A tiny NSW town with a population of about 130 is at the center of a major US-Australia critical minerals deal.

The US Department of War has committed a conditional US$400 million loan, worth about A$566 million, to Australian company Sunrise Energy Metals.

The funding will support the company’s proposed Syerston project near Fifield, which aims to become the world’s first dedicated primary scandium mine.

Scandium is a critical mineral used in aerospace, defence, high-strength alloys and power systems for AI data centers.

The project is expected to begin production in late 2028, with a target of producing about 60 tonnes of high-purity scandium each year.

The deal gives the US government first rights to purchase the mine’s scandium, as Washington seeks to reduce its dependence on China for critical minerals.

However, the project faces economic risks, including competition from potentially cheaper Chinese supplies, meaning long-term investment and government support will be crucial.