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Vol. 15, No. 47 Week of November 21, 2010
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Alaska could become US REE capital

Tech-metals expert Lifton declares HREE-enriched Bokan most important domestic REE deposit; urges Alaska to invest in supply chain

Shane Lasley

Mining News

The swift development of Ucore Rare Metals Inc.’s Bokan-Dotson Ridge deposit in Southeast Alaska is vital to providing the United States with a domestic supply of critical rare earth elements. This is the message world-renown REE expert Jack Lifton delivered to attendees of the Alaska Miners Association 2010 annual convention in Anchorage.

Beyond just mining the heavy rare earth element-rich ore at Bokan, the technological metal consultant advised the State of Alaska to invest in value-added REE processing and refinement and the manufacturing of the magnets in other products made from the technological metals.

“For the future of this country, this development in Alaska is very important. I am hoping it comes to the attention of the national government,” Lifton said.

REEs gain notoriety on China quotas

REEs are a group of 17 previously obscure metals that include scandium, yttrium and the 15 lanthanides. They are widely used in green technology such as wind turbines and hybrid cars; high-tech consumer goods like mobile phones and iPods; and military applications such as guided missiles, lasers, radar systems and night vision equipment.

The technological metals emerged into the mainstream when China, which mines around 97 percent of the global supply of REEs, dramatically reduced its exports of these minerals.

The Far East country has been cutting REE exports since 2005. In July of this year, the Ministry of Commerce of the People’s Republic of China unveiled plans to cap its REE exports for the second half of 2010 at 7,976 metric tons, a 72 percent decrease from the 28,417 metric tons allowed during the same period a year ago. A further reduction of 30 percent for 2011 has been reported by Chinese media. Though China officials dispute the amount reported in the press, they admit that further reductions in REE exports may be necessary.

The news agency AFP reported Nov. 12 that the China Ministry of Commerce has published new rules that “strictly regulate rare earth exporters.” The ministry will cancel export licenses for companies found to have violated rules on quotas or to have failed to follow industry policies or comply with environmental protection rules.

Japan’s high-tech industry is the world’s largest consumer of REEs, and the country has been the hardest hit by China’s constrained exports of the metals. Japan officials told reporters at the November G20 summit in Seoul that the country has not received shipments of REEs since September.

Though China officials deny that they have embargoed REE shipments to neighboring Japan, the flow of the high-tech metals stopped after a run-in between a Chinese fishing boat and the Japanese Coast Guard off a disputed island in the South China Sea.

According to a Nov. 13 Reuters report, a meeting between Prime Minister Naoto Kan and Chinese President Hu Jintao at an Asia-Pacific summit in Yokohama, Japan, has signaled a cooling of tensions between the Asian neighbors.

Japanese Trade Minister Akihiro Ohata told reporters at the summit he has received assurance from China National Development and Reform Commission Chairman Zhang Ping that customs issues that have stalled REE exports should be resolved soon.

The European Union and the United States are also reporting significant decreases in shipments of the metals over recent months.

Though nearly all of the global supply or REEs are mined in China and the country produces some 80 percent of dense rare earth magnets, most of the high-end devises made from the unique minerals are not manufactured there.

If REEs are not mined and refined outside of China, companies that need these metals to manufacture their products may be forced to consider moving production facilities to the country that produces the needed metals.

“I don’t know how you are going to accomplish this, but unless you develop this deposit (Bokan-Dotson Ridge) right now, then you had better start learning Mandarin, because that will be the instructions you get on your high-tech devises. We won’t be making them anymore, it is as simple as that,” Lifton warned.

Why Bokan?

The Dotson Ridge deposit at Ucore’s Bokan Mountain project is not a particularly high-grade or large rare earth deposit, so why does Lifton – who specializes in the market fundamentals and end-use trends of rare metals – insist that the project is key to reducing the United States’ reliance on China for the technology-centric metals.

The answer lies in the difficulty of separating REEs from each other and the ratio of the critical heavy rare earth elements to total rare earth elements at the Southeast Alaska deposit.

“What deposit has the correct ratio of the important rare earths? Therefore, that is the one I want to go after,” Lifton said. “Because of its proportion of heavy rare earths, (Bokan) is the most desirable deposit to be developed in the United States.”

Lifton, who is a geochemist, said the economic importance of having the correct proportions of the critical REEs is related to the difficulty in separating the various metals in a deposit.

“The big problem with the rare earths is real simple – they are too much alike. So, if you find a rare earth deposit, it always contains all of the rare earths,” Lifton explained. “You mine this undifferentiated material – it has 14 rare earth elements and usually scandium, yttrium, thorium, uranium, zirconium.”

Once a mine produces a concentrate, the difficult process of separating these with similar properties begins.

“The metallurgy of this is amongst the most strenuous in the world. Separation plants for rare earths are acres and they have hundreds and thousands of solvent extraction cycles to take advantage of tiny differences in the solubility of rare earth compounds,” the REE expert explained.

Due to the difficulty of disconnecting each individual metal from all others during the separation and refining processes, having the correct proportions of metals plays a vital role in the economics of a project. A mine not well-aligned with demand will produce an overabundance of less sought-after REEs, while falling short of filling the need for the critical metals.

“In the United States, this (Bokan-Dotson Ridge) is the most important deposit of rare earths. Why? Because when you concentrate, separate (and) refine, you wind up with 40 percent heavy rare earths,” Lifton said.

