Australian Mines (ASX: AUZ) shares are up 14% today. AUZ shares are up on the granting of one of the leases necessary for the Sconi project. Well, if you don't get the lease then you can't go mining, so getting the lease is obviously value additive to the idea of being able to go mining. What worries us where about Australian Mines is this very idea of going mining for scandium.
Yes, scandium is a real metal, it exists. There's a market for it - but it's a very small market. There are no wholly accurate statistics here but somewhere in the 15 to 20 tonnes per year for the entire world annually is about right. So, small market. Prices do vary and people make all sorts of assumptions but currently somewhere in the $750 to $1,000 per kg range is about right. That's for the 99.0% oxide, which is the usual traded material.
It's also true that nickel laterites are a fine place to get scandium from. In there with the Ni and Co there will be the Sc as well. The process of extracting the Ni and Co puts the Sc into solution so it can indeed be extracted. So there's nothing wrong with the idea at all - if you're mining a nickel laterite then why not extract the Sc at the same time? Sumitomo does exactly this at a project in the Philippines after all.
Australian Mines share price from ASX
Where we get worried is when people think that Sc is going to be a major component of a project. As a useful little byproduct, quite possibly. But as a mass market product at anything close to current prices? Nope, just not going to happen in any timescale that will make a difference to a current mining project.
So, people who go around saying “Sconi” (scandium, cobalt, nickel) rather worry us. Simply because we don;t think they're paying due care and attention to the realities of that scandium market.
Yes, indeed, there are small scandium projects going on. But the operative word there is “small”. It's simply not going to be a mass market product in the coming decades.
Agreed, this is all a weird thing to worry about but there it is. We do worry about it and that colours our view of Australian Mines.
