Alaska may become Silicon Valley of rare earths

By Julie Gordon

TORONTO (Reuters) - A rare earth project nestled into a mountain ridge on Alaska's Prince of Wales Island may unlock a motherlode of resources, bringing needed jobs and opportunity to the state and offering a secure supply of the strategic metals for the high-tech sector.

Between the Bokan Mountain deposit, owned by Canada's Ucore Rare Metals (UCU.V: Quote), and the nearby city of Ketchikan, Alaska, state legislators see the potential to build up a lucrative rare earth mining and processing industry, with exploration companies set to exploit about 70 promising sites already identified by state geologists.

"They have this view that, potentially, they can make Alaska the Silicon Valley of rare earths," said Luisa Moreno, an analyst at Jacob Securities in Toronto.

Moreno, who has a "speculative buy" rating on Ucore's stock, is optimistic about the company's prospects and sees it as one of the front runners among the dozens of exploration companies in the industry.

"Alaska has a serious unemployment issue and it is getting worse," said Moreno. "Rare earths seem to be their one chance - they really want to capture this opportunity and make it happen."

Rare earths are a group of 17 metals used in technology items from Apple's (AAPL.O: Quote) iPhone to Ford's (F.N: Quote) Focus hybrid, as well as in defense applications and oil refining.

Nearly all of the world's supply is currently produced in China, where an export clampdown sent prices for the individual oxides and metals skyrocketing. That's seen as an opportunity for Alaska and for Canadian exploration companies like Ucore.

Bokan Mountain is a deposit rich in heavy rare earths, particularly dysprosium, which is in high demand globally.