US scandium supply deal incrementally positive for Rio, says Jefferies

Jefferies says Rio Tinto's RIO.AX recent deal with U.S. Defense Logistics Agency for the supply of scandium oxide highlights pricing above market expectations, as scandium becomes one of the most desired critical minerals for use in aerospace and defense

DLA, an arm of the Department of Defense, said on Monday it is seeking to buy scandium oxide worth up to $40 million from Rio's Quebec, Canada facility over the next five years

Jefferies says while the news is incrementally positive for the global miner, it has greater implications for smaller scandium producers including U.S.-based Ramaco Resources METC.O

Adds Quebec operations is a small contributor to Rio's earnings, contributing around 3% to co's total attributable EBITDA

Brokerage rates the stock at "hold", price target A$115

Rio up 0.7% YTD, as of last close