Scandium: From Soviet Secrets to China's Monopoly 

Because of the potentially high demand for climate technologies such as the hydrogen industry, the West is trying to produce its own production of the expensive rare earth metal. The aerospace and automotive industries could benefit from a safe and cheap supply of scandium.

Scandium and its use – ISE AG October 2023

A week ago, the second trilogue meeting on the Critical Raw Materials Act took place in Brussels. This raw materials law aims to secure access to critical metals for European industry. In the current highly tense geopolitical climate, heavy dependence on a handful of countries poses a very high risk to the European economy. China, in particular, controls the mining and processing of numerous critical and strategic metals, but Russia is also dominant in the raw materials sector. China's strategic use of its monopoly is clearly demonstrated by the introduction of export controls on the technology metals gallium and germanium (see https://institut-seltene-erden.de/ausfuhrkontrollen-auf-gallium-und-germanium-china-will-verhandeln/ ). Now, China has extended export restrictions to include graphite, the largest component of electric vehicle batteries (lithium-ion batteries).

Scandium is another potential candidate for export restrictions, according to Alastair Neill of the Critical Minerals Institute . Despite its abundance in the Earth's crust, scandium rarely occurs in nature in concentrated form. Therefore, there is no dedicated scandium mine; instead, the metal is obtained as a byproduct from cobalt, nickel, titanium, uranium, or zirconium mines.

Scandium production in China: a black box

Similar to gallium and germanium, scandium is a niche metal with a very small market. Only a few countries mine the metal: China, Russia, Kazakhstan, and, before the outbreak of war in 2022, Ukraine, supply the world with 15 to 25 tons annually . At least, that's according to estimates from the US Geological Survey , as precise figures are unavailable. The market is too small, and the metal's uses are too dispersed, according to a report by the US Department of Foreign Trade. For example, the actual production volumes in China, intended for domestic consumption rather than export, are unknown. Russia is also believed to still possess stockpiles dating back to the Cold War. What is certain is that China is the dominant player in the scandium market.

Aluminum-Scandium: Weight reduction for aviation

Scandium would be very attractive to industry, and for years experts have predicted a boom for the metal, which, however, has not materialized. As an alloying element in aluminum, scandium, even in small quantities (approx. 0,2 percent), allows aluminum parts to be welded instead of riveted. This enables a weight reduction of ten to fifteen percent, which is particularly relevant for the aerospace industry, where every kilogram less weight translates into savings of several hundred liters of fuel and thus costs. However, the high price, which according to the database of the Institute for Rare Earths and Metals AG ( www.ise-ag.com ) is €654,60 for scandium oxide 99,99% EXW China and €5260 for scandium metal 99,999% EXW China , as well as the supply risk, deters companies like Airbus from using scandium. Market observers therefore speak of a chicken-and-egg problem with scandium: because the supply is too small and too uncertain, demand in industry remains low.

Its special properties – increased strength, flexibility , heat resistance , and corrosion protection – made the material a closely guarded secret in the Soviet Union during the Cold War. Researchers there recognized as early as the 1950s that scandium improved the qualities of aluminum. Scandium was first used as an alloying element in MiG-29 fighter jets. Until the 1990s, the Soviet Union was also the world's largest producer of scandium, which was primarily extracted from uranium mines.

Scandium Oxide 99,99% EXW China – ISE AG Database October 30.10.2023, XNUMX

Rusal is the market leader

Even today, Russia remains a significant player in the scandium sector, and not only in terms of extraction. The aluminum company Rusal was the first manufacturer to successfully extract scandium oxide economically from red mud. Rusal is also a pioneer in the development of scandium-aluminum technologies. According to Maven Research , the third-largest aluminum producer, whose flamboyant founder Oleg Deripaska is listed on Western sanctions lists, is even the market leader for scandium-aluminum products. The company itself was placed on the US sanctions list in 2018 but was removed again in early 2019 following a restructuring of its ownership.

The company still faces sanctions due to Russia's war against Ukraine, even though metal traders and banks on the London Metal Exchange (LME) have recently resumed buying Russian aluminum in large quantities. Many Western companies avoid doing business with Rusal even without sanctions. The company is therefore increasingly focusing on Asian markets, with particular attention to China's electric vehicle industry, whose demand for CO2-reduced aluminum is growing rapidly.

Scandium in electrolyte

The largest single consumer of Russian scandium currently comes from a completely different sector: the Californian fuel cell manufacturer Bloom Energy adds the element to the electrolyte in its solid oxide fuel cells. Scandium is also used in small quantities in the sporting goods industry, where it strengthens bicycle frames, lacrosse sticks, and baseball bats. It is also used in small arms. However, market observers see the greatest potential for scandium in the automotive industry, which has so far avoided aluminum-scandium alloys due to high costs and limited supply.

Germany: Demand from the hydrogen industry

The metal could also become important for the hydrogen industry. Green hydrogen , produced using renewable energy, currently accounts for less than one percent (40 terawatt-hours) of global production. Demand is expected to rise dramatically in the future. According to a study by the German Mineral Resources Agency (Dera), the future lies in green hydrogen production via water electrolysis, in which the gas is produced from water. The study identifies three important electrolysis technologies today, of which alkaline electrolysis and, to a large extent, polymer electrolyte membrane electrolysis are technically mature. Solid oxide electrolysis is currently transitioning from research to industrial application.

Scandium is used only in the latter case: The solid electrolyte consists of either yttrium-doped or scandium-doped zirconium dioxide. According to Dera, the advantages of the scandium-doped material are better conductivity and higher stability at lower operating temperatures. In a sustainable future scenario, the Dera study predicts an increase in demand for scandium to 24 tons by 2040 , which is 2,7 times the 2018 production (7 tons).

Rio Tinto relies on scandium

For several years, a number of Western companies have been striving to take control of the mining and production of scandium. This could signal a breakthrough in the coming years. Riotinto , a major player among mining companies, has been extracting scandium oxide since 2022 from waste generated during titanium oxide production in Quebec, Canada. Production capacity is said to be three tons per year, which, according to Rio Tinto, should correspond to approximately 20 percent of global production. This latter figure should be treated with caution, as actual global production volumes are not precisely known.

The Japanese mining group Sumitomo Metal Mining, which is part of Japan's oldest and largest business conglomerate, has also commissioned additional production of scandium oxide in the Philippines at its nickel refinery, a high-pressure acid leaching plant (HPAL).

New nickel and cobalt refinery projects in Australia are already planning for scandium extraction. There are also several mining projects underway Down Under. Of particular note is the platinum-scandium project by Platina Resources, which Rio Tinto has agreed to acquire for US$14 million . Further projects exist in New South Wales from the junior mining companies Scandium International Mining and Sunrise Energy Metals . Sunrise Energy Metals is also considering building a scandium refinery in the USA.

The near future will show whether the chicken-and-egg problem will be overcome. Until then, scandium will only be available to the world market in homeopathic quantities from China and Russia.

ISE AG – Arndt Uhlendorff – October 2023