Niocorp Developments Ltd (NB)

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LINCOLN — Six years after the drilling of exploratory holes, and a decade after leases were signed with landowners, a mine shaft still hasn’t been started at a proposed $1 billion critical minerals mine in southeast Nebraska.

More than half of the 6,000 investors in a proposed niobium mine near Elk Creek, about 64 miles southeast of Lincoln, are from Nebraska. And they’ve placed a high-risk bet that financing for the mine will materialize, bringing hundreds of high-paying jobs to a region starving for them.

But promoters of the Elk Creek Superalloy Materials Project recently moved to provide more time to raise money, after once predicting that phase would wrap up in 2018.

Mark A. Smith, the CEO and executive chairman of the mining company, NioCorp Developments Ltd., told potential investors in June that the COVID-19 pandemic had hurt the search for financing but that the project was “now on the move.”

“I can’t give more of an update on that,” he said then. “We expect some movement soon.”

But a press release in December — one of an almost weekly string of announcements from NioCorp — didn’t speak of movement forward, instead addressing the need to extend a loan and credit line from Smith for another year to give the company more time to round up major investors.

Smith, in an interview last week, said he couldn’t predict when the mine might move forward, with a company spokesman describing the search for $1 billion in financing as “complex.”


“Patience is a virtue,” Smith said. “This is a lot of money we’re tying to raise. It’s not a couple of million to keep the lights on. This is a very big project.”

A deep-rock mine in southeast Nebraska, designed to extract niobium (used to harden steel), scandium (used to make stronger and lighter aluminum) and titanium (used in paint), has been discussed since the 1970s.

But seven years ago, prospects for the mine appeared to brighten after the hiring of Smith, a former Chevron Mining executive who had led a company, Molycorp, that that explored the Elk Creek project 30 years ago. The company seeking to mine the minerals became NioCorp, dropping its former name, Quantum Rare Earth Developments Corp.


While mine backers and developers remain optimistic, a trio of national authorities expressed doubt that the mine will ever happen. That is despite recent publicity about “rare earth minerals” (including scandium) and the need for the U.S. to develop its own sources and processing capability. That is because China enjoys a near-monopoly over the minerals.

“It’s a long shot,” said David Hammond, a consultant on rare earth and critical minerals based in Highlands Ranch, Colorado, on the Nebraska project. “While I don’t completely discount Elk Creek from being an operating mine someday, this would be in the distant future at best.”

Hammond and two others with expertise about such minerals say that while the U.S. doesn’t produce any niobium, it obtains the mineral from friendly nations such as Brazil and Canada. The open-pit Brazilian mine, they say, is expanding its production, has a higher grade of niobium and can mine it much more cheaply than in Nebraska.


As for scandium, which is projected to provide the bulk of the Elk Creek project’s revenue, the demand and price for the metal right now is too low to make the Nebraska mine economically viable.

“There is currently no market for increased scandium or titanium supplies,” said Jack Lifton, an independent metals consultant in the Detroit area.

David Henderson, a New Hampshire-based investment adviser, called it a “chicken-and-the-egg” dilemma: Airlines and electric car manufacturers may eventually want to use more scandium to lower the weight of planes and vehicles, but right now, they have bigger problems to deal with and would be reluctant to invest in a mine that may or may not provide more scandium at a price that’s workable for them.


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Henderson said the “best chance” for the Elk Creek mine would be if the Biden administration decided to invest in developing a domestic niobium source. But he said there’s now more than enough of the mineral coming from allies Brazil and Canada.

Smith brushes off doubts about the project, saying a worldwide push to “lightweight” transportation vehicles, like airplanes and electric cars, will inspire a boom in scandium demand. Also, he said, demand for niobium will see a big increase as the U.S. and other nations push infrastructure projects, like new roads and bridges.

An independent feasibility study completed in 2017, as well as an update in 2019, indicated “highly compelling” economics for the project, according to NioCorp spokesman Jim Sims.


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NioCorp officials are in constant communications with federal officials about their interest in the Elk Creek project, but Sims and Smith said last week that it doesn’t mean that it will translate into any financial support. In November, the Department of Defense awarded almost $13 million to two companies in California and one in Texas to develop rare earth minerals used in high-tech magnets, and process them, in the U.S. But Smith said the Elk Creek project is a “critical minerals” project, and not one to fill the Defense Department’s needs.

Still, Smith said he remains “passionate” and confident about the prospects of the mine. Seventy-five percent of the mine’s expected niobium production and 12% of the expected scandium output have already been spoken for, he said, demonstrating demand for the mine.


Still, consultants like Henderson question why the mine hasn’t received its required financial backing if so much of its expected output is already under contract.

One thing that isn’t in dispute is the level of support the project has received from Nebraska.

A year ago, the state qualified the project for up to $200 million in tax credits over 10 years if it eventually goes into production and creates a certain number of jobs and investments. Last year, the State Department of Environment and Energy approved a permit allowing air emissions during construction.

Several state leaders have been involved in the project as investors, promoters and consultants, including State Tax Commissioner Tony Fulton, who served on the NioCorp board of directors until he took the state job, and former Lt. Gov. Lavon Heidemann, who lives near the mine and, because he used to be a miner, has been a consultant for the project.

“I still believe in it,” said Fulton, who remains an investor.

Johnson County, where the mine is located, has also shown support, approving a zoning change for the project a year ago.

Smith said crossing the regulatory hurdles, and adopting some technical changes in mining procedures, has “derisked” the project, making it more attractive to potential financiers.

County Board member Scott Gottula of Elk Creek, who said he hasn’t invested in the project because that would create a conflict of interest, said the mine would create 400 jobs starting at $60,000 a year. That kind of salary is difficult to obtain in rural southeast Nebraska, he said.


“We’re hoping it goes forward,” he said. “We’ve tried to put everything in place so it does.”

Smith and other NioCorp officials said it all depends on whether the company can raise $1 billion to finance the construction of the mine and processing facilities.

Smith said that there are “a whole bunch of reasons” why the mine hasn’t taken off yet but that his 10-person company remains steadfast about the mine’s prospects.

“One thing you cannot predict is when financing will happen,” he said. “The capital world comes together when they’re ready.

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