The market for energy metals – metals necessary for today’s technology – continues to offer investors an opportunity to participate in high-return investments.
Scandium, for instance, was a hot topic of conversation at several recent mining conferences.
This soft, silvery metal is very useful in a number of applications, such as lighting, microelectronics, displays, and ceramics. In fact, many thousands of patents have been filed for industrial processes using scandium.
Yet the market for scandium is tiny – only about 10 to15 tons annually, worth about $50 million.
The reason for this lies in the metal’s physical characteristics. Scandium exists as an oxide, known as scandia, naturally. This makes it very rare to find it in pure form. It also has a low affinity for other minerals, making finding a high-grade, commercially viable deposit practically impossible.
Recent exciting discoveries in Australia may be about to change all of that, though, and could start a boom for this metal.
Two Primary Uses
This metal’s two main uses are in solid oxide fuel cells (SOFC) and in scandium-aluminum alloys.
SOFCs have been around for more than half a century. They function by converting oxygen and a fuel source, such as natural gas, into an electrical current, water, carbon dioxide, and heat.
NASA has used these type of fuel cells in their spacecraft for many years. SOFCs offer a highly efficient source of baseload electricity, helping the push toward distributed generation.
Scandium would be the ideal candidate for use as the stabilizing agent for zirconia in the solid electrolyte part of SOFCs, since it would allow operation at a lower temperature. Operating at lower temperatures reduces component costs, making SOFCs more competitive with other sources of electricity.
But scandium’s scarcity has limited its use. Estimates are that if enough scandium were found, the solid oxide fuel cell market would consume up to five times the scandium it currently does.
Scandium-aluminum alloys are another major use for the metal. These alloys have been found to be useful in 3D printing and, in particular, aerospace.
That’s because these alloys have a high heat tolerance, are corrosion-resistant, and are weldable, while offering the strength of steel.
Europe’s Airbus Group N.V. (EADSY) has spent years researching possible uses for the alloy and developed Scalmalloy, an aluminum-magnesium-scandium alloy, which it uses in its aircraft.
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Estimates are that a single-aisle aircraft could use up to 70 kilograms of scandia. Just using the alloy in the rivets for a plane would cut the craft’s overall weight by 10% to 15%.
The huge backlog of Airbus aircraft should be an ideal situation for the scandium market. But, again, the problem is the availability of the metal.
Scandium Finds Down Under
Much of the little available supply is currently controlled by Russia, Kazakhstan, and the Ukraine. But that could be changing, thanks to the recent discovery of commercially viable deposits in Australia.
Both finds were made by junior mining companies. And since scandium is such a small market, the big miners have shown no interest.
The first discovery was made by Scandium International Mining (EMMCF) in New South Wales. Its Nyngan project is the most advanced scandium project out there, and the company has been working on it since 2010.
The second find was made by Clean TeQ Holdings (CLQ.AX). Its Syerston Scandium Project is also located in New South Wales.
The interesting aspect here is that this company is backed by the well-known mining entrepreneur, Robert Friedland. He has been behind other companies, including Ivanhoe Mines (formerly Ivanplats) and Potash One.
Some other junior miners involved with scandium are Plantina Resources, Orbite Aluminae, Metallica Minerals, and Jervois Mining.
These finds are exciting to mining insiders because the grades of scandium found there are three to four times higher than the best projects controlled by the former Soviet states. And the geology allows the scandium in these deposits to be removed in a commercially viable manner.
The scandium market is at an exciting point, to say the least. Latent demand for the metal far exceeds the current supply. And these developments in Australia are well worth keeping an eye on.
But the companies involved in these exciting discoveries are very low-priced junior miners. So a big dose of caution and due diligence is required.
And the chase continues,