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Rare earth elements at Bokan Mountain: mining a fortune in Southeast.


In November 2011, the price of dysprosium skyrocketed to $2,900 per kilogram (2.2 pounds). Dysprosium, a rare earth element (REE), is indispensable to our country's defense and green technologies. The world's strongest and lightest magnets, which power hybrid and electric motors in automobiles and operate gears in wind turbines, are manufactured from a combination of dysprosium and another REE, neodymium. These magnets enable the miniaturization of hard disk drives and other electronic devices. Dysprosium, an important component in nuclear fuel rods, captures neutrons and prevents the rods from overheating. Laser materials and infrared devices also contain dysprosium.

Currently, China controls 97 percent of the mining and production of dysprosium and other REEs. In 2010, China announced it would be cutting its REE exports over the next six years. China has cut its exports in half during the last five years and levied a 25 percent tax on the most expensive REEs, which include dysprosium, and a 15 percent tax on the less expensive ones.

"Due to increasing demand as well as actions by China to restrict exports, it is critical that we develop domestic rare earth supplies, processing and manufacturing," said Sen. Mark Begich.

In 2006, Jim McKenzie, a Canadian entrepreneur, bought Bokan Mountain, the site of Alaska's first and only uranium mine, the Ross Adams mine, in Southeast. Prospector Bob Dotson originally owned the mineral rights to this mine. Initially, McKenzie paid Dotson and his family $520,000 and a 2 percent royalty on the value of any ore extracted from their claims. Later, Ucore Rare Metals, a Canadian company, paid $995,000 for the entire site and McKenzie invested $500,000 (Canadian) of his own money in the project. McKenzie became chief executive officer of the company and his geologist friend, Herman Keyser, became vice president.

Over a three-year period, a mine exploration crew drilled holes thousands of feet into the bedrock under the mine. Core samples, smooth cylinders of mineral-laden rock taken from each hole, showed large concentrations of REEs next to the uranium veins until they got to an area called the I&L zone, named after former claimholders Irma and Lester Hollenback. In this area, the uranium deposits, which usually are found in association with REEs, continued up the mountain while the REE deposits diverged toward the southeast. Because China announced they were cutting exports of REEs to the U.S., Ucore decided to pursue its REE deposits instead of the uranium.

Aurora Geosciences, Ucore's exploration consultants, estimates there are 3.7 million metric tons of REEs under Bokan Mountain. (One metric ton is 2,200 pounds.) Although the deposit appears to be small, it is believed to be one of the purest in the U.S., containing up to 21 percent dysprosium. Because of the rapidly increasing price of REEs, the value of Bokan Mountain's deposits cannot be accurately determined.

Bokan Mountain, located about 31 miles southwest of Ketchikan and 81 miles north of Prince Rupert, stands on the southern end of Prince of Wales Island in Southeast Alaska. Ucore's project at Bokan Mountain totals 19 square miles and is surrounded by the Tongass National Forest. Ucore has been able to obtain a secure mineral title with no claim issues, because no indigenous or residential populations occupy the land.

Bokan has significant infrastructure remaining from when it was an active uranium mine, including an access road system, and is located in close proximity to Kendrick Bay, which is deep enough for barge traffic. Prior permits for mining in the area are still intact and current permits have recently been acquired. The mine lies near the Alaska Marine Highway, the Pacific Ocean and the U.S. West Coast.

McKenzie hopes to be able to begin production in 2015. Ucore still needs to build a mill, a conveyor belt to the shore, camps for the miners, and a dock to load mineral-containing rock onto the barges.

Ucore has enjoyed political support from Alaska Governor Scan Parnell and Begich. When the U.S. Forest Service tried to hold up road permits during the drilling process, Parnell intervened and sped up the permitting process.

Possibilities for employment opportunities in Southeast bolster this strong support. The State of Alaska is considering underwriting a REE separation plant on Gravina Island near the Ketchikan airport.

In August 2011, McKenzie and Begich met at Bokan. "Identified as one of the most concentrated heavy rare earth deposits in the world, Bokan has the potential to provide rare earth elements needed for our national defense as well as for everyday use in products from cell phones to smart cars," Begich said after the meeting. "In addition, the Bokan project would help diversify the economy of communities throughout Southeast Alaska by creating a significant number of year-round jobs. I look forward to the project making a transition from exploration to production."
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Title Annotation:special section: WORLD TRADE CENTER ALASKA 25th Anniversary
Comment:Rare earth elements at Bokan Mountain: mining a fortune in Southeast.(special section: WORLD TRADE CENTER ALASKA 25th Anniversary)
Author:Jaeger, Stephanie
Publication:Alaska Business Monthly
Date:Feb 1, 2012
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