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

• Author: Jaeger, Stephanie
• Position: Special section: WORLD TRADE CENTER ALASKA 25th Anniversary

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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...