London, May 28th (Argus) - The US-based junior mining company NioCorp is advancing its Elk Creek critical minerals project in Nebraska and seeking government-backed financing in the United States.
Argus discussed with CEO Mark Smith the plans to put the project into production, develop a domestic scandium supply chain to unlock potential demand, and the geopolitical risks associated with the highly concentrated supply of niobium. The edited key points are as follows:
Q: What is the current status of the Elk Creek project?
A: We have a very unique ore body - polymetallic carbonate rock - which means we will have six products from this mine. Scandium is our main business, but we will also produce scandium, titanium, and rare earths, including neodymium, praseodymium, dysprosium, and terbium. In general mining, if only one main mineral is extracted, the final benefit depends on the price of that product. But this diversification provides us with a more balanced revenue source and a lower-risk business model.
The construction of the Elk Creek project is expected to start in the third or fourth quarter of this year. It will take about three years to reach production, followed by expansion. By 2030, we should have an annual production. All licenses are in place, so once we obtain the funds, we can start construction. All planned production is carried out under the commercial agreement of the global trading company Traxys for a period of 10 years.
Q: What role does the US Export-Import Bank play in the final-stage financing?
A: We are striving to obtain approximately $780 million in loans from the US Export-Import Bank, which could cover 65% of the total capital expenditure (capital expenditure). In our 2022 feasibility study, the total capital expenditure for underground and surface facilities was estimated at $1.2 billion. In the past 14 months, we have raised over $500 million.
Usually, these debts require additional cash support, which may mean raising another $200 to $400 million. This is a major financing effort, but investors have shown interest in filling this gap.
Q: Scandium is a very small market. Some are concerned that new scandium supply may exceed the growth in demand. What's your opinion on this?
A: Currently, global scandium production is approximately 30-35 tons. We will produce 100 tons. We have heard a view that "you will flood the market. Prices will plummet, and you won't help yourself." I completely disagree. As we gain more understanding of the scandium market, it is clear that due to the lack of reliable supply, some application demands have been put on hold.
As the supply of scandium increases, demand may increase rapidly. We are collaborating with companies like Aston Martin and Jaguar Land Rover to demonstrate how adding a small amount of scandium to aluminum can reduce weight and increase strength. We believe the potential demand may be around 3,000 tons per year.
Q: Processing capacity is equally important as raw material supply, and supply security is crucial. How far do you plan to go downstream?
A: The Department of Defense has indirectly required us to establish a scandium supply chain in the United States, which is almost complete. We will produce high-purity scandium oxide, metallic scandium, and aluminum scandium intermediate alloys. Additionally, for final alloys, such as customizing for end-users, different expertise is required. We will go as far downstream as possible economically and strategically, and then collaborate with experts. The extent to which a mining company can go is limited.
Q: The niobium supply is highly concentrated in Brazil - does this pose a risk to US consumers?
A: We need to pay more attention to niobium. In the United States and the European Union, we import the required niobium. Brazil is particularly concerning because it produces approximately 95% of the world's current supply. The question is, will this be used as a bargaining chip in geopolitical disputes? Six months ago, when Brazilian President Lula da Silva became more outspoken and critical of some of Trump's actions, we pointed out that this was a real risk.
Q: NioCorp plans to supply rare earth oxides to limited markets outside China. Do you have technical expertise in processing rare earths?
A: Processing rare earths is one of the difficulties in rare earth mining. It involves complex chemistry, engineering, and a considerable amount of practical knowledge. We have developed this capability through our own production of these materials and through internal development.
