U.S. Defense Department Funds Scandium Production to Reduce Chinese Reliance

WASHINGTON, D.C. — The U.S. Department of Defense announced on Tuesday that it has awarded up to $10 million to Elk Creek Resources, a subsidiary of NioCorp Developments. The funding aims to bolster the domestic supply of scandium, a strategic mineral, as part of efforts to lessen dependence on China for critical metals.

CEO Mark Smith shared with Reuters that the investment will help improve the design and processes of NioCorp’s Elk Creek project located in Nebraska. The firm plans to scrap its original proposal for a sulfuric acid plant, which will save an estimated $100 million. Additionally, the project will shift to a fully electric twin-ramp rail system for underground mining, potentially reducing overall costs by $200 million from its projected $1.14 billion budget.

“We’ve done all the drilling, all the metallurgy, and we have all our permits,” Smith stated. “We’re just going through the final stages of project finance. Once that’s done, we start construction.” Following the announcement, NioCorp’s shares experienced a nearly 7% increase during mid-day trading.

Historically, the U.S. has not mined scandium since 1969. This lightweight metal plays a crucial role in strengthening aluminum alloys used across various industries, including defense, aerospace, and energy. Currently, almost all of the global supply is sourced from China, Russia, and Ukraine.

The Elk Creek project aims to also extract niobium, titanium, and other rare earth metals. As part of its strategic plans, the Department of Defense seeks to enhance the country’s hypersonic missile program, with Smith indicating a need for “U.S. niobium to fill the needs for that hypersonic missile.”

NioCorp has secured binding long-term agreements for 75% of its projected niobium production and plans to produce 12 tonnes of scandium annually, which constitutes its largest scandium contract to date. The company is also in discussions with Stellantis to supply all of its future rare earth output from the Elk Creek project.

Smith emphasized the significance of the Pentagon’s grant, stating, “This is a grant, not an investment. It shows strong U.S. government backing and how critical niobium and scandium are for defense.”