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Rusal has produced scandium oxide at a concentration exceeding 99% for the first time at its Urals smelter, the Russian aluminum producer said Thursday.

The market price of the new product is up to $2,000/kg, Rusal said.

The new production follows the installation and launch of a 96 kg/year pilot unit for the processing of Scandium concentrate into Scandium oxide, based on Rusal's carbonization technology for scandium extraction from red mud, which is a byproduct of alumina refining.

Project investment has so far totaled around Rb64 million ($1 million), and work is in progress on the pilot unit to further improve the technology to reduce product costs, Rusal said.

The scandium oxide produced will be used for the production of aluminum-scandium alloys at Rusal's smelters, the company said, noting that the use of scandium as a micro-alloying element improves the consumer properties of aluminum alloys, while producing its own raw materials for the production of alloys will allow Rusal to reduce costs associated with raw materials purchasing.

Scandium has "vast potential" in the aerospace, transport and energy industries, with global consumption of scandium oxide currently estimated at 10-15 mt/year, said Victor Mann, director of Rusal's research and development, in a statement.

"In this regard, Rusal has plans to develop a modular unit capable of increasing the capacity keeping up with market demand," Mann said. "The production will rely on the company's own raw material base and will fully meet demand not only in Russia, but globally."