Friedland’s forgotten metal wins $400M U.S. backing

After more than two decades, billionaire Robert Friedland’s plans of developing a scandium mine in New South Wales (NSW) look to be finally coming to fruition. 

Sunrise Energy Metals (ASX: SRL), where the Ivanhoe Mines (TSX: IVN; US-OTC: IVPAF) founder is non-executive chairman, last week secured a $400-million (C$556-million) conditional loan commitment from the U.S. Department of Defense for the Syerston scandium project. Sunrise also wants to list on a U.S. securities exchange, it said Aug. 10. 

The project hosts one of the largest and highest-grade mineable scandium deposits within a Western jurisdiction, the company said. While Sunrise is planning to make a final investment decision by year-end, early works are already under way. An initial interest in nickel at the site, followed by a lack of demand for scandium beyond solid oxide fuel cells, delayed the project, CEO Sam Riggall told The Northern Miner.  

“Fast forward a decade, and suddenly scandium has found its way into a range of different applications, like semiconductors and 3D printing for defence components,” while fuel cells have moved beyond being a niche green technology, he said in an interview.  

“They're now really at the heart and centre of how you deploy AI and data centres effectively across the U.S.,” he said. “When you are so heavily constrained by the lack of gas generation capacity at the moment, fuel cells are providing a really interesting filler for that niche, and that probably won't go unnoticed by China either.” 

Nickel at first

Sunrise first advanced the project’s large nickel-cobalt resource to shovel-ready status. But it pivoted back to scandium when Indonesian supply flooded the nickel market several years ago. 

New company estimates in August now peg capital expenditures for the project at A$450-475 million (US$315-333 million). That’s almost four times the feasibility study estimate of US$120 million in March because the company is now considering a processing plant in the U.S. and the ability to triple output to 180 tonnes. 

Once in production, perhaps in 2028, the project will produce 60 tonnes a year of scandium for a global market the U.S. Geological Survey estimates at 40 to 70 tonnes a year. But annual demand could reach 300 tonnes by 2030 because of fuel cells, Riggall said.  

Scandium is essential for defence, advanced manufacturing, artificial intelligence infrastructure and wireless spectrum technologies. The U.S. has not actively mined scandium in decades, leaving the market heavily dependent on China.  

The metal “is already heavily embedded in our wireless technologies, Riggall said. “There is no 5G or 6G wireless without scandium, so the utility of the metal in industrial processes and technologies has come along in leaps and bounds, and it really sits at the heart of a lot of defence-centred technologies that are really critical, particularly in the United States, which is the largest manufacturer of them.” 

First output 

Syerston hosts 45.9 million measured and indicated tonnes grading 414 parts per million (ppm) scandium for 19,007 tonnes of contained scandium, according to a resource issued in September. It has 5.7 million inferred tonnes grading 364 ppm scandium for 2,082 tonnes of contained scandium. 

The Department of Defense financing provides it with a right of first offer on Sunrise's output, which would support the demand of U.S. companies, including defence contractors. The financing could be a landmark moment for Sunrise, according to Friedland. 

“The world has entered an era in which access to critical minerals will shape industrial strength, technology leadership and national security. Scandium is one of the clearest examples, supporting the technologies, industries and defense capabilities that will shape the coming decades,” he said in a statement dated Aug. 10. 

Sunrise “may become an American company,” Friedland told Bloomberg TV after the deal was announced. “Uncle Sam likes these companies to be domiciled in the United States.”  

Supply doubts 

Scandium made headlines earlier this year when activist investor Hunterbrook Capital released a report expressing doubts about U.S.-listed fuel cell company Bloom Energy’s growth plans due to a lack of scandium supply. 

On July 8,  New York-based Hunterbrook alleged that Chinese scandium oxide was still reaching Bloom through Thailand, Japan, and South Korea. Bloom subsequently described the report’s financial claims as false and misleading and rejected its conclusions about the company’s scandium sourcing.  

Hunterbrook’s report highlighted just how dependent scandium supply chains were on China, Sunrise’s CEO says. 

“You're starting now to see certainly an urgency within government to address this problem, though I think there'll be somewhat of a lag effect for industry to jump on board and work out how they're actually going to deliver this,” he said.  

“Within the defence sector, in particular, there's an acute awareness of this issue, given they already are required by law to try and address these issues around vulnerabilities in the supply chain.  

“What's really interesting to us is where we're seeing scandium start to be used, particularly in the alloy market and semiconductors,” Riggall said.  

“While fuel cells are still the largest volume driver, the chips are really strategic, and again, China produces 100% of the world's scandium metal. There's not one other source of metal anywhere, so we know from our engagement with the industry, supplies have been extremely tight, and it's very difficult at the moment.”  

Revised scope 

As part of Sunrise’s engagement with Washington, Syerston’s scope has been broadened to cover not only the development of the mine and refinery, but also the construction of scandium metal refining capacity in the U.S., and increased investments in power and water infrastructure.  

“Robert Friedland and I have done some of the largest copper projects in the world, like Oyu Tolgoi in Mongolia and the Ivanhoe developments in the Congo, Riggall said. “This is a tiny project.” 

Still, he says what's taken China 20 years to build can be done in one mine in central New South Wales “without having to move too much dirt.” 

“The quicker we can bring this on, the better,” Riggall said.  

“There’s enormous potential, and for us, it's just about making sure customers feel like there is a safe, secure, reliable supply that can be scaled as their as their demand grows, and that's what we're trying to build in New South Wales.” 

-With files from Frédéric Tomesco and Colin McClelland