I’m going to explain why I am very luke warm on scandium in the short and even medium term, and people who are thinking scandium is going to sell for $2000 or more, and banking on that for their investments, are going to get killed. The essential problem is not as much a matter of demand as it price. Its present boutique price in the range of $4000 may be deluding some people who are projecting it when 20-100 times the present supply becomes available.
This is how scandium will probably play itself out. A bunch of companies are coming on-line with scandium production over the next 2-5 years. Clean TeQ alone can produce something like 15 times the present total world usage annually if they want to. There is this somewhat wild factor that needs to be understood with scandium……. the supply limits the demand. This is a little unusual in the normal supply/demand quotient. With scandium, unless a lot of it is reliably available at a certain price, then the demand is suppressed. It isn’t like the whole world is hungry for a hamburger, and you can sell all the hamburgers you can make. it more like you first have to have 1000 McDonalds, then the world is ready for a hamburger. In other words, you need mass supply before you can get even moderate demand.
So the first few companies start to produce scandium, and a few more start building their scandium mines, and a few more trying to get financing for a scandium mine, and all of them horny as hell for an off take commitment. Meanwhile, cleanteq and maybe a few other companies begin to stockpile the stuff, as a secondary byproduct to whatever else they are mining. These stockpiles become important, as it gives potential large buyers the confidence that reliable supply is secure. The cost for mining scandium as a by product is very low, I don’t want to say free, but practically almost. So they can choose to stockpile the stuff until the market is ripe for business, or they can sell it for cheap, I mean, if they just have it laying around, it cost them nothing to mine it, and there is an unlimited supply of the stuff on their property for the next 50 years, THE PRICE GETS DETERMINED BY WHATEVER THEY CAN GET FOR IT. This is a fatal set up for any company that is a primary scandium producer, that cost them big money to mine the stuff. They have zero chance to build a viable business.
Now in the long term, I believe scandium will get used big time in the future, scandium aluminum alloy is too good of a material, they will find all kinds of uses for it, and the manufacturing infrastructure will evolve to incorporate it. I think 3D printing applications will be huge for scandium. At some point the demand could grow very strong, and the price begin to come up. I’d guess maybe 10-15 years for it to cycle to that point
PGM Price at posting:
19.0¢ Sentiment: Buy Disclosure: Held
