Whether it’s a commuter turning on a cell phone or the military engineering new defense systems, they depend on rare earth minerals. Until now, the United States has been relying on foreign suppliers to get them, but that may change eventually with a new mining venture in Southeast Alaska.
Bokan Mountain rests on Prince of Wales Island. Miners have gone to the site for uranium in the past. In fact, seven companies have come and gone at Bokan over the years. Now the company Ucore Rare Metals Inc. — which has offices in Halifax, Nova Scotia, and Vancouver — has set its sites on a new prize within the mountain.
After learning that Bokan is rich in rare earths that are a necessity in developing technologies Ucore President and CEO Jim McKenzie decided to take a chance and purchase the site. The company ultimately paid $995,000 for the entire prospect with McKenzie buying a 6 percent share.
There are 17 rare earths in the world, broken down into heavy or light categories depending on their atomic weights. Bokan is especially valuable for its supply in heavy rare earths and could likely be the best source for these elements in the country. The heavy ones are harder to come by and therefore command higher prices.
Steve Borell recently retired after 22 years as the executive director of the Alaska Miners Association and has studied Bokan Mountain for years. He said rare earths have been known to exist there for a long time but there wasn’t enough interest in rare earths to explore them. He said people are just now beginning to understand their importance for higher technology applications.
The purchase and movement on the Bokan prospect comes at a time when China is limiting its supply of rare earths to the world. China currently controls more than 95 percent of the world’s supply of all rare earths. However, those suppliers have been cutting back on export quotas over the years.
“It puts our industry in a very vulnerable position,” said Ken Collison, Ucore’s chief operating officer.
China’s stronghold wouldn’t matter so much if America didn’t depend so greatly on these materials. But we do, from everything from computer memory to magnets to missiles, from vehicles to television screens, rare earths are a major component for high-tech devices.
Preparation
Ucore is moving full ahead with its intentions. The company has completed a drill program analysis and has just named Randy MacGillivray as senior mine permitting manager. This analysis confirmed the intensity of development prospects there. Still, these are preliminary findings.
The company is currently undergoing a preliminary economic assessment, which is expected to be completed in April, to help determine the property’s economic practicality for a mine.
“They believe they have an economic deposit. They have not proven that yet,” Borell said. “We hope very much that it is.”
Collison is pretty sure it is. He said Bokan has proven to be a large enough resource to justify a mine.
“If it’s really economic, which I expect this one will be, then you do a feasibility study,” he said.
This study generally takes nine to 12 months and is expensive, necessitating this preliminary study to find out if the project will be good before the costs are incurred. Collison said this is the study that will come into play for financing and permitting, although this step could still be a few years away.
“We’re still a ways away from knowing whether it’s going to be a mine or not but it’s exciting to see them moving in that direction,” Borell said.
He said having such an ore body usually implies that it would be economic to mine and can be processed at a profit.
In the meantime, the studies will look at environmental data such as water quality and fish studies. This data will be required later for the permitting process. Collison said the mine is probably about three years from opening if all goes well but this will be dependant on a number of issues, especially with lengthy permitting procedures. The current pre-cost studies will also point out different items that need to be worked on, such as mining methods.
Collison said the mine will have a 10- to 15-year lifespan, but that could be increased.
“One thing I like to tell people is miners like to mine. And so the trick is to get the mine going and they’ll find ways to keep it going,” he said.
Collison said the underground would probably employ around 200 people but the exact number is still unknown. Current plans also include processing the materials onsite.
Borell said having the processing facility plus the follow-on manufacturing facilities could present a big challenge. He said it could prove to be unlikely to process the materials on-site, but the minerals could be concentrated there.
Ucore will host job camps to hire locally. Representatives will be visiting communities this summer to explain more about the project and get a feel for the available workforce. Collison said the local employee pools look good.
He gave an example of how logging professionals from the area will likely make good miners since they know how to run the mine’s rubber-tired, diesel-powered equipment without breaking it .
“I’m pretty positive that we’re going to be able to hire a very good percentage of our employees from the local area,” he said.
National security
Collison said Bokan means more than just a local economic boost, but that it’s important to the nation to lighten dependence on China. Borell said more domestic manufacturing with domestic rare earths could prove to be an even bigger financial boost than the mining.
The country’s other big rare earth source is Mountain Pass in California, which is owned by Molycorp. This site has been mined off and on over the years, and the company is expected to re-open the mine this year.
Collison said Mountain Pass was mostly light rare earths anyway and so isn’t considered a competitor for Bokan.
“Bokan is the main know deposit in the United States that has a high percentage of heavier rare earth,” he said. “And a high percentage is somewhere between 40 and 60 percent.”
This would make the output worth more than Mountain Pass on a per-ton basis since heavy rare earths are more expensive.
Borell agreed that Bokan’s heavy rare earths give it an advantage over Mountain Pass.
One material Borell made particular mention of was dysprosium. Among its uses is in the world’s strongest permanent magnets. Such magnets have a number of uses, such as in hybrid or electric engines. Dysprosium even has applications for cameras or aircraft like Predator drones. This is one the least common rare earths but Bokan has a high concentration.
Legislative support
Rare earths have always been used but remained under the radar until recently. This is partly why Bokan’s minerals haven’t been aggressively sought before. China’s cutback in 2010 pushed the issue into the light.
President Barack Obama has been pushing China to loosen those restrictions, announcing that his administration would file a complaint with the World Trade Organization.
Sen. Lisa Murkowski reacted to this. In a release, she denounced the continuation of looking to China for rare earths instead of at home.
“The president wants to sue the Chinese for something that we could – and should – be producing for ourselves. Instead of settling for Chinese imports, the president should be taking steps to jumpstart development of our own supplies of rare earth elements and other critical minerals. All he has to do is look north to Alaska, which has already identified roughly 70 rare earth elements sites,” she stated.
Murkowski also introduced the Critical Minerals Policy Act last year to reduce dependence on foreign suppliers.
Sen. Mark Begich met with Ucore officials last summer and sees Bokan Mountain as a good prospect for metals and economic development. In a statement last August, he advocated expeditious review of exploration permits, “so that the mine can be put into production with no undue delay.”
This article appears in the AJOC March25 2012 issue of Alaska Journal of Commerce
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