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The rare earths racehorse investors are betting on

The date of: 2019-11-25
viewed: 2


In most definitions of rare earths Scandium is included but it is the forgotten relative. Why? This truly is a chicken and egg situation when it comes to supply and demand. Indications are that there is latent demand but a stable, long term supply is needed before companies can commit to a change of production to utilize this element.Global production is estimated to be around 15-20 tonnes annually of scandium oxide which would account for annual sales of under US$100 million. The element number 21 is found in most rare earth and uranium deposits but very little is actively recovered. In 2003, three areas were producing Scandium: China, from the iron ore/rare earth mine in Bayan Obo, Inner Mongolia, the uranium and iron mines in Zhovti Vody in Ukraine, and Russia from its apatite mines in the Kola Peninsula, though recent reports indicate that mining has stopped and Russia is working off stockpiles. Japan’s Sumitomo Mining announced in 2018 that it would start production in the Philippines.

There are a number of companies globally looking into scandium production including Canada’s Imperial Mining Group Ltd., USA’s NioCorp Development Ltd., Scandium International Mining Corp. with its Nyngan Scandium Project, located in New South Wales, Australia, Clean TeQ Holdings Limited, Australian Mines Ltd. and Platina Resources Limited. Most are targeting production around 2021. The challenge for most is the projected capital expenditure to get into production is close to or above a billion dollars, which is a big ask in today’s equity markets.Many prices are thrown around in the space to justify economics but in discussion with some with knowledge say that broad acceptance will require an oxide price in the range of $1,200-1,500 per kilogram. It is difficult to verify existing pricing but indications range from $3,000-4,000 per kilogram.What are the advantages of Scandium? When added in small amounts to aluminum, typically 0.25% or less it improves the properties of traditional aluminum alloys. It improves the strength by as much as 150% while also improving the alloy’s corrosion resistance and heat tolerance. Compared to steel, an aluminum alloy using scandium can provide similar protection on a military vehicle at one-third the weight. Retrofitting military vehicles would increase speed and range while reducing overall weight. Presently Al-Sc alloys are used in sports equipment (baseball bats, tennis rackets and high-end bicycle frames) along with solid oxide fuel cells, revolvers and have potential in electric vehicles and aerospace.It is widely acknowledged that the Russian MIG 29 used significant amounts of Al-Sc alloy. It is weldable which is far more attractive than the riveting used in aircraft production. Claims about building aircraft from these Scandium alloys are being made but there is one issue that needs to be understood. Design and qualification of a new aircraft can take a decade or longer. So what does a scandium producer do while he waits for this demand to occur? They will need to find near term uses to generate sales. Electric vehicles would be an interesting option but typically designs being made to are for production 3-5 years later, a shorter timeframe but again producers have a lag. So the initial focus will have to be on consumer products and immediate light weighting applications that do not need excessive qualification and testing. Retrofitting of military vehicles would be an obvious market and working with aluminum producers to expand the existing uses.The next decade, I believe, will see significant effort to develop and expand the Scandium market and it is a horse race as first to production will be able to capture the first movers to utilize Al-Sc alloys. Game on.

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