US awards NioCorp unit up to $10 million for scandium project in Nebraska

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By Katha Kalia

(Reuters) -The U.S. Department of Defense said on Tuesday it has awarded up to $10 million to Elk Creek Resources, a unit of NioCorp Developments, to increase domestic supply of scandium as it looks to reduce reliance on China for critical minerals.

The funding will help improve design and processes at NioCorp’s Elk Creek project in Nebraska, CEO Mark Smith told Reuters.

These include scrapping plans for a sulfuric acid plant, saving $100 million and switching to a fully electric twin-ramp rail system for underground mining, which could trim $200 million from the project’s $1.14 billion capital cost.

“We’ve done all the drilling, all the metallurgy, and we have all our permits,” Smith said.

“We’re just going through the final stages of project finance. Once that’s done, we start construction.”

NioCorp’s shares rose nearly 7% in mid-day trade.

The U.S. has not mined scandium since 1969. The lightweight metal is used to strengthen aluminum alloys used in defense, aerospace and energy industries, but nearly all global supply comes from China, Russia and Ukraine.

The Elk Creek project also targets niobium, titanium and other rare earth metals.

The DoD wants to ramp up the country’s hypersonic missile program, Smith said, adding that the department wants “U.S. niobium to fill the needs for that hypersonic missile.”

NioCorp has binding long-term deals for 75% of its planned niobium production and 12 tonnes of scandium a year, its largest scandium deal yet.

It’s also in talks with Stellantis to supply all of its future rare earth output from Elk Creek.

The Pentagon’s grant is part of a broader effort to shed reliance on foreign suppliers for key metals.

“This is a grant, not an investment,” Smith said.

“It shows strong U.S. government backing and how critical niobium and scandium are for defense.”

(Reporting by Arunima Kumar and Katha Kalia in Bengaluru; Editing by Sahal Muhammed)