AIDEA looks into funding Ketchikan SMC
Alaska agency eyes economic advantages of rare earth facility
Last updated 11/2/2018 at 3:49am
Alaska Industrial Development and Export Authority (AIDEA) continues to be interested in funding the Strategic Metals Complex, or SMC, a rare earth element separation facility that Ucore Rare Metals is planning to develop in Ketchikan, Alaska.
In 2014, the Alaska Legislature authorized AIDEA to invest up to US$145 million to help finance the development of a mine at Ucore's Bokan Mountain rare earth deposit on Prince of Wales Island, which is located about 30 miles southwest of Ketchikan.
At the time, it was envisioned that the Bokan Mountain Mine and a rare earths processing facility near Ketchikan would be developed in tandem. Ucore, however, has decided to wait until REE markets are more favorable before developing the mine. In the meantime, the company plans to build the SMC, which would begin by separating rare earths from feedstock sourced from outside of Alaska.
"The SMC will initially be constructed to process by-product and primary rare earth concentrates from non-Chinese operations that require REE separation services to produce a saleable product in the current Chinese dominated rare earth element worldwide market," said Ucore Rare Metals President and CEO Jim McKenzie.
AIDEA believes that Ucore's decision to wait until REE prices improve before developing a mine at Bokan is prudent and development of the SMC is an important first step to the overall goal of mining rare earths in Alaska.
"Based on this information, AIDEA is in the process of examining methods to provide funding for the SMC project," AIDEA CEO John Springsteen penned in a letter to McKenzie. "AIDEA believes that the development of an industrial plant such as SMC in Ketchikan would lead to the diversification of the state's economy and provide a basis for the processing of rare earth elements domestically, a goal which is important to both Alaska and the United States."
Fueling the need for Ketchikan SMC
Recent initiatives by the Trump Administration have fueled the need for finding non-Chinese sources for rare earth elements.
Comprising 15 lanthanides on the periodic table, plus yttrium and scandium, rare earth elements possess unique properties that make them essential to a wide gamut of high-tech products such as terabyte hard-drives that fit in the palm of your hand, high-efficiency green-power generation and sophisticated military hardware.
For decades, China has dominated the REE market and has largely controlled the prices and supply of these critical elements.
"China has been the leading producer of REEs for decades and since the late 1990s it has accounted for more than 90 percent of global production, on average," the USGS wrote in its January report on minerals critical to the United States.
In June, the Trump Administration levied a 10 percent tariff on REEs from China.
The bigger move, however, was provisions in the 2019 National Defense Authorization Act, prohibits the U.S. Department of Defense from acquiring rare earth magnets – along with certain tungsten, tantalum and molybdenum products – from China, Russia, Iran, and North Korea.
"This is a turning point in the re-establishment of an independent US rare earth industry," said McKenzie. "It is also an important inflection point for rare earth investors. Rare earth magnets, or REMs, represent a technology of critical importance to the American military."
The separation plant Ucore proposes to build near Ketchikan could provide a domestic source for Pentagon procurement officers looking to acquire rare earths from outside of China, Russia, Iran, and North Korea.
"Ucore's planned Strategic Metals Complex, as a U.S.-based producer of high purity REEs, comes at a time when the U.S. military will be actively pursuing these materials," said McKenzie.
SMC due diligence
The SMC being planned for Ketchikan will utilize molecular recognition technology, or MRT, a cutting-edge technology that is both more efficient and environmentally sound than the traditional methods of separating the 16 tightly interlocked rare earth elements that are commonly found together.
Developed by IBC Advanced Technologies, the MRT process uses resins that are engineered to grab ions based on various traits such as size, chemistry and geometry. Loaded into columns, these resins latch onto the targeted material suspended in a solution that is pumped through the column. Simply rinsing the resin with a mildly acidic solution releases a nearly pure version of the material the resin is engineered to bind to.
In partnership with Ucore, IBC developed resins that in stages separates the notoriously tightly interlocked rare earths.
Using an REE laden solution derived from Bokan Mountain, this REE separation technology has been advanced from bench tests to a pilot plant known as SuperLig-One and is now ready for commercial application in the form of the SMC.
In March, Ucore began due diligence for its proposed Ketchikan SMC, which includes identifying the ideal location; finalizing engineering designs for the REE separation plant; determining the costs to build and operate the facility; and selecting feedstock from a short-list of competing alternatives.
"The decision to embark on the engineering design is a significant milestone for Ucore and Alaska; as together we accelerate to becoming a technology-based producer of individual, saleable REE oxides in the worldwide market," said McKenzie.
Ucore has already identified six acres of property on the outskirts of Ketchikan to build the SMC and has entered into an agreement to buy the two adjacent lots zoned for heavy industrial use.
This land package on the North Tongass Highway provides direct access to the deep-water shipping and container facilities at Ketchikan.
"With highway frontage and fundamental infrastructure to support the planned accesses, services and utilities, I believe we could not have selected a more promising development location," said Ucore Rare Metals COO Mike Schrider.
Situated on Alaska shipping channels, among the most prolific shipping lanes in the world, the development site brings direct access to major markets in the United States and the Pacific Rim by way of ocean shipping, the lowest-cost mode of bulk transport.
In addition to barged and container handling facilities at a deep-water Pacific Rim port, Ketchikan offers excellent utilities and a skilled immediate-area workforce.
"We're pleased that Ketchikan has been selected from among competing locales," said Randy Johnson, a Ucore advisory board member and Ketchikan resident.
Johnson brings both an Alaskan perspective and business acumen to Ucore's advisory board.
In his previous role as president of Alaska Ship & Drydock, Johnson, was a key player in developing the Ketchikan Shipyard through a unique and award-winning public-private partnership with AIDEA.
As an investor in both Ucore and the metals separation technology the company has developed, he also was a strong advocate for basing the first SMC in Ketchikan, a community that he has helped revitalize in recent years.
In addition to Johnson, Ucore's advisory board boasts Michael Barry, another distinguished Alaska businessman.
Barry is the chairman of Alaska Power and Telephone and former chairman of AIDEA and Alaska Energy Authority.
"AIDEA welcomes the involvement of Alaskan entrepreneurs and business leaders like Mr. Randy Johnson and Mike Barry, who both reside on Ucore's advisory board and provide a significant Alaska perspective to the project," AIDEA Executive Chairman Springsteen penned in his letter to McKenzie.
Ucore envisions ramping up production of the SMC over a roughly four-year span. The first phase of the facility, slated for completion in 2020, would have the capacity to process 1,000 metric tons of rare earth concentrates per year. The second phase would increase throughput to 2,500 tpy and by 2024 the company plans to have the facility processing 5,000 tpy of REE concentrate.