Planes, trains and automobiles – feeling fat and heavy?

Planes, trains and automobiles – feeling fat and heavy?

Lose weight now with Scandium, available from Clean TeQ Holdings

201510_Clean TeQ Presentation

 

Clean TeQ Holdings Ltd (CLO: ASX) is an Australian mining company using advanced chemicals (ion exchange resins) in a hydro-metallurgical process to extract Scandium and other ‘smart metals’ crucial to the development of a new generation of light-weight clean-tech advanced materials for trains, planes and automobiles (fuel cells, batteries, rockets and robots too).

The words ‘miner’, ‘advanced materials’ and ‘clean-tech’ don’t often appear in the same sentence. But with Clean TeQ Holdings, they should. That’s because smart metals like scandium, cobalt, nickel and manganese (the latter three being crucial to the future of batteries) cannot be downloaded from the iTunes Store. They have to be extracted from the earth’s crust by miners. Through its choice of name, Clean TeQ Holdings is boldly and baldly positioning itself at the beginning of  the long supply chains required to deliver clean-tech 2.0 (featuring light-weight, low emission transportation and other goodies). It is developing the world’s first mine devoted 100% to scandium production.

Clean TeQ’s Chairman Sam Riggall will be speaking at the Advanced Materials Society on November 10th in London. He is one of the Society’s sponsors. Clean TeQ has signed a collaborative agreement with Airbus APWorks, the aircraft manufacturer’s 3D printing and advanced materials subsidiary (which sponsored the previous Advanced Materials Society conference). APWorks requires scandium to makes its proprietary alloy, Scalmalloy.  (For more details on Scalmalloy see http://blog.london-eif.com/2015/03/09/qa-with-joachim-zettler-md-airbus-apworks).

Sam is looking for more collaborative agreements. If you’re an overweight plane, train, automobile or robot looking to shed a few pounds before Christmas (and beyond), Sam’s your man. He sets out Clean TeQ’s plans to become the world’s most reliable supplier of Scandium and other smart metals. .

Q: What is the business opportunity for Scandium?

Sam Riggall (SR): Scandium is a rare earth element, one that is rarely found in nature in appreciable concentrations. As a result, scandium’s properties are only known to a restricted number of specialists. These experts have known for half a century that scandium is an exceptionally good alloying agent for aluminium.  It is also used in the manufacture of solid-oxide fuel cells. We decided to buy the Syerston mine in New South Wales. The mine is rich in scandium, nickel, cobalt and platinum so we have the opportunity to supply these metals reliably and predictably to customers. For scandium, this will finally make it an attractive metal for deployment in aluminium-based applications, principally transportation. We believed that by combining a large, high-grade resource with Clean TeQ’s proprietary technology we could unlock latent value.

Q: What is the potential impact of Scandium?

SR: Scandium is an extraordinary metal when alloyed with aluminium.  It makes aluminium stronger, and therefore lighter for a given application; more resistant to corrosion, thereby avoiding the need for surface treatment; and weldable using conventional welding methods, an extremely critical benefit for aerospace.  Imagine the weight savings that can be achieved by removing rivets from the body of an aircraft, not to mention the reduction in assembly time.

Q: Why isn’t all aluminium treated this way?

SR: It’s a shortage problem. Those companies that would wish to use scandium alloys for mainstream industrial applications, such as building cars or airplanes, have always lacked confidence that sufficient scandium would be available. That is because no mine has ever been built that produces scandium as a primary product. To date, most scandium has been produced as a by-product of the treatment of industrial waste, mostly in the titanium pigment industry. Clean TeQ has successfully produced scandium in this manner through the application of our continuous ion exchange process in Japan. But what we are offering now at Syerston is something radically different. We propose the development of the world’s first mine devoted 100% to scandium production, by first leaching the scandium into a solution, then using Clean TeQ’s proprietary ion exchange process to extract it and yield scandium oxide for commercial use.

Q: What’s the current market for scandium like?

