A small and largely unknown mining company focused on developing a huge tract in Alaska could supply virtually all of the heavy rare earths the U.S. military needs for its high-tech weaponry, a leading industry analyst declares.
In an interview with Defense Media Network, renowned expert Jack Lifton expressed frustration that the Bokan Mountain mine owned by Ucore Rare Metals Inc. has received relatively little media attention despite the fact that it could ensure stable, domestic supplies of two key elements.
“If America is to be self sufficient under American control it has to develop Bokan Mountain,” Lifton said. “There isn’t any other choice.
“If America has decided ‘well, instead of depending on China we’ll depend on Canada or we’ll depend on Australia’ okay, that gives us some other choices. But they are much more expensive than Bokan Mountain.”
Indeed, Bokan mountain is entering a geopolitical power struggle that pits the U.S. against China, which controls 97 percent of the world’s supply of rare earths, including those required by the Pentagon. China has adopted export restraints that have increased the price of some heavy rare earths by several hundred percent in the past year.
Industry observers consider heavy rare earths more valuable than their “light” counterparts. That’s because the heavy elements remain more scarce and also form the backbone for powerful magnets used in everything from hybrid cars to wind turbines to missile guidance systems.
A physical chemist and former military researcher, Lifton is the founding principal of Technology Metals Research, an advisory firm. He says he has visited the Bokan Mountain site on the Alaskan panhandle and it contains abundant supplies of the heavy rare earths neodymium and dysprosium.
“It turns out that the Bokan Mountain deposit, like every other rare earth deposit on this planet has mostly light rare earths,” Lifton explained. “However, at Bokan Mountain the proportion of heavy rare earths is the highest of any deposit I have seen in the United States.
He also gives the mine high marks for the quality of its elements, adding that they could be used to make some of the “best rare-earth permanent magnets available,” Lifton said.
Moreover, Lifton said, Bokan Mountain also contains deposits of samarium, which is often combined with cobalt to form another type of rare-earth magnet for military use. For instance, the Stinger hand-held missile employs samarium-cobalt magnet motors to control the fins.
Besides Ucore, the United States could also obtain samarium from Molycorp, the Denver-based company that owns a rare-earth tract in southern California, Lifton said. Molycorp is reopening the Mountain Pass mine that formerly served as the world leader in rare-earth production but that closed several years ago largely because of environmental concerns.
Political support could advance Bokan Mountain’s operations, Lifton said. Although defense department officials say they can get rare earths from existing markets, both U.S. senators from the state have asked the Pentagon to consider building a strategic stockpile of heavy rare earths.
Alaska’s governor recently asked the White House to support Bokan Mountain with expedited permits. The governor noted Australia can process the necessary paper work in as little as a year but it frequently takes a decade in the U.S.
Lifton said Molycorp’s wildly successful stock offering in July 2010 turned attention away from smaller exploration companies like Ucore. Since going public at $14 a share, the stock had recently climbed above $54, for a gain of 285 percent.
As far as its stock is concerned, Ucore faces a couple of other obstacles, Lifton acknowledged. The company uses the Toronto stock exchange as its main listing agency, which limits investor interest because most U.S. stockholders prefer domestically listed companies.
In addition, Ucore’s stock remains well below institutional grade, where professional investors prefer equities selling above $10 a share. Ucore, on the other hand, recently traded at 95 cents.
Such a low stock price makes it difficult to issue new shares to raise money Ucore needs to fund completion of the Bokan Mountain mine as well as a processing center. By contrast, Molycorp raised $530 million in its stock offering and then another $130 million in a second investment round.
“Ucore has got to get the story out to the institutional investment community,” Lifton said. “This is not something that is going to be resolved by day traders buying a few shares of stock. This requires strategic long- term investors.”