cobalt supply deal with South Korean battery maker SK Innovation was terminated in late 2019.
The purchase was, and remains, crucial for AUZ to finalize a very large and very complex financing package for the $1 billion plus Sconi nickel-cobalt-scandium development in North Queensland.
Sconi, if fully developed, will be one of the lowest cost producers of battery materials in the world with a shelf life of more than 30 years.
But the company hit another bump in May when ASIC filed a lawsuit against it and its CEO, Ben Bell, alleging misleading claims about financing projects and purchase agreements in 2018.
“The Origination Process calls for several declarations, a civil financial penalty against the company and the managing director to be set by the Court and an order of disqualification against the managing director for the time that the Court considers appropriate,” says AUZ.
“The company intends to defend the process.”
The Platina Scandium Project (PSP), formerly known as the Owendale Project, is located about 350km west of Sydney.
Backed by former analyst Corey Nolan and CEO of Sayona Mining (ASX:SYA), the Platina Scandium Project underwent a definitive feasibility study in December 2018, demonstrating a 30-year mine life that would generate a NPV after tax of $166 million ($233 million).
Platina’s payback period at the time was 5.3 years, with its DFS financial model taking into account a scandium oxide price of around US$1,550 per kilogram over the life of the project.
While the focus has more recently been on the company’s gold portfolio, the company said it was implementing a variety of initiatives to unlock value in the project by September 2021.
At the time, Nolan said new pure scandium projects like PSP, which offer stable sources of supply other than by-products, will be needed to spur demand growth.
Platina’s new development strategy contemplates the development of master alloy production intellectual property (IP) and a two-phase market entry strategy based on the development of a commercial-scale master alloy production facility that initially uses raw materials. scandium oxide premium purchased by third parties until such time as the size of the market or security of oxide supply warrants the development of PSP.
Expected capital and operating costs are expected to be modest and will be defined through a feasibility study once the IP and market development strategies are complete.
SCANDIUM INTERNATIONAL MINING (TSE: SCY)
Scandium International is focused on developing its Nyngan Scandium Project, some 500km north-west of Sydney, into the world’s first producing scandium mine.
The company says exploration at the site has defined a measured and indicated resource significantly larger (some seven times) than the currently planned 20-year mine life outlined in the feasibility study.
At this stage, the project requires adequate short- and medium-term purchase agreements with clients for a significant part of the output of the phase one product, to make the final investment and finance/build decision.
SCY continues to look for acquisitions at this time.