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Department of Defense eyes Bokan Mountain mining prospects

Alaska Dispatch

Mining prospects at Alaska’s Bokan Mountain, the largest known rare earth elements deposit in the U.S., are inching forward. Ucore Rare Metals Inc. announced Monday that it has contracted with the United States Department of Defense (DOD) to conduct a mineralogical and metallurgical study on Bokan Mountain, in Southeast Alaska, in order to provide the DOD with an ongoing supply of “critical” heavy rare earth elements.

Rare earth elements terbium, dysprosium and yttrium, are essential in all sorts of modern-day technology: cell-phones, hybrid vehicles, computer hard drives, and unmanned aerial vehicles, a.k.a drones. A March 2012 report from DOD said the three rare earth elements found in Bokan Mountain are “critical to the production, sustainment, or operation of significant United States military equipment,” according to Ucore.

Ucore is owned by Jim McKenzie, who fell into the business by “inadvertent luck,” McKenzie told Bloomberg Businessweek. After selling his Nova Scotia cable modem company to AT&T, he had money and time to spare, and became transfixed with mineral hunting thanks to a friend involved in uranium investing.

In October 2006, McKenzie was clued into the site at Bokan Mountain by Harmen Keyser, a geologist and helicopter pilot. The site was staked by Bob Dotson, an aging pioneer who had spent much of his life trying to attract investors to the mountain.

Bokan Mountain has seen eight mining companies come and go since the 1950’s, all in search of uranium deposits. Dotson was part of one of those original crews in 1955. He believed the surveying crew missed some of the uranium, so he went out and staked his own claims at the base of the mountain. Fifty-one years later, and after extensive research of both uranium and rare earth elements in the mountain, his work paid off.

The site is extremely important, as China, which produces around 95 percent of the world’s supply, announced in 2009 that it would cut rare earth exports over the next six years. It also imposed a tarriff of 25 percent on the four most expensive rare earth elements, causing prices to skyrocket. The problem for the U.S. supply is so great President Obama accused China in March of violating trade rules for hoarding the minerals. Alaska is also trying to tap this essential market; in September 2011 the Alaska Legislature approved a $500,000 request by Gov. Parnell to launch a study of rare earth elements in the state.

Read much, much more from Bloomberg Businessweek.