LONDON, Sept 22 (Reuters) - The U.S. Defense Logistics

Agency is seeking to buy scandium oxide worth up to $40 million

over the next five years from a unit of mining giant Rio Tinto

to secure supplies of the critical material for addition to the

national stockpile.

Scandium is one of the rare earth elements, whose importance

to the Western defence and technology sectors has been in the

spotlight since China, the main producer, imposed export

controls.

"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 Defense Stockpile," DLA said in a document

published last week.

It intends to buy 6.4 metric tons of scandium oxide within

five years.

In the first year it will be seeking almost 2 tons,

equivalent to about 5% of last year's global production of

scandium oxide, which, according to U.S. Geological Survey,

totalled 40 tons with existing capacity of 80 tons.

To increase domestic supply of scandium, the U.S. awarded up

to $10 million to Elk Creek Resources, a unit of NioCorp

Developments ( NB ), in August.

However, for now the U.S. government has to seek the

product, used in many defence systems, from outside the country.

"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," the

document said.

Rio Tinto said it would not comment on

commercial matters, but added that it was "actively

collaborating with the U.S. government to identify opportunities

and leverage available support to increase domestic production

and strengthen supply chains for the American market."

In 2020, Rio Tinto's scientists became the first to develop

a process which allows the extraction of high-purity scandium

oxide from waste streams of titanium dioxide production, without

the need for any additional mining.

"Rio Tinto is uniquely positioned to help secure materials

critical to America's future," the group said in an emailed

reply to a Reuters' request for comment.

Rio Tinto's facility in Quebec, Canada produced the first

batch of scandium oxide three years ago and currently has the

annual production capacity of 3 metric tons.

(Reporting by Polina Devitt;

Editing by Ros Russell)