Located approximately six hours west of Sydney, the small town of Fifield, near Parkes, is home to just over 130 residents according to the latest Census. Yet, this quiet town has unexpectedly found itself at the heart of a significant strategic initiative by the US government.
The United States Department of Defense has agreed to provide a substantial conditional loan of US$400 million (approximately $566 million) to Sunrise Energy Metals, an Australian corporation. This company aims to deliver the first global supply of an essential critical mineral outside of China’s control.
Listed as a critical mineral in both Australia and the United States, scandium plays a vital role in sectors such as aerospace and defense due to its strategic importance.
This financial injection marks the latest effort by the US government to diversify its critical mineral supply chains and decrease reliance on Chinese sources. However, achieving this goal will demand ongoing funding and strong governmental support.
Why scandium is on the radar
Highly coveted for its unique properties, scandium is essential in manufacturing ultra-high-strength alloys, which are crucial for the cutting-edge technology used in modern fighter jets. Additionally, it plays a pivotal role in solid oxide fuel cells, which are indispensable for ensuring the stable power supply necessary for artificial intelligence (AI) data centers.
Two factors have contributed to the sudden interest in scandium.
First, demand for scandium is being driven by massive increases in defence spending across North America, Europe and Asia and an investment boom in power-hungry AI data centres.
Second, China’s sweeping export controls on rare earth elements, including scandium, have contributed to a persistent shortage of supply on the global market, pushing up prices.
These export controls are designed to maintain China’s dominance of supply chains for key critical minerals and slow down the US defence and industrial base.
Still, the market for scandium is tiny. According to statistics from the US Geological Survey, the entire world only consumed 60 tonnes of the metal in 2025.
The world’s first dedicated mine
Scandium is usually found in very small quantities. For that reason, until now, it has been exclusively produced as a byproduct of nickel and titanium processing.
This is what sets the Sunrise Energy Metals project apart — the proposed mine has scandium deposits in a high enough concentration to be the first primary source of scandium in the world.
If production goes ahead, and lives up to its promise of producing 60 tonnes of high-purity scandium each year by 2028, this would be enough to completely satisfy the current level of global demand.
According to the company, there is also potential to expand the project in the future and add another 120 tonnes of production.
China still has leverage
The deal gives the US government first rights to purchase scandium from Sunrise Energy Metals, with production expected to start in late 2028.
However, there are some risks for this project’s economics. While China continues to restrict its exports, scandium will continue to fetch a high price. But China has the ability to remove those restrictions at any time, flooding the market with low-cost scandium and potentially squeezing Sunrise Energy Metals’ profits.
China has played this card before with lithium, flooding the market and making some Western mines uneconomic.
Many other rare earth elements projects also face this risk. That’s partly why earlier this year, in a US$96 million deal (about $136 million) with another Australian mining company, Lynas, the Pentagon agreed to price floors, to shield Lynas from potential price crashes.
Adding to this, the Pentagon’s multi-million-dollar loan to Sunrise Energy Metals is just that — a loan. It must be paid back, potentially with interest.
The loan is also conditional on a number of milestones. These include the construction of a scandium metal refining facility in the US that can produce a range of different military grade scandium compounds.
When you consider the major upfront capital costs required to produce a small amount of the metal, and overlay the threat of low-cost, subsidised Chinese production, the risks of this kind of investment become clear.
Success isn’t guaranteed
While this project is critical to US defence and strategic ambitions, its success will require long-term investment and government support.
The NSW government, for its part, has chipped in with an offer to defer royalties for five years.
As long as China has the ability to flood the global market with cheap critical minerals – whether its graphite, gallium, or in this case, scandium – projects like these are vulnerable to price crashes.
The US and Australia should consider whether a price floor on scandium is necessary to protect this critical supply chain for the long term.
Robert Monterosso is a research fellow in the United States Studies Centre’s Economic Security Program. He does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
