(Reuters) -The U.S. Department of Defense said on Tuesday it has awarded up to $10 million to Elk Creek Resources, a unit of NioCorp Developments Ltd, to increase domestic supply of scandium as it looks to reduce reliance on China for critical minerals.
The funds, provided under the Defense Production Act, will support feasibility study, additional reserve drilling and updated cost estimates for NioCorp's Elk Creek Critical Minerals Project in southeast Nebraska.
Shares of the company rose 4.5% in
morning trade.
The U.S. has not mined scandium since 1969. The lightweight metal is used to strengthen aluminum alloys used in defense, aerospace and energy industries, but nearly all global supply comes from China, Russia and Ukraine.
NioCorp said the award aligns with President Donald Trump's executive order in March to boost domestic mineral production and could help secure up to $800 million in debt financing from the U.S. Export-Import Bank.
Tuesday's funding will assist with engineering, drilling and alloy qualification efforts with a U.S. defense contractor, the company said. It did not give a detailed cost breakdown.
The Pentagon's grant is part of a broader effort to secure domestic supplies of key materials and shed reliance on foreign suppliers, especially China.
In early July, MP Materials unveiled a multibillion-dollar deal with the U.S. government to boost output of rare earth magnets and help loosen China's grip on the materials used to build weapons, electric vehicles and many electronics.
The Elk Creek Project is described by NioCorp as a shovel-ready, high-grade critical minerals deposit targeting production of scandium, niobium, titanium and other rare earth elements.
(Reporting by Arunima Kumar and Katha Kalia in Bengaluru; Editing by Sahal Muhammed)
