The US Defense Logistics Agency (DLA) is planning to purchase scandium oxide worth up to $40m (£29.62m) from Rio Tinto over the next five years to enhance the US defence stockpile, reported Reuters.
The move aims to secure a stable supply of scandium, a rare earth element (REE) critical to Western defence and technology sectors, following China's imposition of export controls.
The agency intends to acquire 6.4 tonnes (t) of scandium oxide within the five year period, beginning with nearly 2t in the first year.
This initial purchase represents around 5% of the global scandium oxide production last year, which the US Geological Survey states was 40t, with current production capacity at 80t.
The DLA, in a document, stated: “Scandium, until recently, was primarily sourced from China.
“In late 2024, China placed export controls on scandium, which constrained the supply chain and prompted this acquisition for the National Defence Stockpile.
“Rio Tinto Services Inc. has been identified as the only vendor available capable of fulfilling the government's required product needs at the capacity required for the contract.”
Rio Tinto said it was actively collaborating with the US Government to identify opportunities and leverage available support to increase domestic production and strengthen supply chains for the US market, according to the news report.
Rio Tinto, in an email reply, told Reuters: “Rio Tinto is uniquely positioned to help secure materials critical to America's future.”
In August this year, the US awarded up to $10m to Elk Creek Resources, a subsidiary of NioCorp Developments, to bolster domestic sources.
Despite these efforts, the government still relies on foreign sources for the material, which is integral to various defence systems, said the publication.
Rio Tinto's scientists achieved a breakthrough in 2020 by developing a method to extract high-purity scandium oxide from waste streams during the production of titanium dioxide, eliminating the need for additional mining.
Its Canadian facility in Quebec, which produced its first batch of scandium oxide three years ago, now has an annual production capacity of 3t.
In July, Rio Tinto announced gross costs of up to $300m due to US tariffs on its primary aluminium exports from Canada during the first half of 2025.
