Aug 5 (Reuters) - The U.S. Department of Defense has awarded $10 million to Elk Creek Resources to help develop a scandium supply chain, it said on Tuesday, as Washington looks to reduce reliance on China for critical minerals.

The funding for the NioCorp Developments NB.O unit, under the Defense Production Act, will support engineering, drilling and feasibility studies at the Elk Creek project in Nebraska.

Shares of NioCorp were up 4.8% in premarket trade.

The U.S. has not mined scandium since 1969. Most of the global supply comes from China, Russia and Ukraine.

The project is part of broader efforts to reduce U.S. reliance on China and other foreign suppliers of critical minerals, in line with a 2025 executive order by President Donald Trump to boost domestic production.

In early July, MP Materials MP.N unveiled a multibillion-dollar deal with the U.S. government to boost output of rare earth magnets and help loosen China's grip on the materials used to build weapons, electric vehicles and many electronics.

Scandium is prized for making lightweight, high-strength alloys used in aircraft, hypersonic weapons and energy platforms.

(Reporting by Katha Kalia in Bengaluru; Editing by Sahal Muhammed)

((Katha.Kalia@thomsonreuters.com;))