Putnam now on fast track to world’s first primary scandium mine
Two years from now, the present-day metal world should see something they have never seen before: a primary scandium mine.
George Putnam, President and CEO of Scandium International Mining Corp (TSX: SCY) has been in Sydney this last week, and he reports receiving a very positive reaction from the New South Wales Department of Planning and Environment after seeking clearance of the regulatory hurdles to developing a mine in that state. Putnam says he can now turn his mind to signing up more sales agreements — half the first year’s output of 15 tonnes has already been signed up — and then tackle the financing of the projected $87.1 million capital cost of the mine to be developed near the small NSW country town of Nyngan. It will take the Nyngan plant 24 months to reach nameplate capacity of 39 tonnes a year.
For NSW, the Nyngan project makes possible the development of lateritic ore where the grades of nickel and cobalt are too low to justify mining those.
In an interview during his visit to Australia’s largest city and state capital for NSW, Putnam discussed the question of whether a primary scandium mine could work; this follows discussion here on InvestorIntel as to whether scandium output would continued to be a by-product only proposition. The estimated 20 tonnes now produced annually comes as a by-product (or co-product) from other mining, including at a titanium dioxide pigment plant in China. One plant may produce as little as one tonne a year, from recycling the solvent extraction material and picking up scandium at grades as low as 20 parts per million. He says the cost may well be almost as much as the plant receives for the scandium.
SCY’s case is that producing scandium oxide as a by-product cannot offer the volume of metal needed to provide the critical mass that would trigger development of new products using scandium.
China’s output is spread over numerous mining operations. The Bayan Obo rare earth Nb-Fe mine in Inner Mongolia produces some scandium, with other small amounts coming from leach solution waste streams in other parts of China.
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Russian production has traditionally come from scandium content in tailings from the Zheltye Zvoti iron and uranium mine in Ukraine, closed in the 1980s. Stockpiles of scandium oxide and aluminium-scandium 2% master alloy, from Russian strategic strockpiles built in the 1970s, still find supply commercial markets.
Will Nyngan work financially? Well, Scandium International’s recently published definitive feasibility study indicates it will. The estimated operating cost to produce a kilogram of scandium oxide is $557; the company is working on the basis of receiving $2,000/kg, a modest assumption in Scandium International’s view.
George Putnam says his company will be able to prove that a primary scandium mine can work, even though it has never been tried before. He sees the outer limit of scandium demand being between 400 tonnes and 500 tonnes a year — but it will take 15 years to get to that level of demand (and 10 of those years to reach demand of 250 tonnes a year).
(After all, as InvestorIntel has long reminded readers, scandium use has been limited, not by demand, but by supply: potential end-users have left off developing new scandium-containing products for fear that the metal would not be available.)
So let us turn to the company’s definitive feasibility study.
This is the key to the interested in scandium: Its “uniqueness is such that minute additions of the element to aluminium alloys results in a step improvement in overall performance properties, including strength. No other alloying element gives the same level of multiple property improvements in such a diverse range of aluminium alloy system as scandium”.
In reference to the $2,000/kg price adopted b y SCY, the feasibility study says that one scandium supplier, Stanford Materials Corp., confirmed in March that the current oxide price for 99.5% grade product was $5,290/kg.
The pricing issue is complicated by the fact supplies are available only in limited quantities. Pricing for large quantities —in terms of tonnes rather than kilograms — is not available.
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