Dear Collective Competition,
You may know this already, but last weekend in Fairbanks, Alaska's Department of Natural Resources hosted North America's largest gathering concerning the development and marketing of what are called "rare earth elements."
Their name is a bit of a misnomer, though. The minerals are relatively abundant in the earth's crust, but not often found in concentrated, highly economical deposits like other minerals. They're used in high-tech gadgets, they have military application, and their oxides are used to control air pollution. Plus, demand for them has grown greatly in recent years.
By many accounts, the Strategic Minerals Conference was a success at connecting political leaders to representatives of industry, and it adjourned with a sense of great optimism at meeting the growing demand for these minerals. These days, however, America has essentially lost the ability to meet its own needs for and is researching alternatives.
Currently, China produces by far the largest portion of these elements consumed worldwide, and it practically has a stranglehold on intellectual capital necessary to refine the ore. But its cutting back its production to conserve its reserves, essentially cracking a window for other players trying to climb into the market.
The state of Alaska hopes to get in on the ground floor. In Gov. Sean Parnells speech to the assembled conference, he gave an update on the progress of a state effort to begin investigating Alaskas potential for rare earth mining and processing, and laid out the way forward. So far the states survey effort has identified 70 Alaska sites with rare-earth potential.
The governor even said that the feds, surprisingly, seem willing to lend a hand. Gov. Parnell said Interior Secretary Ken Salazar had a positive reaction to his hope that the U.S. Geological Survey would be able to collaborate with the state on its search for economical rare-earth deposits.
Given that youre always on the lookout for a way to diversify yourself or replace industries that have left Alaska or have taken nosedives, the news must be welcome indeed. As much as we The Concerned like to see you prosper in healthy ways, and as concerned as we are about what will happen to you as oil continues to decline, were a little concerned about all this enthusiasm.
We werent really all that concerned until we read a report from Reuters quoting a Toronto-based securities analyst who touts investment in one company pursuing a rare-earth development on Southeast Alaskas Prince of Wales Island. She said, "Alaska has a serious unemployment issue and it is getting worse, Rare earths seem to be their one chance -- they really want to capture this opportunity and make it happen."
According to Alaska Department of Labor and Workforce Services (.pdf), the state's seasonally-adjusted unemployment rate is actually not that bad compared to the rest of the country these days. In fact, in late 2008, for the first time ever, it became better than the U.S. average, and it has stayed steady so far in 2011. Sure nearly 8 percent unemployment isn't terrific, but Alaska's unemployment rate isn't nearly as depressing as it could be. However, assuming projections about the continued decline of Alaska's oil industry prove accurate, the state is going to need a new industry.
We're always concerned when we hear anyone say Alaska (or the United States) has only one chance at something. But we were doubly worried in this case because these days it seems entrepreneurial Alaskans are all over the place, farming, creating, inventing and generally trying to do something awesome that the world or their communities will buy. But it doesn't seem like those projects will be able to carry the economic weight that a major, high-demand industry can.
Maybe Strategic Minerals Conference attendees learned something about the Alaska Pipeline Project no one else knows yet, but it's also impossible to avoid news of one burgeoning idea or another, whether it's an energy project, natural gas exports, or increasing oil and gas activity on the North Slope and in the Cook Inlet region.
Perhaps the analyst was referring to some parts of Southeast, where timber mills have closed recently, putting plenty of locals out of steady work. She did mention the investment opportunity in Ucore Minerals Company's proposed rare-earth project at the Bokan Mountain deposit, near Ketchikan.
We The Concerned are excited about what resumed activity at Bokan Mountain deposit could mean for Southeast residents looking for work, and for you in general because it could be the first in a series of rare earth minerals projects. But we're concerned that it and other such projects have the potential to become yet another frustrating example of the long antagonism between resources, specifically fish and minerals.
Materials published by the regional environmental group Southeast Alaska Conservation Council indicate that Ucore's proposed project, because of its proximity to an abandoned uranium mine, could turn into a resource fight similar to the one swirling around the proposed Pebble Project in Southwest Alaska, except a bit more radioactive.
Since Southeast Alaska has a reputation for being one of the most environmentally protective (and marine-dependent) regions of the state, we're worried about what happens when the rosy glow of the conference fades and reality sets in. If cruise ship waste-water was at the center of such a bitter fight and such strict local regulations in Southeast, what'll happen when salmon start getting hauled into the matter?
Just this week, in fact, we The Concerned noticed a report about a mining company that presented its plan for a major gold mine in British Columbia in the Unuk River drainage at a community meeting in Ketchikan, where around 100 area residents expressed skepticism about the possible environmental impacts. And thats just ordinary gold, not minerals considered nationally strategic.
No one really knows yet what Alaskas potential rare-earth projects will look like because everything is still in the early stages. Reportedly, the Bokan Mountain Project still needs to raise at least $100 million to become fully operational, and an additional $50 million if a processing facility is to be built at the site. Were mainly worried that the effort to attract local support for Alaskas potentially new resource industry is not getting off on the right foot.
The securities analyst told Reuters that they (we assume Alaskas leadership and companies looking to do business in the state) are hoping to create a Silicon Valley of Rare Earth Elements in Alaska by attracting innovators and projects. Were not sure exactly who used that phrase, but were concerned that marketing effort isnt up to the task of convincing many Alaskans.
For one, people are already building a rare-earth Silicon Valley. In Baotou, China. In 2009, that same phrase was reportedly being used to attract investment there for a new industrial park. Its awesome theres such interest in creating new opportunity for Alaskans, but theyve seen lots of ambitious projects come and go, and a recycled marketing effort doesnt seem the best way to start off building local support for what seems a pretty strong blip on the conservation radar.
We The Concerned think a smart way forward for the state and rare-earth industry would be to switch the appeal from "the Silicon Valley" to "the North Dakota," "the Alberta," or even "the Marcellus Shale" of rare earth elements. Those places are already familiar economic comparisons for Alaskans and would be a natural fit. And given how jealous some Alaskans seem of North Dakota these days, that's probably the best option. It also might help to start distinguishing more sharply between Ucores rare-earth project at Bokan Mountain and the troubled Superfund-candidate nearby.