Critical REEs

The terms heavy rare earth elements and light rare earth elements are misnomers. HREEs do not necessarily weigh more than LREEs. The distinction is related to where the elements fall on the periodic table of elements. Likewise, REEs that fall into the heavy category are not necessarily more important than those that precede them on the chart.

Dr. Vladimir Seredin – who published a paper titled “A New Method for Primary Evaluation of the Outlook for Rare Earth Element Ores” – has proposed new categories for evaluating REEs.

The Russian scientist argues that those REEs with future demand that is likely to outstrip supply be referred to as critical REEs, and those REEs with future supply that is likely to be in excess of demand be referred to as excessive REEs. The balance would fall between these groups into a category referred to as non-critical REEs.

Dr. Seredin classifies neodymium, europium, terbium, dysprosium, erbium and yttrium as critical REEs, while cerium, holmium, thulium, ytterbium and lutetium fall into the excessive REE category.

With this classification system, the Russian scientist evaluated 40 deposits around the world by the ratios of critical REEs to total REEs and excessive REEs to total REEs.

Using the matrix created by Seredin, Lifton further refined the list by evaluating the 13 most advanced rare-earth projects currently underway (i.e. those with a mineral resource definition that is compliant with NI 43-101 (Canadian) or JORC (Australian) industry guidelines and/or which have been historically mined and have reliable associated data.

The two most advanced U.S. REE assets, Mountain Pass in California and Bear Lodge in Montana, ranked at the bottom of the list – each with a proportion of critical rare earth elements of less than 15 percent.

When Lifton added Bokan – which does not yet have a NI 43-101-compliant resource – to the list, the Southeast Alaska project ranked at the top with a critical REE to total REE ratio of around 50 percent.

Ucore President and CEO Jim McKenzie said, “Bokan represents the largest and most accessible historically estimated HREE resource in the United States. What’s more, upon the delivery of our resource calculation in the near term, Bokan will be the only primarily HREE-enriched deposit on U.S. soil with a fully documented NI 43-101-compliant resource. It’s a unique position, which places Bokan as an alternative and complementary bookend to Rare Element Resources Ltd.’s primarily LREE-oriented deposit in Wyoming and Molycorp Minerals’ primarily LREE-oriented deposit in California.”

An NI 43-101-compliant resource estimate currently being calculated for the Dotson and I&L zones at Bokan Mountain is expected to be completed by the end of 2010.

Metal of the century

One of the things that set Bokan Mountain apart from its peers is the proportion of dysprosium found in the deposit.

Dysprosium is becoming an increasingly important ingredient in magnets used in automobiles. Internal combustion engines run more efficiently at higher temperatures. One of the limits is that the multitude of magnets found under the hood of a modern automobile reach their Curie point, or loses their magnetism to the high heat.

“Researchers found that when they added dysprosium to the magnet, the Curie point was moved hundreds of degrees higher,” Lifton explained. “This is the standard for high temperature generators and motors today – the neodymium-dysprosium magnet.”

Lifton told the Alaska miners that China has produced all of the dysprosium in the world to date. The Far East country, which is expected to manufacture 17 million automobiles this year, announced that its demand for dysprosium is on the brink of outpacing supply, and it will not be exporting any more of the critical REE.

This has western manufacturers such as General Motors, General Electric and Hitachi worried about where they are going to source this important ingredient of high-temperature magnets.

“Dysprosium is the metal of the century, in my opinion,” Lifton said.

In addition to the “metal of the century,” Bokan has healthy portions of the critical REEs terbium, neodymium, yttrium and europium.

Resource calculation pending

In 1989, a U.S. Bureau of Mines study estimated that the greater Bokan area contains 37.8 million tons grading 0.5 percent total rare earth oxides.

“As always, our objective has been to verify the historical resource for this area as set out by the U.S. Geological Survey (formerly the US Bureau of Mines; USBM OFR 33-89), converting these expectations to NI 43-101 compliance, before embarking on an aggressive mine feasibility and development schedule in 2011,” McKenzie said.

A conceptual estimate released by Ucore in October approximates that the deposit areas drilled over the past two years contain 3.5 to 6.5 million metric tons grading between 0.76 percent and 1.42 percent total rare earth oxides, 40 percent of which are the coveted heavy REEs.

The Ucore president said, “The skew towards HREE content for the deposit remains exceptionally strong, and places Bokan amongst the highest known HREE skews in the world. Together, the increased grade and tonnage figures represent a deposit sufficient to meet U.S. heavy rare earth needs for decades.”

In tandem with the resource calculation, Hazen Research Inc. is conducting mineralogical and metallurgical studies on bulk samples take from the Bokan-Dotson Ridge project. Results from this work are anticipated to coincide with the resource calculation.

Lifton urges investment in supply chain

Even if Ucore Rare Metals can fast-track Bokan Mountain into production, the United States is bereft of a domestic supply chain capable of converting the mined concentrates into high-tech products.

“Alaska holds a solution to a current problem,” Lifton told the mining community in Anchorage. “The problem is; no matter what you do, when you mine rare earths you wind up with a concentrate that has the least value.”

“With rare earths this is an exceptional problem. First, I have to extract them from the concentrate; second, I have to separate them from each other; and then continue refining – which means continuing separation,” he added.

The tech-metal expert’s solution is for the state to invest in building the needed supply chain in Alaska.

“Bring the supply chain up here. Bring a company that separates the rare earths, refines them, makes the metals, makes the magnets,” Lifton urged. “I think for US$100 million Alaska could become the United States’ center of heavy rare earth production.”



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