Sunrise Faces Market Risks Amid China’s Tightening Scandium Export Controls

A Long-Term Scandium Supply Vision

Sunrise Energy Metals Limited (ASX – SRL) has delivered a compelling quarterly update that underscores its ambition to become a cornerstone supplier of scandium, a critical mineral increasingly vital to advanced manufacturing and defence technologies. The company’s updated Ore Reserve Estimate for the Syerston Scandium Project now supports a 32-year mine life, with an annual scandium oxide production forecast of approximately 60 tonnes. This positions Syerston as one of the world’s largest and highest-grade scandium deposits on a granted mining lease in New South Wales.

The updated reserve, announced in October 2025, reflects an 87% increase in contained scandium compared to 2016 figures, underpinning Sunrise’s confidence in the project’s long-term viability and expansion potential. The project benefits from secured land and water rights, an approved development consent, and proximity to key infrastructure, all of which reduce execution risk.

Strategic Financing and Partnerships

Financial momentum is building behind Syerston’s development. Sunrise has secured approximately A$98 million through three placements completed in late 2025, aimed at funding pre-construction and early works. Complementing this, the company received a Letter of Interest from the U.S. Export-Import Bank (U.S. EXIM) for up to US$67 million in financing support, representing about half of the estimated US$120 million capital cost for the project. This endorsement by U.S. EXIM highlights the strategic importance of scandium supply chains to U.S. industrial and defence sectors, especially amid tightening global supply due to China’s recent export restrictions.

Further cementing its market position, Sunrise granted Lockheed Martin Corporation an option to purchase up to 25% of the first five years’ scandium oxide production from Syerston. This offtake option, subject to formal agreements, aligns Sunrise with a global defence and aerospace leader, potentially accelerating scandium’s adoption in high-tech applications.

Advancing Project Development

Sunrise is actively progressing its updated Feasibility Study, expected to be completed in early 2026. This study will incorporate the enhanced resource base and production forecasts, providing a refined blueprint for project execution. Concurrently, engineering contracts have been awarded to GR Engineering Services Limited for the Front-End Engineering Design of beneficiation and leaching circuits, and to Clean Teq Water Limited for the ion exchange and refinery components. These steps indicate Sunrise’s commitment to de-risking the project and preparing for construction.

Environmental and regulatory groundwork is well advanced, with the project holding an approved Development Consent and Environmental Impact Statement. Minor modifications to the consent are planned to better align with the updated feasibility outcomes, with discussions underway with New South Wales authorities.

Market Dynamics and Exploration Outlook

The scandium market is experiencing significant shifts. China’s imposition of export licensing restrictions on critical minerals, including scandium, has tightened global supply and driven prices higher. Sunrise is capitalising on this environment by expanding its patent portfolio for scandium alloys and engaging with end-users to secure offtake agreements. Meanwhile, exploration activities continue across Sunrise’s broader portfolio, including joint ventures in Queensland targeting nickel-cobalt and geothermal prospects, maintaining optionality beyond scandium.

Financially, the company ended the quarter with a strong cash position of A$47.9 million, supported by capital raisings and option exercises, providing a solid runway for ongoing development.