By extracting scandium and gallium from industrial waste, the USA is testing a new model for securing critical minerals without investing in new mining operations.

Scandium’s strategic significance is clear, despite its small market size. Project Blue estimates that 70.8t of scandium oxide was produced globally in 2024, underscoring the material’s scarcity.

Its applications in solid oxide fuel cells, aluminium–scandium (Al–Sc) alloys, additive manufacturing powders, and advanced aerospace and defence components make it critical for systems such as missile defence platforms, sensors, components on fifth-generation fighter aircraft (e.g. the F-35 and F-22), and hypersonic weapons. However, broader adoption has long been constrained by price volatility, limited supply, and concentrated production.

The US Department of War’s recent decision to award US$29.9M to ElementUSA under Title III of the Defence Production Act (DPA) represents a potential shift in the USA’s approach to scandium supply.

The new investment will enable the development of a demonstration facility in Gramercy, Louisiana, to extract gallium and scandium from existing industrial waste. The company will use a proprietary process to separate and extract these critical minerals, along with several others, from over 30Mt of mineral-rich bauxite residue, a by-product of the alumina refining process.

Thus, ElementUSA could create a domestic supply chain of critical minerals, whilst also cleaning up a waste product, with no additional mining required.

The USA has not produced scandium domestically since 1969. This has left the country dependent on imports from countries with elevated geopolitical risk, particularly China, which dominates global production.

The new DPA investment aims to begin reducing this dependency. If successful, ElementUSA would become one of the first US producers of scandium from industrial residues, representing an important early step towards rebuilding domestic capability.

However, North American supply already exists. Rio Tinto produced the first batch of high-purity scandium oxide in May 2022 at its commercial-scale demonstration plant in Sorel-Tracy, Canada. In addition, Rio Tinto plans to quadruple its production capacity to reach up to 12tpy of scandium oxide, up from the current nameplate capacity of 3tpy.

Notably, the US Defence Logistics Agency (DLA) has outlined plans to procure up to US$40M worth of scandium oxide from Rio Tinto over the next five years. The initiative forms part of broader US efforts to reduce reliance on China, the world’s leading scandium producer, and address national security concerns.

The US DLA selected Rio Tinto as a potential scandium supplier, noting that it was “…the only vendor available capable of fulfilling the government’s required product needs at the capacity required for the contract.” Under the five-year contract, the DLA will purchase 6.4t of scandium oxide via fixed-price delivery orders, with approximately 2t planned for the first year.

While Rio Tinto and ElementUSA present an opportunity for supply diversification away from China, the pressing question regarding Western scandium remains: who is ready to pay the higher prices that come with non-Chinese production?

Project Blue’s scandium cost tracker shows that Rio Tinto’s costs are significantly higher than those of Chinese producers, requiring customers to be willing to pay a premium for non-Chinese supply. Rio Tinto may have found such a buyer in the US government.

ElementUSA is still at an early stage, with capital, technology validation, and cost competitiveness yet to be demonstrated, and Chinese producers continue to hold a significant price advantage.

However, the DLA’s multi-year scandium procurement from Rio Tinto shows that credible US demand exists for secure, non-Chinese material. This indicates that, although new US production will face substantial hurdles, defence-driven offtake may provide the initial market support required for domestic capacity to emerge.