Why Scandium Could be a Huge Opportunity

- September 16th, 2020

Commercially viable scandium deposits are rare, making widespread use of the metal tricky. However, there is indeed opportunity in the space.

Scandium is not particularly rare and can be found in small concentrations in the Earth’s crust. In fact, the transition metal is more abundant than lead, mercury and all the precious metals. Scandium metal is also as strong as titanium, as light as aluminum and as hard as ceramic.

However, there are no pure scandium-producing mines. The rare earth element is often a by-product, produced from refining other metals, including uranium. Pure scandium metal rarely concentrates at higher grades alongside other metals, making commercially usable scandium deposits very rare.

What’s more, even when scandium is found at elevated levels, processing it can be difficult, leading to very few stable sources of this critical metal. Not surprisingly, that means there has been very little adoption of scandium in commercial applications.

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However, as John Kaiser of Kaiser Research has pointed out several times in the past few years, that doesn’t mean there hasn’t been research into how scandium could be used in the future. “Hundreds of applications (have been) filed, many of them related to alloys with aluminum,” he said in an interview with the Investing News Network. “This obscure metal is going to go ballistic in the next few years.”

Kaiser made that statement a few years back, and scandium has yet to go ballistic. But he still has hope for the metal, and it could yet have its day in the sun.

Below is an overview of the scandium market. Topics covered include current production, newcomers to the space and the metal’s potentially bright future.

Current scandium production

The first known large-scale scandium production was associated with Russian military programs. Details are lost to history, but Russians reportedly alloyed the metal with aluminum to make lightweight MIG fighter parts. Mining at these historic Russian production sites has ceased, but stockpiles of scandium oxide and scandium master alloy remain in Russia. These stockpiles are rumored to be dwindling, but continue to be offered for sale on the market.

Today, most scandium is produced as a by-product during the processing of other ores, such as uranium or rare earths, or recovered from previously processed tailings. As a result, scandium supply can be affected by the supply and demand dynamics of the metals it is produced with. That can make the metal’s already tough-to-follow market dynamics even more difficult to understand.

According to the US Geological Survey, scandium-producing countries include China, where it is a by-product of iron ore, rare earths, titanium and zirconium, and the Philippines, where it is a by-product of nickel. Scandium is also produced as a by-product of uranium in Russia, Ukraine and Kazakhstan. More US production could be on the horizon as well after a push in legislation that encourages the Department of Defense to look into the potential uses of the metal.

Scandium resources have been identified in minerals-rich regions across the world, most notably in Australia, where a number of junior mining companies are working to develop scandium deposits in New South Wales. These include Scandium International Mining (TSX:SCY), which controls the Nyngan project; Clean TeQ Holdings (ASX:CLQ,OTCQX:CTEQF), which holds the Sunrise project; and Platina Resources (ASX:PGM,OTC Pink:PTNUF), which is working the Owendale project.

Scandium price and trading

According to the US Geological Survey, the global scandium market is “small relative to most other metals.” This is best exemplified by global production and consumption of the metal, which is estimated at between just 15 to 20 metric tons annually.

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The US Department of Commerce and the International Trade Commission do not have specific data on trading for the metal. Furthermore, there is no formal buy/sell market today — scandium is not traded on an exchange and there are no terminal or futures markets.

Instead, the metal is traded between private parties, mostly at undisclosed prices and in undisclosed amounts. Therefore, understanding the precise volume of production and cost of scandium is difficult, and independent estimations are more relevant.

Production estimates are based on levels of trader activity and interest, as well as the knowledge that some traders deal in the critical metal from very small operations.

The estimates also include consumers believed to be sourcing their own scandium through small, controlled recovery operations, but don’t consider amounts of the metal contained in the master alloy currently being sold from Russian stockpiles.

The scandium opportunity

Research and Markets expects the global scandium market to grow at a compound annual growth rate of above 11.5 percent between 2019 and 2024. “The major factors driving the growth of market studied are the accelerating usage in solid oxide fuel cells, and growing demand for aluminum-scandium alloys,” notes the research firm. “On the flipside, lack of awareness, high cost, and inconsistent supply are hampering the growth of the studied market.”

Despite the lack of known, stable supply, scientists and engineers have been working hard to develop new products incorporating the metal. Scandium’s potential in high-tech applications is well documented. Highlights of the metal’s properties include:

  • Can be used in the creation of stronger, corrosion-resistant, heat-tolerant and weldable aluminum alloys for lightweight aircraft and automobiles.
  • Outstanding electrical properties and heat resistance valuable for solid oxide fuel cells.
  • Unique optical properties for high-intensity lamps.

A recent Kaiser Research report on scandium details the wide variety of end uses for scandium now and into the future, as well as where potential supply to meet that demand may originate.

scandium oxide supply and demand

Image courtesy of Kaiser Research.

As Kaiser has explained, “There’s an enormous latent demand for scandium if it ever became available on a primary, scalable basis.”

In other words, the only barrier to accessing demand from a whole new family of high-performance aluminum materials and energy/lighting products is the lack of a commercially viable larger-scale scandium production. Interestingly, Kaiser’s work highlights two important scandium market events in recent months that may “have the potential to launch scandium demand growth over the next decade towards a 1,000 (tonne per annum) market worth $2 billion.”

For one, Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO) announced in early 2020 that it has developed a route to recovery for scandium at its Sorel-Tracy facility in Quebec, where it produces titanium slag from the Lac Tio iron-titanium deposit.

Secondly, Scandium International Mining filed an application in late 2019 for a patent protecting a method for recovering scandium and other metals from the waste streams of copper oxide leaching operations. In mid-2020, the company announced that copper raffinate tests showed there is enough recoverable scandium using its patent-pending process to match the supply growth coming from Rio Tinto’s recovery of scandium from its titanium upgrading slag.

“Conditions are finally right for scandium to become the ideal lightweighting solution for aluminum,” said Kaiser in his note.

This is an updated version of an article originally published by the Investing News Network in 2014.

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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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4 responses to “Why Scandium Could be a Huge Opportunity

  1. I have scandium deposit in the state of oregon, western part. Need a partner to take more assays, drill it and put into production. Open pit
    some assays .21 some an ounce in the hard rock. thanks

  2. I have scandium deposit in the state of oregon, western part. Need a partner to take more assays, drill it and put into production. Open pit
    some assays .21 some an ounce in the hard rock. thanks

  3. I think it is these supplementary metals that make Texas Rare Earth Resources so appealing. In addition to the primary rare earth deposits, Round Top also contains scandium, beryllium, lithium, and a recent offtake agreement for their uranium, which helps to moderate the price swings in the rare earth market.

  4. I think it is these supplementary metals that make Texas Rare Earth Resources so appealing. In addition to the primary rare earth deposits, Round Top also contains scandium, beryllium, lithium, and a recent offtake agreement for their uranium, which helps to moderate the price swings in the rare earth market.

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