How to single-handedly build a market for scandium
Scandium, a rare chemical element that is extracted as a by-product in mining operations, could potentially revolutionize many industries from aviation to 3D printing through its ability to strengthen and lighten aluminum alloys.
Today there is little demand, as there is virtually no supply. But that could change. Canada’s Scandium International Mining Corp. (TSX: SCY) plans to build the world’s first primary scandium mine in New South Wales (NSW), Australia. Scheduled to come into production by 2019, Scandium, if successful, would single-handedly build a new market.
Scandium International owns 100% of the Nyngan Scandium Project in the NSW lateritic clay belt, located approximately 500 kilometers northwest of Sydney.
According to Scandium International’s CEO George Putnam, there is almost no market for scandium at the moment. Most supplies arrive as a by-product from titanium and other mines in China and Russia.
Currently, Scandium International is focusing on reaching letters of intent (LOI) with different industries to test scandium in their operations, with the hope that some of those LOIs will be converted into off-take agreements.
“We want to educate the investor a bit more,” Putnam said. “We have to build this market ourselves.”
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LOIs include Sweden’s rolled aluminum products provider Gränges for heat-exchangers and Germany’s Ohm & Häner Metallwerk for improving durability of metals castings. Scandium hopes to expand on the company’s portfolio of LOIs, to help boost its chances that one or two of those will become a long-term supply agreement.
Putnam said Scandium International only needs an initial supply of 40 tons and five or six customers to start building the market, which he predicts could be worth US$1-2 billion if aluminum makers decide to broaden their use of aluminum-scandium alloys.
The resources are surface-mineable and the executive believes they can be delivered at large enough scale and realistic prices to promote much wider use of the metal. That’s why the company is “laser focused” on marketing of the new material, which as a lighter and tougher alloy, boost its credentials as a next-gen material.
Putnam welcomes the prospect of other scandium projects entering the market. It’s hard to build a market single-handedly.
There are three other companies in the same lateritic clay belt, which he believes could boost scandium supplies. Those projects are primarily nickel and cobalt rich, with scandium a by-product. They didn’t get developed in the past decades because nickel could be sourced cheaper from Indonesia. That said, the dramatic increase in cobalt prices has made them feasible to mine.
“That makes those nickel cobalt projects interesting right now,” Putnam said. “That group of companies might join us at some point. Another significant scandium producer would make my job easier.”
Despite its scarcity, potential high-value commercial uses for scandium additions to alloys (Al-Sc) have been identified. Relatively small amounts of the metal produce aluminum alloys that are stronger, lighter, heat and corrosion resistant.
The aircraft and automotive industries are increasingly incorporating Al-Sc alloys to achieve weight reductions and better fuel efficiency. Al-Sc alloys are also used in bicycle, golf clubs and other sporting accessories.
The primary use for scandium today is in solid oxide fuel cells where those attributes improve performance.
Scandium is a good electrical conductor but is unlikely to replace copper due to its reputation as being a fire hazard.
Where it does have potential, is in long-distance transmission lines. As it is lighter, more wires can be strung giving better throughput and requiring fewer towers.
Another potential use is for the emerging 3D printing market.
AML Technologies, an Adelaide, Australia, start-up will test Al-Sc to improve speed and range of printing larger aluminium-based parts based on the wire 3D printing method as opposed to powder printing which is more for smaller, more detailed objects, like medical implants.
“3D printing is a fast emerging technology though it’s hard to predict how important it is or is not going to be. There’s a lot of interest and sex appeal in it right now. But I’d say it won’t be that important for us in the first three years of sales,” Putnam said.
Matt Craze has covered commodity markets for more than 20 years, working as a researcher at CRU International, and for over 10 years as a ... <Read more about Matt Craze>