EDITOR: | September 8th, 2015 | 7 Comments

Australia: the emerging scandium powerhouse

| September 08, 2015 | 7 Comments
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REE-Handbook-Scandium-SC-InvestorIntelNature has been kind to the Australian state of New South Wales, says George Putnam. Nowhere else on the planet has it bestowed such high grades (over 400 parts per million) of scandium. Putnam heads Scandium International Mining Corp (TSX:SCY) which has the Nyngan project in that state. The company believes the NSW lateritic clay belt represents a recent, game-changing discovery of scandium at grades approximately four times the grades of existing resources. This makes it possible to run a mine with production costs under $700/kg at a time when the product would fetch about $2,000/kg on the market.

And here’s another big plus: this scandium is not in either Russia or China, the present sources of the metal. Having a reliable supply from a First World country is a second game-changer.

There’s yet another positive factor: Scandium International is not the only scandium player in this Australian state, a fact that Putnam thinks is just great. He argues that a company such as Airbus is not going to retool its plant to make 400 or so A320 airliners with a scandium-aluminium alloy if it has only one source of the scandium and can be held to ransom by a monopolistic supplier. So it’s the more, the merrier he says.

Putnam is in Australia this week in relation to his company’s scandium project. (He does know the country: he once lived in Melbourne while being chief financial officer for the manganese business of BHP Billiton).

So let me bring InvestorIntel readers up to speed on NSW, the potential new world power in scandium.

Scandium International has the Nyngan project near the small NSW settlement of that name. It aims to be the first company to achieve production from a primary scandium mine (the present supply coming as a by-product from uranium and iron ore mines in Ukraine, the Bayan Obo rare earth mine in China and apatite mines in Russia).

The company is working on its definitive feasibility study and expects to begin production in 2017.

The scandium story has been slowly creeping up on Australian miners, and is still not widely known. I have checked my files and find that I wrote a newspaper report way back in 1997 saying that a small junior called Jervois Mining (ASX:JRV) had found scandium near the NSW city of Port Macquarie. Nothing much was to come of this but then that company came across scandium at Nyngan, and that led to a joint venture with what is now known as Scandium International. That JV has since been dissolved and the Canadian company is the sole owner.

The appeal of scandium is that just small amounts added to aluminium alloys produce lighter, stronger, more heat-resistant end-products, from baseball bats to jet fighters.

Putnam is in agreement with others in the scandium business that if you provide reliable supplies of scandium, they (the end-users) will come (and develop other products containing the metal). At present it is estimated world supply is no greater than 15 tonnes. So that’s why Airbus and other big companies cannot take a risk on there being enough scandium available. The mines of NSW could change that situation.

In Putnam’s view, another leading contender in the state is CleanTeQ (ASX:CLQ). It has a scandium project at Syerston, NSW. Last week that company reported the wet commissioning of its scandium recovery pilot plant had been completed and was now treating the first batch of scandium ore. While SCY is working at its definitive study, CLQ in May completed its scoping study. The company has a collaboration agreement with Airbus.

Syerston has passed through a number of hands including Canada’s Ivanhoe Mines, mostly with a focus on laterite nickel. As CleanTeQ says, “throughout the history of the project the scandium occurrences in the drilling results remained little more than a geological curiosity”. Robert Friedland’s Ivanhoe sold the project to CLQ last year.

Then there is Platina Resources (ASX:PGM) with its Owendale platinum-scandium project. The last report we heard was that negotiations were continuing with China’s Honfine Oriental Zirconium for the supply of 15 tonnes a year of scandium oxide, and there were talks with other parties, including European ones. There are 9,100 contained tonnes of scandium at Owendale.

And Jervois is still in the game with its own NSW project, which it describes as the largest in NSW “and probably the world” with 2.67 million tonnes grading at 435ppm scandium.


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Comments

  • G CHASE

    projected production date in 2017. Small typo in the article.
    It would be interesting if SCY and CLQ joined forces at some future point.
    That would be a powerhouse with first mover advantage.

    September 8, 2015 - 7:48 AM

  • Positroll

    How do the scandium alloys stack up against hafnium alloys? I got the impression that they are fairly interchangeable, with some additional posives for hafnium, but could be wrong:
    “Addition of 1% hafnium in aluminum leads to the production of aluminum superalloys with metal grain size of 40{50 nm. Here, not only alloy reinforcement, but also considerable relative elongation is achieved, the shear and torsional strength is increased and the vibration resistance is improved”
    http://nanojournal.ifmo.ru/en/wp-content/uploads/2014/08/NPCM54P603.pdf
    Given that ALK is planning on producing 200-300 tons of hafnium / year, if I were Airbus or Boeing, I’d rather go with the hafnium alloy …

    September 8, 2015 - 10:48 AM

  • 90bigpicture

    Hafnium is typically a by-product of zirconium. Manufacturers are not going to depend on by-product production when making production line decisions with multi-decade implications.

    That’s why these scandium deposits in NSW are so critical to scandium’s potential in aluminum alloys finally being achieved – John Kaiser has done some excellent work on this topic.

    September 8, 2015 - 11:18 AM

  • Positroll

    According to the FEED-NR, Alk’s DZP will make as much profit from hafnium than from zirconium (in addition to FeNi and REEs). The resource is good for more than 70 years, which is easily enough for any aircraft production plan I have ever heard of …

    September 8, 2015 - 11:43 AM

  • charles.1

    The history of all minor metals is that production as a by-product works best as a long term sustainable business. Material can be fed into the market at a rate that suits all parties – no need to overproduce to try and lower costs. Pure play scandium – lots of risk. Hafnium as a by-product – lots of potential.

    September 8, 2015 - 9:10 PM

  • Robin Bromby

    End-users know where they are with primary scandium producers. What if the by-product producers see their main commodity dive in price and/or demand, and cut back production — or even shutter a mine?

    Airbus etc. would not leave themselves open to such an eventuality. The point about primary scandium producers is that their point of existence is producing Sc. Therefore there’s an inter-dependence between them and end-users.

    September 9, 2015 - 5:55 PM

  • John

    CLQ have already stated they will produce at $446 a kg and that’s with a 20% contingency / $1500 Sc price!!
    SCY are no where near this.

    Friedland holds all the cards here.

    September 10, 2015 - 6:41 AM

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