EDITOR: | May 31st, 2016 | 11 Comments

Putnam now on fast track to world’s first primary scandium mine

| May 31, 2016 | 11 Comments
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iStock_000092492603_FullTwo 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.

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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Comments

  • Paul

    Interested to hear thoughts on how this will affect Clean Teq which has been touted as the premium Scandium player in the market.

    June 1, 2016 - 2:44 AM

  • Jack Lifton

    Robin,

    Spot pricing is not contract pricing. The price that a willing buyer pays for scandium will depend on the customer’s specifications and needs. Bloom Energy, for example, needs a small amount annually of Sc2O3; I don’t know at what purity level, but I do know that each “9” increase in purity adds significant cost. Bloom’s small amount, by the way, is around 6 tons per annum I am told, which I am also told it has under “private treaty” with an existing Chinese supplier. The pending uses of scandium are for metals and alloys. However there is no agreed cost structure for producing consistently high quality scandium metal; in fact there is no agreed best practice to do this. As Tim Worstall likes to point out any increase in supply without a corresponding increase in demand will drop the price of any commodity! Therefore any off-take agreement today is a gamble on both sides. The scandium market is waiting for a credible regular supply of some threshold value of production that will sustain an end-use. For scandium aluminum alloys, fro example, to become used for aircraft stringers there will have to be enough REGULAR supply of scandium for Airbus, for example, to engage an alloy vendor to produce the stock from which the stringers are made in sufficient quantity for the product run life of an aircraft. This is not a lone decision to be made by a miner. This is a total supply chain confidence analysis problem. There will NEVER be a lot of scandium, but there may be enough for an end-user to gamble on gaining competitive advantage by using it. Time and money will tell.

    Jack

    June 1, 2016 - 4:45 AM

  • Tim Worstall

    “”Russian production has traditionally come from scandium content in tailings from the Zheltye Zvoti iron and uranium mine in Ukraine, closed in the 1980s. ”

    Complete nonsense. That mine never produced more than a couple of kg. Sorry, I was there in Russia dealing in scandium for a decade.

    June 1, 2016 - 10:55 AM

    • Tracy Weslosky

      Tim – I am going to let Robin Bromby reply, but wanted to let you know that I edited out your last line as it does not make sense to the reader. If you want to reference another post, please comment on the post that you are on for the sake of dialogue and debate. Thank you for reading, I look forward to our other scandium experts commenting. As I am certain some of our clients have been there too….

      June 1, 2016 - 1:12 PM

  • Robin Bromby

    Don’t shoot the messenger — I was just quoting from the feasibility study, in which the exact words were:

    “Russian production has traditionally come from scandium content in tailings from the Zheltye Zvoti mine in the Ukraine, formerly an iron and uranium underground mine, closed in the 1980s.”

    I should make it clear, as I have to from time to time, that I am not presenting myself as an expert in these matters. I am a journalist, and my job is to report what others say and do.

    June 1, 2016 - 4:15 PM

  • Alan Levy

    Whilst on the subject of scandium, let us not forget Joe Sausville who passed away in May 2015 at the age of 96. Born in Brooklyn, N.Y. he went on to found Sausville Chemicals in New Jersey, one of the major scandium suppliers in the U.S. He later relocated his facilities to Knoxville, TN .

    In discussing scandium, one thing to keep in mind is its similarities (and differences) to the lanthanides. Its valence electrons are similar to that of the lanthanides and to yttrium (i.e. +3), but it is a much smaller and lighter ion, not having that funky 4f shell found in the lanthanides. Therefore its charge to radius ratio is much, much higher than that for yttrium or the lanthanides and it ‘loads’ onto solvents like gang busters. It does this to such a great extent that it frequently acts as a poison to solvent extraction systems. And since it then HAS to be removed, it can be separated and monetized. I suspect that this is/was the source of some FSU material.

    June 1, 2016 - 7:04 PM

  • P. Ryan

    It’s interesting how the article completely side steps CLQ. I guess readers should do their own due diligence. Maybe it’s because CLQ don’t pay to advertise here?

    June 1, 2016 - 7:34 PM

  • Jim

    Please explain why you “infer” CLQ is better than Scandium International.
    For me I don’t see it.

    June 1, 2016 - 8:15 PM

  • Jim

    Can you summarize your point here?

    June 1, 2016 - 8:16 PM

  • Jim

    Alan Levy, can you please summarize your point?

    June 1, 2016 - 8:16 PM

  • Robin Bromby

    We did give coverage to Clean TeQ in February as part of a post on what was happening on the scandium scene in NSW. I have pasted that below — but the point to make here is that it is not incumbent on any news service to include elements that are not relevant to the subject of a report. This was an interview with the CEO of one company about what that company’s view of the scandium market was. If we do a piece about a REE story (e.g. Lynas) we don’t then have to mention every other REE company. So you can abandon the conspiracy theory. Anyhow, this is what we reported earlier this year:

    “The third company, Clean TeQ Holdings (ASX:CLQ) has also lost ground in terms of the share price, from A$0.29 in May to A$0.165 in Friday afternoon trading – but this company is making some progress, last month announcing an alliance with Universal Alloy Corp, based in Canton, Georgia, a global supplier of extruded alloy aerospace components. Clean TeQ has also teamed up with an Australian university: the Institute for Frontier Materials at Deakin University, located at Geelong, Victoria, focuses on innovation and development in materials science and engineering. The thrust will be to develop the next generation of lightweight solutions for commercial aircraft.

    In other words, the target is to use scandium in aluminium alloys to make parts lighter and stronger. (Deakin is also reported to be keen to test the potential of scandium alloys with 3D printing.)

    But Clean TeQ has already developed its own technology, what it calls the resin-in-pulp (RIP) process. It uses, as the company explains, “a combination of continuous ion exchange sorption and desorption processes, [that] was proven to extract and concentrate nickel and cobalt directly from acidic lateritic pulps at a much lower cost than conventional routes”.

    The involvement of laterite ores is an important factor.

    The company’s project is located in the Fifield district of NSW, the location of Australia’s only historic source of platinum production, mined between 1887 and the mid-1960s.

    In 2000 another Australian exploration company was looking at developing a nickel laterite mining operation there, and development consent (to a subsequent mining company after the property changed hands) was given in 2006. It never proceeded due to the prevailing nickel price at the time (and, one must add, in Australia at that time nickel laterite projects were a hard sell after several hopeful miners had been battered by technical problems extracting the metal).

    But there’s a key sentence in the history: “Throughout the history of the project, the scandium occurrences in the drilling results remained little more than a geological curiosity”. Clean TeQ’s case is that, as industrial uses for scandium have grown, so has its importance to the project.

    Between 2004 and 2008, the application of Clean TeQ’s technology for metal recovery from lateritic ores was developed in collaboration with BHP Billiton through an A$8 million investment.

    Clean TeQ, in fact, has delivered a scandium recovery pilot plant to a large Japanese titanium dioxide producer. Meanwhile it is focusing on securing commitments for scandium offtake for the first stage of mine development. Several weeks ago it reported producing the first batch of 99.9% purity scandium oxide at a demonstration plant in Perth. Metals general manager John Carr said it was the first time scandium oxide of any significant quantity had been produced from the processing of primary ore using continuous ion exchange technology.”

    – See more at: http://investorintel.wpengine.com/technology-metals-intel/scandium-race-two-potential-australian-projects-on-fast-track/#sthash.NGmQEJTw.dpuf

    June 1, 2016 - 11:36 PM

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