The KRO Scandium Resource Center is designed to help investors get acquainted with scandium and get quick access to scandium related comments published on Kaiser Research Online. Scandium is for aluminum the counterpart of what niobium has become for steel. When alloyed in small amounts with aluminum and steel respectively scandium and niobium bestow strength in addition to other properties such as corrosion resistance. Greater strength reduces the volume of aluminum or steel needed to meet strength specifications, which is important for anything that moves because weight costs energy. Scandium and niobium are thus "lightweighting" champions, which appeals not just to people concerned about climate change mitigation, but also anybody concerned about fuel costs. The difference between niobium and scandium is that since the sixties niobium supply has grown to 59,500 tonnes in 2019 worth about $3 billion, whereas scandium output is estimated at 15-25 tonnes of scandium oxide worth no more than $50 million. Although scandium is more abundant in the earth's crust than lead, its nature as a "dispersoid", what makes it such a holy grail for aluminum, inhibits concentration. As a result there are no current primary scandium mines as there are for niobium; all supply is non-scalable by-product from rare earth mines, nickel-cobalt laterite mines, titanium dioxide waste stream stripping, and uranium processes. The only historic primary mine was the Zhovti Vody mine in the Ukraine operated by the Soviets which used Al-Sc alloy in their Mig fighter jets. At a grade of only 130 ppm Zhovti Vody ceased production when the USSR collapsed. Although abundant resources with 40-60 ppm Sc exist, the high recovery cost results in a product far too expensive for utilization as an aluminum alloy. The situation changed in the mid nineties when unusual laterites enriched to 300-600 ppm where discovered in Australia. At least 4 projects have been taken through feasibility with plans to sell scandium oxide at $1,500-$2,000 per kg, but none have achieved commercial production as primary scandium mines due to the chicken-egg problem. What comes first: the CapEx funding or the filled offtake order book? Financiers won't put up capital without guaranteed revenue for the output, and end-users won't commit to using a new material that won't arrive until a mine is commissioned a couple years later and, something that is a risk with chemical plants, maybe won't be available at the price agreed on because it doesn't work as expected (think of Molycorp's $1.6 billion rebuild of the Mountain Pass rare earth mine). To appreciate why the chicken-egg problem defeated even Robert Friedland just listen to the experts below in the segment from Market Scams: how to protect your investment. It is an under-statement to say that scandium juniors have had a rough time, which is why SCY loaned John Kaiser an Al-Sc armor plate it had developed for defense applications.
The last junior to make a serious effort was Scandium International Mining Corp which in early 2018 embarked on a campaign to work with a dozen plus disclosed and undisclosed potential end-users to demonstrate how Al-Sc alloy could be incorporated into their product lines. During 2018 SCY released a very important graphic which revealed their understanding of the relative size of various end-uses, when during the supply evolution cycle they were most likely to kick in, and the degree of price sensitivity. This was an eye-opener because most of the hype during the past decade had focused on making airplanes lighter and feeding new technologies like Bloom Energy's solid oxide fuel cell. Because of the engineering and certification cycles aircraft would be among the last adopters, while Bloom Box sales never took off as expected.
KRO converted the future demand bubble chart into a pie chart of what the usage breakdown would look like a decade later when demand had evolved to 1,000 tpa. There was a much greater diversity of potential uses than juniors had typically portrayed in their corporate presentations including uses as mundane as beer cans.
But where would the supply come from? KRO created a graphic which shows how the different usages would evolve and from where future supply might come from, both primary sources and by-product sources.
Alas, after two years pursuing its LOI strategy SCY had not reported a single offtake agreement despite many press releases about successful demonstration of Al-Sc alloy uses. The chicken-egg problem appeared hopeless but in early 2020 two unrelated solutions emerged which have the potential to launch scandium demand growth over the next decade towards a 1,000 tpa market worth $2 billion. The first development was that Rio Tinto has learned to recover scandium at its Sorel-Tracy facility in Quebec where it produces a titanium slag from its iron-titanium Lac Tio deposit, one of two such bedrock sourced titanium mines in the world (the rest of the world's titanium comes from heavy mineral sands which are not an enriched source of scandium). The Lac Tio ore has a scandium content of 30-50 ppm which mostly reports to the titanium slag after a furnace turns all the ore, including the ilmenite, into a melt from which the iron is recovered. For decades Rio Tinto has sold the leftover 80% TiO2 slag product to pigment makers who use the sulfate process. But pigment makers have been shifting to the chloride process which requires a feedstock in the 90%-95% TiO2 range. Necessity forced Rio Tinto to develop an upgrading step out of which came the ability to separate scandium. How much has not been disclosed, but at the current production rate Lac Tio could generate as much as 50 tonnes of scandium oxide annually, somewhat more than the 35 tpa SCY planned to produce initially from its Nyngan primary scandium deposit in Australia. But while a primary mine is an all or nothing proposal, Rio Tinto need recover only as much scandium as its Alcan aluminum division wants. The key to cracking the chicken-egg problem is to be able to increase scandium supply incrementally in response to gradual demand evolution, without a significant CapEx investment for that purpose, something that is not possible from by-product operations by their nature nor from primary operations because of the chicken-egg problem. The Rio Tinto development is thus a game changer for launching a cycle of aluminum-scandium alloy adoption by end-users which will get global supply to a critical mass where new primary supply is not bigger than existing supply.
The second development that is a parallel game changer was an application filed in late 2019 by SCY for a patent protecting a method for recovering scandium and other metals from the waste stream of copper oxide leaching operations. SCY's CTO, Willen Duyvestyn, who has a background in copper leaching for SX-EW operations and ion exchange technology spent much of 2019 securing copper raffinate samples from various American copper mines and developing methods to recover other elements besides copper which otherwise end up back on the heap leach pile where they ultimately remain when the copper is depleted. SCY had figured out how to make master Al-Sc alloy, but it was becoming clear from the LOI collaboration with end-users that they wanted bigger samples, and a meaningful supply during the construction period while they engaged in a staged rollout of Al-Sc alloy based product lines. SCY wanted to build a small melt shop capable of producing 1-2 tonnes of master alloy daily, but needed a scandium oxide supply. Procuring such a supply from China was conceivable, but not sustainable once the Chinese figured out SCY's strategy. China is the world's biggest aluminum producer and has the world's greatest lightweighting need for a transportation fleet it was converting from gasoline to electric but charging with coal powered electricity. The copper raffinate tests revealed there was enough recoverable scandium using SCY's patent pending process to play the same incremental supply growth role as Rio Tinto's recovery of scandium from its titanium upgrading slag. This development was announced in early May and the market is now waiting for SCY to secure a deal with one or more of the copper oxide miners, among whom Freeport is the giant with 7 operations in the United States. If this works SCY could do similar deals with copper oxide mines around the world. The idea is that SCY would be the buyer of the scandium output to feed its master alloy melt shop while a range of other metals with varying purities such as cobalt would be sold by the waste stream cleaning JV to the highest bidders, which could attract ESG premiums for metals such as cobalt whose possible conflict source is a marketing problem for users such as Apple. It could also serve as a transitional solution to America's critical minerals supply problem that looms if the deglobalization trend leads to a New Cold War with China (see the Metal Criticality Center for geographical supply concentration problems). Conditions are finally right for scandium to become the ideal lightweighting solution for aluminum.
The under-funded and neglected US Geological Survey publishes annual and interim overviews of a wide range of metals and industrial minerals. Joe Gambogi has taken over rare earths and scandium from James Hedrick.
Key Publicly Listed Companies with Primary Scandium Deposits
Primary Scandium Companies - Market Activity for September 18, 2020