Scandium: Robert Friedland’s little secretBARRY FITZGERALD1:00AM...

Scandium: Robert Friedland’s little secretBARRY FITZGERALD1:00AM APRIL 25, 2016COMMENTSBillionaire mining entrepreneur Robert Friedland has always been worth following.If it wasn’t his Voisey’s Bay nickel mine success in Canada in the 1990s, then it was his taking of the Turquoise Hill copper/gold discovery made by BHP Billiton in Mongolia to make it what is now known as the Oyu Tolgoi mine, about to expand at a cost of $US6 billion ($8bn) under the tutelage of Rio Tinto.Never one to count his billions and ride off in to the sunset, copper and platinum is now Friedland’s go in Africa. But tucked away in his portfolio is a 17 per cent stake in a little thing called Clean TeQ (CLQ), which is listed on the ASX, trading on Friday at 17.5c a share or $73 million.Friedland came on to the register of the Melbourne-based group back in 2013, with the group’s continuous ion-exchange technology the initial attraction for its ability to clean up waste water, either on environmental grounds alone, or a combination of the environmental with valuable metals and minerals recovery.But it was in the following year that Clean TeQ was to acquire the Syerston scandium project near Condoblin in central NSW from Friedland’s Ivanhoe Mines (now renamed Turquoise Hill and majority owned by Rio).Ever the visionary, Friedland’s interest in scandium is in the role it can play in the “light weighting’’ of the aerospace and automotive industries. Lower weight means less fuel consumption.Not such a big deal at the moment given the collapse in oil prices. But oil prices will bounce back as there is no getting away from the fact that near on 100 million barrels a day of the black stuff is consumed each and every day.The capital strike in response to low prices means that ever depleting oilfields are not being replaced, or found in the first instance with drill bit for that matter.More than that though is the relentless push for lower emissions, regardless of the oil price. And that is where light weighting comes in to its own. And one of the best ways to do that is to increase the use of aluminium in planes and cars.This is where scandium comes in. As light and strong as aluminium can be, the stuff cannot be welded with the same degree of confidence in the welds that plane and carmakers need.As an alloying element, scandium refines the crystal structure of aluminium to the point where the alloyed metal can be welded without loss in strength, as well as delivering other benefits (increased plasticity in the moulding of complex shapes, improved corrosion resistance, and higher thermal conductivity, to mention a few).Its weldability is what has got scandium fans really excited. The world, on Boeing estimates, is going to need 35,000 new planes by 2032. Trouble is building the things is a slow process because of the time-consuming riveting of panels, even in planes that have gone down the carbon fibre/composites route (Boeing’s 777X will have composite wings but a metallic fuselage).If the riveting can be replaced by robotic laser welding, the whole process of building a plane will be sped up massivelyNow the beneficial properties of adding a pinch of scandium to aluminium alloys has been known for decades. But guess how much scandium is currently consumed globally. It would be lucky to be 15 tonnes of the stuff annually, most of it going in to high end golf clubs, baseball bats and bicycles.So if its benefits are so great, why only 15 tonnes? One of the problems has been the lack of mine supply, with most scandium coming from the reprocessing of resides in the titanium dioxide industry.And what supplies of the metal there has been have been from the Ukraine and Russia, which are not exactly the sort of places that the plane and carmakers want to rely on for supplies.But the world’s low-emissions push goes on, so aluminium scandium alloys will have their day, as the fourth-generation of aluminium-lithium alloys have done.That there is only 15 tonnes annually being consumed tells you that aluminium-scandium alloys are yet to make their mark in aviation, or the automotive industry, just yet. But the boffins reckon it is a technology ready to go through the qualification process the aerospace industry demands, and by extension the auto industry.It is against that backdrop that Clean TeQ reckons the world is ready for its first dedicated and non-former Soviet Union scandium mine, acknowledging all that while that the development of Syerston must go hand-in-hand with the development of a new global industry.To develop a viable scandium market, Clean TeQ recognises it must effectively commoditise the metal by creating reliable supply, produce a consistent product, and offer significantly lower prices for scandium oxide (the precursor to the metal sells for anywhere between $US2000 to $US3000 a kg).It reckons Syerston fits the bill and it is working to completing a feasibility study in the middle of this year after first striking strategic alliances with Airbus (it has developed the trademarked Scalmalloy for use in high-strength extrusions and a sheet metal) and others in the space.A lower level scoping study released in May last year gave a feel for Syerston’s potential. Based on a long-term price of $US1500 a kg, a project producing 42.5 tonnes annually (scandium oxide) would have an average cash cost of $US446 a kg. The suggested production level of more than 40 tonnes annually says more than anything else that Clean TeQ reckons the time is right for scandium after being it being in the shadows all these years.The post-tax net present value of a Syerston development was put at $280m. Best to wait for the feasibility study to confirm that sort of potential, but what can be said is that Syerston is not resource-constrained on becoming something bigger still should the use of aluminium scandium alloys take off in the world’s light weighting push. Friedland for one is betting that just might be the case.Barry Fitzgerald