Defence and AI are changing scandium’s future demand

Scandium has two especially important demand drivers into larger markets:

• In aluminium alloys, it can improve strength and corrosion resistance while preserving low weight, supporting aerospace, defence and other demanding applications. eg NioCorp’s Lockheed agreement builds on a joint development programme for scandium-based aircraft components.
• The second route is electricity and AI investment. eg Bloom Energy uses scandium oxide in its fuel-cell electrolyte to improve power density, durability and fuel efficiency, and, in April 2026, Bloom announced that Oracle intended to procure up to 2.8 GW of fuel-cell systems under an expanded agreement

Bloom says its scandium supply chain can support up to 25 GW of annual production capacity and does not depend on China, according to its July explanation of scandium sourcing.

However, specialist consultancy OnG Commodities questioned the visibility of that supply in a September analysis published by the MMTA, while acknowledging that it did not know where Bloom sourced its scandium.

“The principal uses for scandium in 2025 were in aerospace alloys and solid oxide fuel cells used in large-scale power generation and backup power systems for critical infrastructure” — USGS, Scandium, 2025

Scandium’s supply problem is increasingly about access. USGS estimates suggest production (80 tonnes in 2025) currently outpaces consumption (60 tonnes) but, especially in such a small commodity market, say little about the material available — and the subsequent leverage available to suppliers — to individual buyers, in the required form and under acceptable export conditions.

For example, by February 2026, US chipmakers were reporting delays obtaining scandium export licences and seeking Washington’s help, with a US government official telling Reuters some US manufacturers now face “shortages”, putting at risk, for example, America’s 5G chip industry.

The exposure extends beyond aircraft structures and fuel cells. Scandium is also used in aluminium–scandium nitride thin films, which improve the performance of radiofrequency components used in communications and sensing. These applications connect scandium supply to radar, avionics, satellite communications and 5G infrastructure. By February 2026, US chipmakers were reporting delays obtaining Chinese scandium export licences and seeking Washington’s help.

Yttrium offers a warning of how these disruptions can spread. Used in heat-resistant jet-engine coatings, its shortage had forced some North American coating suppliers to pause or stop production, according to Project Blue’s April analysis. At that point, the shortages had not disrupted engine or semiconductor production itself, but they threatened to compound existing aerospace bottlenecks. Even when the quantities involved are small, interrupted access to a specialised material can put much larger manufacturing programmes at risk.

That creates a market increasingly divided by origin and access: material available within China, and supply that US manufacturers can reliably secure outside Beijing’s licensing system. Even if restrictions ease further, their potential return gives Washington a reason to finance alternative production.

Recent US commitments include:

• Sunrise Energy Metals, Australia — US$400 million conditional loan commitment, August 2026: the Pentagon’s Office of Strategic Capital backed development of the Syerston scandium project and downstream processing capabilities. The proposed financing provides a right of first offer on output, but remains subject to conditions before financial close
• ElementUSA, Louisiana — US$29.9 million award, November 2025: the Defence Production Act funding supports a demonstration facility to recover gallium and scandium from industrial waste, alongside development work in Texas. The award covers both minerals
• NioCorp’s Elk Creek Resources, Nebraska — up to US$10 million, August 2025: a milestone-dependent award supports a domestic scandium supply chain extending from mining to alloy manufacture and qualification for defence applications
• in September 2025, the Defense Logistics Agency announced plans to procure more than 6,000kg of scandium oxide for the National Defense Stockpile from a source in Sorel-Tracy, Quebec, Canada

New supply still has to be built

The supply response is gathering momentum, but delivery is not certain — and will take time.

For example, Sunrise’s Syerston project illustrates the gap with its planned initial capacity of 60 tonnes of scandium oxide annually, but commissioning in the first half of 2028. Its US financing commitment remains conditional, and engineering, construction, etc still stand between the announced funding and commercial supply.

Meanwhile, demand is moving into deployment.

Bloom’s expanded Oracle agreement includes 1.2 GW of contracted fuel-cell capacity, with installations underway and continuing into 2027. Bloom claims it has secured a diversified scandium supply chain, but other buyers have encountered difficulties with US chipmakers facing delays obtaining Chinese scandium export licences, including companies sourcing through third countries.

Longer term, the EY-Parthenon study commissioned by Scandium Canada projects demand reaching 194 tonnes annually by 2035, when a global supply gap emerges.

The pressure therefore operates on two timelines:

• manufacturers need dependable material today despite ongoing export restrictions from China
• and new producers must finance and build capacity for incoming future demand

Any project delays would widen that exposure, and the recent volatility in pricing in other smaller commodity markets, such as tungsten, highlight what can happen if there is any disruption in a tight market.