Pentagon Backs $400 Million Australian Scandium Deal to Break China's Grip

The US Department of War has committed $400 million in conditional financing to an Australian miner to build a Western scandium supply chain, moving to loosen China's grip on a metal used in advanced fighter aircraft and semiconductors.

The Office of Strategic Capital, the department's investment arm, said on 7 August that the conditional loan commitment would help Sunrise Energy Metals develop its Syerston project in New South Wales and build the capacity to turn the ore into finished metal. Private capital would sit alongside the public funding.

Scandium occurs in low concentrations across the Earth's crust, and no primary mine-source supply exists anywhere in the world. Buyers instead depend on small volumes recovered as a by-product of other industrial processes. The Department of War said foreign competitors accounted for about 80% of mining output and close to all processing capacity.

China is the supplier those figures point to. The US Geological Survey lists it as the leading global producer, and in April 2025 Beijing placed scandium under export licensing controls that classified the metal as a dual-use military material, tightening Western access.

With the financing, Sunrise would develop a full value chain from the Syerston deposit, which the Department of War described as high-grade, through to metallisation and additive layer manufacturing. The arrangement would run from an Australian mine to US processing, and would give the department a right of first offer on the company's output.

"This nearly $1 billion deal, bringing together public and private capital, would help address foreign dependencies in scandium supply and facilitate scandium's use in critical defence and commercial applications," said David Lorch, director of the Office of Strategic Capital and a senior adviser to Deputy Secretary of War Steve Feinberg.

The firm commitment stands at $400 million. The larger figure cited by Lorch reflects the private capital the department expects the transaction to attract, which has not been detailed.

Sunrise's scandium would supply US firms, including those in the defence industrial base. The Department of War said the metal enhanced the capabilities of modern fighter aircraft and expanded compute capacity in data centres. It is also used in semiconductor manufacturing and across the automotive sector.

Sunrise, listed on the Australian Securities Exchange, holds a high-grade deposit at Syerston that sets it apart from the by-product recovery supplying most of the market. The financing is intended to carry the material from the mine through to onshore US metal production, keeping the chain under allied control rather than strictly domestic hands.

The commitment remains conditional. The Department of War said Sunrise must still satisfy financial and legal conditions, and meet technical requirements, before the loan can reach financial close.

Senior department officials cast the commitment as part of a mandate to reduce reliance on adversaries for critical minerals. The Department of War said Congress had provided the funding and that its leadership, including Secretary of War Hegseth and Deputy Secretary Feinberg, was directing resources towards securing supply for American manufacturers and the armed forces.

Scandium strengthens aluminium alloys used in aircraft and supports the filters that allow advanced chips to handle high-frequency signals, which places it at the centre of both defence and commercial demand.

The scandium commitment forms part of a wider effort. The Office of Strategic Capital said it had committed more than $8.4 billion in debt financing in the 2026 fiscal year and mobilised over $17.8 billion in combined public and private capital for the US industrial base. It said due diligence was under way on further scandium opportunities, describing the Sunrise commitment as the first step in a broader push to secure the supply chain.