* State hopes for rare earth mining, processing boom
* Canadian explorers seek piece of potential bonanza
* Would provide secure supply of strategic metals
* 70 promising rare earth sites identified by state
* Bokan Mountain deposit rich in heavy rare earths
(In U.S. dollars unless noted)
By Julie Gordon
TORONTO, Oct 2 A rare earth project nestled
into a mountain ridge on Alaska's Prince of Wales Island may
unlock a motherlode of resources, bringing needed jobs and
opportunity to the state and offering a secure supply of the
strategic metals for the high-tech sector.
Between the Bokan Mountain deposit, owned by Canada's Ucore
Rare Metals (UCU.V), and the nearby city of Ketchikan, Alaska,
state legislators see the potential to build up a lucrative
rare earth mining and processing industry, with exploration
companies set to exploit about 70 promising sites already
identified by state geologists.
"They have this view that, potentially, they can make
Alaska the Silicon Valley of rare earths," said Luisa Moreno,
an analyst at Jacob Securities in Toronto.
Moreno, who has a "speculative buy" rating on Ucore's
stock, is optimistic about the company's prospects and sees it
as one of the front runners among the dozens of exploration
companies in the industry.
"Alaska has a serious unemployment issue and it is getting
worse," said Moreno. "Rare earths seem to be their one chance -
they really want to capture this opportunity and make it
Rare earths are a group of 17 metals used in technology
items from Apple's (AAPL.O) iPhone to Ford's (F.N) Focus
hybrid, as well as in defense applications and oil refining.
Nearly all of the world's supply is currently produced in
China, where an export clampdown sent prices for the individual
oxides and metals skyrocketing. That's seen as an opportunity
for Alaska and for Canadian exploration companies like Ucore.
Bokan Mountain is a deposit rich in heavy rare earths,
particularly dysprosium, which is in high demand globally.
Nearby Ketchikan, once home to major salmon cannery and a
pulp mill, has the basic infrastructure and skilled labor to
fuel a major mineral separation and refining facility.
Having the ability to process the rare earths would make
developing other Alaskan deposits feasible. The facility could
even refine concentrate from Canadian projects like Avalon Rare
Metal's (AVL.TO) Nechalacho deposit in the Northwest
Territories and Great Western Mineral's GWG.V Hoidas Lake
deposit in northern Saskatchewan.
But building up an industry from scratch won't come cheap.
Ucore estimates it will cost about $100 million to get the
Alaska mine off the ground and an additional $50 million to
build a rare earth processing facility in Ketchikan.
As well, it can take up to three years to get permits in
Alaska, in addition to time spent on drilling, feasibility
studies and environmental impact work.
"The permitting issue is key and we recognize that both on
the state and federal side we need to bring down these times,"
said Alaska's natural resources commissioner, Dan Sullivan. "It
just takes too damn long to permit a mine."
Faster permitting would allow Ucore to stick with its 2015
production target, as well as help speed up non-rare earth
mining projects being developed in Alaska by Barrick Gold
(ABX.TO), NovaGold Resources (NG.TO), International Tower Hill
(ITH.TO) and Northern Dynasty (NDM.TO).
As for financing this "Silicon Valley of rare earths", so
far Alaska has earmarked $500,000 for land assessment and, at a
summit on Friday, Governor Sean Parnell committed to providing
incentives for the development of known and highly prospective
rare earth deposits.
"We want responsible resource development up here," said
Sullivan. "There is a land here, a lot of unexplored land, and
we think the opportunities are enormous."
If everything goes according to the best-case scenario,
Alaska will be pushing out up to 2,300 tonnes of high value
rare earth products a year from Bokan Mountain by 2015.
With processing infrastructure in place, Ucore and other
Canadian-listed exploration companies can focus on finding new
deposits to fuel that facility, which will likely lead to not
only new rare earth finds, but other metal deposits as well.
State officials hope that, eventually, Alaska and its miles
of untouched land will provide the United States with
everything from rare earths to copper and gold.
"They've had a lot of oil revenue and now they're looking
to add other natural resources," said rare earth industry
expert Jack Lifton. "There's a natural resource boom about to
be ignited in Alaska."
While having a secure, domestic supply of the metals is
important, the focus for Lifton is on breaking Western
countries' dependency on Chinese rare earths and their
ever-soaring export prices.
In early 2010, cerium oxide cost about $5.50 a kilogram. By
August this year it was worth $130, though the price has since
slipped back to around $70, according to Asian Metal.
Dysprosium went from about $200 per kg to $2,500, before easing
to around $1,565.
"Right now, the issue is we've got to bring the total
spectrum of rare earths into production in the West," Lifton
said. "I am very confident that something major will happen in
Alaska in the next twelve months in the way of rare earth
(Editing by Rob Wilson and Jeffrey Hodgson)