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Rio Tinto's Australian pure-play scandium mine poised to transform global market


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Rio Tinto's Australian pure-play scandium mine poised to transform global market

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Drilling at Platina Resources' namesake scandium project in New South Wales, Australia. Rio Tinto Group is buying the project.
Source: Platina Resources Ltd.

Rio Tinto Group's acquisition of Platina Resources Ltd.'s Owendale scandium project in New South Wales could eventually make Australia a key supplier of the ultralight critical metal and curb market dominance by China and Russia.

Australia has long led global scandium drilling activity, which hit a record high in 2022 and is already surging close to the same level this year, according to S&P Global Commodity Insights data. The country hosts half of the world's 10 largest projects by scandium contained in reserves and resources.

One of the most efficient hardening additives in aluminum alloys, scandium is used in aviation and aerospace parts, sports equipment, boats and other applications.

"Certainly the Rio deal is positive for the market as a whole as it creates new supply in a market dominated by Chinese and Russian output at a time when supply from these countries is becoming increasingly problematic for certain consumers," Jack Bedder, founder and director of London research firm Project Blue, said in an email interview.

Global scandium supply totaled just 40 metric tons in 2022, with 80% coming from China, 10% from Russia, and most of the remainder from Japan, according to Bedder.

"If Rio can create the market out of incrementally selling scandium out of Quebec until such time there is critical mass to warrant the development of Owendale, then I think that works really well for them," Platina Managing Director Corey Nolan told Commodity Insights. "Nobody else in the world, I believe, can really develop that platform. So they are a unique buyer in that regard."

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Transformational deal

Australia hosts 38 of the world's 62 active scandium properties, including 11 in New South Wales. Deposits there have high enough grades to be developed as pure-play scandium projects as opposed to most of the world's scandium, which comes from byproduct waste streams of metals including cobalt, nickel, uranium and titanium.

Christopher Ecclestone, principal and mining strategist at equity research house Hallgarten & Co., said the deal is "transformational for the scandium market." If Rio Tinto can get Owendale operational, it would "empower" Scandium International Mining Corp.'s Nyngan and Sunrise Energy Metals Ltd.'s Clean TeQ Sunrise projects, which comprises what he called "the lithium triangle of inner-west New South Wales," along with Owendale, Ecclestone said. Sunrise and Nyngan will "be able to do financings on the back of that deal," he said.

Ecclestone said New South Wales' scandium geology is "better than anywhere else — at surface, good grades. And that area will be developed before any other tertiary areas" such as in North America.

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'Gorilla' in scandium's midst

Rio Tinto started a pilot plant in Quebec in 2021 to extract scandium from its existing titanium dioxide business, and the Platina deal is "an extension" of that strategy, Sinead Kaufman, Rio Tinto's chief executive for minerals, said at a May 24 industry conference in Perth, Australia.

"We've seen significant interest from the market in the alloy, which we can produce ourselves," Kaufman said. "When we look at these critical minerals, the benefits are in the processing, and the downstream processing for us is not just producing the concentrate but being able to turn it into a master alloy. So doing the whole lot in Australia makes sense for this particular mineral."

Ecclestone told Commodity Insights that while buying Owendale is "small beans for Rio, it makes them the 800-pound gorilla in scandium. It's quite clear that Rio has fallen in love with scandium. If you can get into all the alloy mixes for every airplane that's being made going forward, that's no small market. Longer-term it is going to switch over to aerospace."

Yet both Nolan and Bedder see the airline industry as difficult to gain traction in, as it takes a long time to become a certified supplier.

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Scandium aluminum alloy, which Rio Tinto is producing in Quebec.
Source: Rio Tinto Group

Much may depend on the impact Rio Tinto's market entry will have on prices, according to Bedder. "If Rio can make scandium alloys more affordable, there is more chance of widespread adoption," Bedder said.

Bloom Energy Corp. has traditionally been scandium's biggest user in producing solid oxide fuel cells used as a power source. Yet Hallgarten & Co. also sees a potential new growth area for aluminum scandium alloys in electric and hybrid vehicles, where weight reduction is key to reducing batteries' size and cost.

Rio Tinto has the financial capacity to develop Owendale and integrate it with a globally significant aluminum business, but Sunrise Energy Metals CEO Sam Riggall said the asset is "significantly behind" the Sunrise project in terms of development.

"We suspect Rio will need to undertake many years of studies and permitting before they are ready to build Owendale," Riggall told Commodity Insights. "By contrast, Sunrise, which is a far larger and higher-grade scandium deposit, already has all key permits in place and is construction-ready."

Sunrise's feasibility study demonstrated its viability as a stand-alone scandium project, but Riggall said the current plan is to build the larger nickel-cobalt project to leverage into the rapidly growing demand for EV battery metals while building the world's largest single-source of scandium supply as a low-cost byproduct.

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