SR: There’s not an openly traded price in the market, as all contracts are private. Published figures I have seen vary from anywhere between $1,700 per kilogram ($1,700/kg) and $6,000/kg. That says to us that this is quite a dysfunctional market. In order to create a viable scandium market, we must not only establish supply reliability but also establish a price that creates value for customers and creates end users. Scandium is now a niche rare metal. Our objective is to commoditize it with reliable supply, consistent product specifications and significantly lower pricing. To achieve that, we need a scandium mine. The benefits of a minable supply of scandium are clear. First, a known, reliable production base that is not dependent on by-product production, which is subject to indirect, second-hand reduction. Second, a reliable production base leads to cost certainty, as well as significant cost reduction. We have a valuable proposition for industry with Syerston: stable production with lower costs. And we intend to supply key players in the transportation sector.

Q: What is the significance of Clean TeQ’s agreement with Airbus APWorks GmbH and KBM Affilips BV?

SR: Airbus is, as you know, one of the world’s largest aircraft manufacturers. APWorks is an Airbus division that commercializes technologies developed by Airbus, in particular manufacturing technologies focused on 3-D printing. KBM is one of the world’s largest manufacturers of master alloys, which that company calls the “spice rack for the metal industry.” In other words, the particular composition of a master alloy fine tunes the properties of the metal product.

Scandium’s challenge is not in permitting, mining or processing; it is in marketing. As Clean TeQ progresses the development of Syerston, we must prove a demand for the scandium it produces. From the start of this process, it was clear we needed to engage with end users and all along the supply chain. The significance of our agreements with Airbus APWorks and KBM is that they demonstrate our eagerness to work with major end users and persuade them of our ability to provide a reliable supply of scandium at the right price.

Q: How does the Syerston site stand for permitting and infrastructure?

SR: Exceptionally well placed, as it is fully permitted for a mining development. Even better, it has a government granted water allocation, which is essential, considering both the hydrometallurgical process we will employ and the region of Australia where it will be employed. The Syerston mine is in a remote location with virtually no population, but there is extensive copper mining there, which means access to infrastructure and a trained workforce.

Q: You issued a maiden Syerston resource in January. What do you have there?

SR: We examined two potential scenarios: a global resource with a lower cut-off and a high-grade resource with a higher cut-off. We hope to maximize grades and therefore recoveries in the early years. In the global resource, there is at least 16 thousand tonnes of contained scandium oxide in the ground. This estimate is based principally on historic drilling. We are also undertaking our own drilling, and we believe the potential exists to increase the resource. To put the above figure in context, the global market for scandium today is only 15 tonnes. It’s a niche market because users cannot obtain the metal at a desired price. Once operational, Syerston will exploit the latent demand in the market.

Q: How close is Syerston to releasing a feasibility study?

SR: We are aiming to complete the feasibility study by the middle of 2016. We are just completing a crucial piloting program in Perth. Its purpose is to provide input and feedback for our metallurgical testing, to measure leaching efficiency, recoveries and extraction throughout the process. This program processed around 12 tonnes of ore directly from the site.  We are committed to providing samples for potential customers to test and verify for product qualification purposes, and our pilot program has positioned us to produce these samples on a relatively large scale.

Q: Could you give us a ballpark capital expenditure (capex) figure for Syerston?

SR: It would be a very small mine with a very small footprint and a relatively modest capex: ~AUD$70–80M. We aim to develop a facility that will produce 30–40 tonnes of scandium oxide per annum at a cost of US$400–500 per tonne. Initially, Syerston would process only 65,000 tonnes of ore annually. This is so small as to cause some to wonder why we would bother. The answer is that this is incredibly high-value material, which fully justifies such a small footprint and development plan, producing a metal that has so much industrial value. Of course, once we begin delivering scandium reliably and cheaper than ever before, what would happen to demand then? And what would our expansion plans look like?

Sam Riggall is the chairman of Clean TeQ Holdings Limited. He was previously executive VP of business development and strategic planning at Ivanhoe Mines and before that worked for over a decade at Rio Tinto in a variety of roles. He led the Oyu Tolgoi Investment Agreement negotiations with the government of Mongolia for Rio Tinto and Ivanhoe Mines to develop one of the world’s largest copper-gold mines. Mr. Riggall is a director of Syrah Resources Ltd., which is currently constructing the world’s largest graphite mine in Africa. A graduate of the University of Melbourne, he was awarded bachelor degrees in commerce and law and holds a Masters of Business Administration.