China's scandium export controls have changed the ground rules for sourcing solid oxide fuel cell (SOFC) materials. When China's Ministry of Commerce (MOFCOM) added scandium to a list of seven medium and heavy rare earth elements under Announcement No. 18 on April 4, 2025, the price of scandium oxide (Sc₂O₃) roughly tripled — from about $1,200/kg before the controls to $3,500–4,370/kg after. The key point up front: this is not an embargo but a case-by-case licensing regime, and buyers who can document civilian end use and diversify their supply base can still procure.
What Was Controlled, and When
Announcement No. 18, issued April 4, 2025, placed seven medium and heavy rare earths — scandium among them — under export controls covering their metal, alloy, oxide, compound, and mixture forms. The mechanism that matters is that every export shipment now requires a MOFCOM license. This April tranche remains in force as of July 2026.
The regime then tightened once more. In October 2025, five additional items were added and the extraterritorial reach was strengthened, so that third-country products containing Chinese-origin content above a threshold could also fall under the rules. However, a November 2025 US–China agreement suspended the October tranche for one year, through November 2026. The distinction that trips buyers up: the suspension applies to the October tranche, not the April tranche that includes scandium.
| Date | Action | Status as of July 2026 |
|---|---|---|
| Apr 4, 2025 | Announcement No. 18: 7 medium/heavy rare earths controlled | In force (not suspended) |
| Oct 2025 | 5 items added, extraterritorial reach strengthened | Suspended for one year |
| Nov 2025 | US–China deal suspends October tranche (to Nov 2026) | Suspension in effect |
Why SOFCs Take a Direct Hit
The electrolyte is the component that governs SOFC performance. A widely used high-performance electrolyte, 10Sc1CeSZ, is a scandium-stabilized zirconia composed of roughly 87.6% zirconium and hafnium oxides (ZrO₂ + HfO₂), about 11% scandium oxide (Sc₂O₃), and about 1.4% cerium oxide (CeO₂). Because the scandium content reaches 11%, both the electrolyte powder and its scandium oxide feedstock fall squarely within the controlled scope.
Scandium is inherently one of the scarcest metals. With almost no standalone mines, it is recovered as a byproduct of titanium, rare earth, and uranium refining, and global output is only around 40 tonnes per year. Layering export controls on top of that structural scarcity amplified both price and lead-time volatility. For the background on why scandium is so scarce, see Scandium: the metal produced at just 40 tonnes a year.
Why "Licensing" Is Not "Embargo" — and Why It Matters
A licensing regime and an embargo call for entirely different procurement strategies. Under licensing, export is not prohibited outright; each shipment is reviewed and approved or denied case by case. The early pattern in practice was that Chinese producers allocated their limited licensing bandwidth to large, long-term contracts first, winding down small, low-value spot orders. In other words, small spot purchases are the most exposed.
The flip side is that contracts with a clearly identified end user and documented civilian use have room to clear the licensing gate. Defense and aerospace applications, by contrast, tend to be excluded. The three-step approach — confirm whether an item is controlled, design a licensing track, and run a non-China alternative in parallel — is laid out in Procurement strategy in the age of export controls.
Procurement Response: Dual Sourcing and Contract Defense
This episode exposed the risk in depending on a single country of supply. The response rests on two pillars.
- Dual sourcing: Run a price-competitive China licensing track alongside a lower-risk, non-controlled track. The non-controlled track can include Japanese refiners with core process technology, US fuel-cell materials specialists, and domestic Korean production. Compare each track across quality, price, lead time, and regulatory risk in a matrix and allocate accordingly. The supplier landscape is mapped in The ScSZ electrolyte supplier landscape.
- Contract defense clauses: Insert an Export License Contingency clause stating that the contract is void and any advance payment is refunded if an export license is not granted. When sourcing from higher-risk jurisdictions, also consider Incoterms (FOB/FCA) that place export-clearance responsibility on the seller.
Price Impact at a Glance
Scandium oxide prices roughly tripled across the control threshold. That flows directly into the cost structure of SOFC electrolyte powders, and the higher the scandium content of a grade, the larger the effect.
| Item | Before controls | After controls |
|---|---|---|
| Sc₂O₃ price | ~$1,200/kg | $3,500–4,370/kg |
| Multiple | — | ~3x |
Frequently Asked Questions
Is the scandium export control a total embargo?
No. Announcement No. 18 (April 2025) is a licensing regime requiring a MOFCOM license per shipment. Export is not prohibited outright; approval depends on an end-user and end-use review. Documented civilian use has room to be approved, while defense and aerospace uses tend to be excluded.
Did the November 2025 US–China deal lift the scandium controls?
No. What was suspended is the tranche added in October 2025 (a one-year suspension through November 2026). The April 2025 tranche that includes scandium is not covered by the suspension and remains in force as of July 2026.
Why does the SOFC electrolyte fall under the controls?
The leading high-performance electrolyte, 10Sc1CeSZ, contains about 11% scandium oxide. That high scandium content places both the electrolyte powder and its scandium oxide feedstock directly within the controlled scope.
How ready are alternative sources?
Alternative sources are being developed in Australia, the Philippines, and Canada, but they are at an early commercialization stage. In the near term, running a China licensing track in parallel with non-controlled tracks in Japan, the US, and Korea is the practical response.
References (Public Sources)
- China MOFCOM Announcement No. 18 (April 4, 2025)
- Holland & Knight, analysis of China export controls (April 2025)
- Pillsbury, analysis of the US–China agreement and suspension (November 2025)
- lanthanides.io, scandium oxide pricing data
Nami Tech Solution (NTS) is a Korea-based trading company specializing in global sourcing of semiconductor and energy materials. We manage procurement risk for controlled items through material sourcing, lot-level quality verification (SEM/EDS, PSA, XRD), dual sourcing, FTA tariff, customs and K-REACH support, and domestic inventory buffering.
If you need to design a procurement track for controlled items such as scandium or ScSZ, contact us at [email protected] or use our contact page.