Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
I'd just like to say how grateful I am for your Q&A. Too many newsletters promise to reply to email queries if you sign up and then you never hear from them. So, Scandium is on everyone's lips now after America's investment in Sunrise Energy. What else do you like on the ASX or elsewhere for this rare metal?
Hi David,
We can’t promise to get every market call right, but we can promise to provide good service, straight answers and try to add value every day. We’re glad that’s resonating with you.
Scandium is certainly having its moment. In simple terms, adding very small amounts of scandium, typically around 0.1–0.5% to aluminium can materially improve its strength, weldability and heat resistance. That makes aluminium-scandium alloys attractive for lightweight aerospace, defence, automotive and additive-manufacturing applications. Scandium is also used in solid-oxide fuel cells, while its strategic importance is increasing as the US and its allies look to establish critical-mineral supply chains outside China.
The obvious Australian exposure is Sunrise Energy Metals (SRL), and the recent catalyst has been significant. The US Department of War’s Office of Strategic Capital has conditionally committed up to US$400m through a proposed 25-year loan facility to help develop the Syerston Scandium Project in NSW. That potentially takes a large chunk of the financing risk off the table and is a strong strategic endorsement of the project.
Syerston is targeting production from the second half of 2028 and would become one of the world’s largest primary scandium operations outside China.
However, this is where we’d exercise some caution. SRL is now a ~$3bn company following an enormous rerating, despite meaningful commercial production still being a couple of years away. There is clearly a significant amount of good news already embedded in the share price.
There are also very few genuine listed scandium alternatives:
Of those, NB probably interests us most as an alternative exposure, particularly given the downstream aluminium-scandium angle and the strategic importance of developing a domestic US supply chain.
The big caveat across the whole scandium story is demand. The current market is tiny, and Syerston’s planned initial production of around 60 tonnes per annum would itself represent a very significant increase in available global supply. In other words, the SRL bull case isn’t simply that it develops a mine — it needs cheaper and more reliable supply to stimulate an entirely larger market for scandium.
That may well happen. Aerospace, defence, additive manufacturing and energy applications provide credible avenues for demand growth, and US government backing certainly adds weight to the theme. But at SRL’s current valuation, investors are already paying for a fair portion of that success.
We like the scandium thematic and think it has genuine strategic legs, but after SRL’s spectacular rerating, we’d be reluctant to chase it here. The horse may not have completely bolted, but it’s certainly well out of the gate. For fresh exposure, we’d be more inclined to investigate some of the less crowded alternatives rather than pay today’s premium for SRL.
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