Developing a market for scandium oxide

If you blinked you might have missed the news last week but it was extraordinary: Rio Tinto (NYSE: RIO; LSE: RIO) and the Quebec government announced they are building a commercial-scale demonstration plant to produce scandium oxide in Canada - the first scandium oxide plant in North America.

As Alisha Hiyate, the editor-in-chief of the Canadian Mining Journal and Diamonds in Canada magazine pointed out in her article about the new plant on Jan. 14, scandium oxide is used to make high-performance aluminium alloys for the aerospace, defence and 3-D printing industries, and in the production of solid oxide fuel cells. Scandium-enriched alloys are stronger, lighter, corrosion-resistant and weldable.

Rio Tinto will be extracting the critical material from tailings it has generated from processing titanium dioxide. The mining company discovered the scandium oxide in mineralized material from its Lac Tio ilmenite mine in the French-speaking Canadian province five years ago, figured out a way of producing scandium oxide at a purity level of over 99.99%, and last year produced its first aluminum-scandium master alloy.

When I heard the news I started calling around to see what some of the experts think about Rio Tinto's plan to produce about 3 tonnes of scandium oxide a year when the global market for scandium oxide is estimated at only about 20 tonnes. Is there enough demand to see the market take off?

Chris Ecclestone, an expert on critical minerals and a mining analyst at Hallgarten & Co. in the United Kingdom was both enthusiastic and at the same time soberingly realistic about how quickly a market might develop for the material.

"Think of the implications!" Ecclestone told me over the phone from his home in London. "Everyone has been flapping their gums about dependence on China - vulnerability - and suddenly we're going overnight from China being a dominant source to Canada being a dominant source. And it's one of the minerals on the USA critical minerals list."

While Ecclestone added that "the sky's the limit" and that, eventually, there could be a market for hundreds of tonnes of scandium oxide a year, he also cautioned that the expression "which came first: the chicken or the egg" was practically invented to describe the market for scandium. "Without supply there's not going to be adoption," he explained. "There are a number of companies out there that have primarily scandium deposits but have never been able to get them to be viable because there's just not the demand. If they started producing, then there would be demand."

Ecclestone used the aerospace industry as an example. The industry has used some aluminum-scandium alloys to make their planes lighter, but companies like Boeing and Airbus will not start retooling their fleets, he forecast, until they are sure there is enough scandium oxide available on the market. They don't want to be at the mercy of producers in countries like China, Russia, or even the Philippines, he said. (There are other sources of scandium oxide besides titanium streams, he noted, including some nickel mines. Japan's Sumitomo produces about 7.5 tonnes of scandium oxide a year from a nickel laterite mine in the Philippines. Scandium oxide can also be extracted from the red mud or bauxite residue, which is generated when bauxite is refined into alumina using the Bayer process, although an economic path to production has yet to be developed.)

A drill site at Clean TeQ Holdings' Sunrise cobalt-nickel-scandium project in Australia, 350 km west of Sydney. Credit: Clean TeQ Holdings.

I also spoke with Sam Riggall, CEO of Clean TeQ (TSX: CLQ; US-OTC: CTEQF), a company that owns the Sunrise nickel, cobalt and scandium project in New South Wales, Australia. The Sunrise project is not only one of the largest and most cobalt-rich nickel laterite deposits in the world, but it is also the largest and highest grade scandium resource globally. Speaking on his cell phone from Melbourne, Riggall noted that the news about Rio Tinto and indeed other smaller players looking at producing scandium oxide is all positive. "It gives end users who see applications for scandium a path and options," he said. "No one wants to be beholden to one supplier, which typically has been Chinese or Russian supply chains over the years."

Like Ecclestone, Riggall warned that it will take time for the market to develop and noted that one reason global production of the metal was still relatively small is because you "don't need a lot of scandium in alloys" and that's "a positive because it keeps the cost of making the alloys low." Think of scandium, he said, "as where niobium was 40 years ago, a niche alloy until world class deposits were developed to ensure reliable supply. What niobium did for steel, scandium will do for aluminum."

"It's a niche metal still," he continued, "but the potential where it can be used is enormous and we think there's significant scope for mainstream applications. We have announced a bunch of partnerships over the years." In December 2019, Clean TeQ signed a heads of agreement with Panasonic Corp to supply up to five tonnes of scandium oxide per year that will go into the company's aluminum casings for laptops, mobile phones and other electronics. Clean TeQ also inked an offtake agreement with Relativity Space, a rocket launch company in California that 3-D prints rockets. "It's quite amazing, they build these huge rocket structures out of aluminum alloys and they need scandium," Riggall said. "If you're looking at a world where 3-D printing of lightweight metal alloys becomes more important, scandium becomes important. There are certainly customers out there who need the material."

There are also markets for aluminum-scandium alloys for use in electric vehicle battery casings and cast parts. "Single casting is a large part of production but you need high-performance alloys to do that and that's where scandium comes in," Riggall said.