04/08/2013 01:00 PM House RESOURCES

        SJR  8-MINING/PROCESSING OF RARE EARTH ELEMENTS                                                                     
                                                                                                                                
2:18:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SADDLER  announced the next  order of business  would be                                                               
CS  FOR  SENATE  JOINT  RESOLUTION  NO.  8(RES),  Supporting  the                                                               
continued and increased  exploration, extraction, processing, and                                                               
production of  rare earth elements  in the state; and  urging the                                                               
United  States  Congress  to  support efforts  of  the  state  to                                                               
develop rare earth  elements in the state for the  benefit of the                                                               
economic and national security of the United States.                                                                            
                                                                                                                                
2:18:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  moved  to adopt  the  proposed  House  committee                                                               
substitute  (HCS)  for  CSSJR 8,  Version  28-LS0324\P,  Bullock,                                                               
4/8/13, as the working document.                                                                                                
                                                                                                                                
REPRESENTATIVE TUCK objected for the purpose of discussion.                                                                     
                                                                                                                                
2:19:19 PM                                                                                                                    
                                                                                                                                
TREVOR FULTON,  Staff, Representative  Dan Saddler,  Alaska State                                                               
Legislature, informed  the committee the first  change in Version                                                               
P  is found  on page  3, line  2, in  that the  word "state"  was                                                               
deleted  to imply  that the  Alaska State  Legislature urges  not                                                               
just state  agencies, but all  agencies, both state  and federal.                                                               
Also on  page 3, line  6, the  FURTHER RESOLVED was  rewritten so                                                             
that federal agencies  are directed to work  with state agencies.                                                               
Both of  these changes were made  to adhere to the  guidelines of                                                               
joint resolutions, which are used to  express the view or wish of                                                               
the legislature  to the President, the  Congress, U.S. government                                                               
agencies   or  other   state   governments,  whereas   concurrent                                                               
resolutions   are  used   for  the   internal  business   of  the                                                               
legislature  and   for  requesting  action  of   executive  state                                                               
agencies.                                                                                                                       
                                                                                                                                
REPRESENTATIVE TUCK removed his objection.                                                                                      
                                                                                                                                
CO-CHAIR  SADDLER  would like  the  record  to reflect  that  the                                                               
sponsor wished to  include an additional Whereas  that would urge                                                             
the following:                                                                                                                  
                                                                                                                                
     the Alaska Industrial  Development and Export Authority                                                                    
     (AIDEA)  to  expedite  the  review  and  due  diligence                                                                    
     necessary  to assess  and  finance  participation in  a                                                                    
     specific project,  that being the Bokan  Mountain [Rare                                                                    
     Earths Project] for rare earth elements.                                                                                   
                                                                                                                                
CO-CHAIR SADDLER discouraged the  addition of this clause because                                                               
a  joint  resolution is  aimed  at  the  President and  the  U.S.                                                               
government,  and the  aforementioned clause  is more  appropriate                                                               
for  a concurrent  resolution.   However, he  expressed his  full                                                               
support  of  the sponsor's  efforts  to  encourage AIDEA's  rapid                                                               
review and due diligence of the Bokan Mountain project.                                                                         
                                                                                                                                
2:22:09 PM                                                                                                                    
                                                                                                                                
JESSE  LOGAN,   Staff,  Senator   Lesil  McGuire,   Alaska  State                                                               
Legislature, further explained the  House committee substitute is                                                               
a  result of  the awareness  of the  differences between  a joint                                                               
resolution and  a concurrent  resolution, and  the changes  in no                                                               
way  imply  a   lessening  of  the  sponsor's   support  for  the                                                               
identified projects;  in fact, SJR  3 passed in the  Senate 20-0.                                                               
Mr. Logan paraphrased from the sponsor statement as follows:                                                                    
                                                                                                                                
     SJR  8  is  supporting   the  continued  and  increased                                                                    
     exploration, extraction, processing,  and production of                                                                    
     rare  earth  elements  in the  state;  and  urging  the                                                                    
     United States Congress to support  efforts of the state                                                                    
     to develop  rare earth  elements in  the state  for the                                                                    
     benefit of  the economic  and national security  of the                                                                    
     United  States.   Rare  Earth  Elements possess  unique                                                                    
     chemical, electrical, and  physical properties; they're                                                                    
     indispensable for  national defense  military equipment                                                                    
     such   as  night   vision  goggles,   precision  guided                                                                    
     weapons,  drones,  radar  systems and  satellites,  and                                                                    
     clean   energy    technology,   hybrid-electric   cars,                                                                    
     vehicles,  wind turbines,  solar  panels, and  consumer                                                                    
     goods   such   as   portable   communication   devices.                                                                    
     Industrial   uses   include   catalytics,   phosphorus,                                                                    
     polishing   compounds,   pollution   control   devices,                                                                    
     illumination screens, and optical quality glass.                                                                           
                                                                                                                                
MR. LOGAN stated  that the demand for rare  earth elements (REEs)                                                               
has increased  100 percent in the  last 20 years, and  95 percent                                                               
of the world's supply is  controlled by China, which is currently                                                               
reducing its export  quotas.  This poses a  national security and                                                               
energy security  risk for  the U.S.   However,  mineral resources                                                               
make up  a majority of  Alaska's economic assets, and  Alaska has                                                               
several prospects for the production  of REEs, the most promising                                                               
of  which  is  the  Bokan Mountain  deposit,  putting  Alaska  in                                                               
position to become the U.S.  leading supplier of REEs.  Increased                                                               
exploration  for  REEs,  along with  processing  facilities,  can                                                               
create  new  opportunities  for  Alaskans,  in  contrast  to  the                                                               
existing mining  extraction in Alaska  that does not  provide for                                                               
the export of value-added products.   Mr. Logan concluded, saying                                                               
the  resolution   supports  increased   exploration,  extraction,                                                               
processing,  and production  of REEs,  urges federal  agencies to                                                               
expedite consideration of permits,  and urges Congress to support                                                               
these efforts.                                                                                                                  
                                                                                                                                
2:24:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   TUCK  asked   how  REE   mining  increases   the                                                               
opportunity for Alaska to export value-added products.                                                                          
                                                                                                                                
MR.  LOGAN  said  to  do  so the  state  would  have  to  develop                                                               
manufacturing along  with the extraction  of elements.   At Bokan                                                               
Mountain, there  is the  opportunity to develop  a road  to Craig                                                               
and  access  to  a  deepwater  port.    In  further  response  to                                                               
Representative  Tuck, he  said manufacturing  REEs in  support of                                                               
nanotechnology is possible.                                                                                                     
                                                                                                                                
REPRESENTATIVE JOHNSON  said the only processing  plants for REEs                                                               
in the world  are in China and Australia.   Building a processing                                                               
plant  in  Alaska would  require  a  source  of natural  gas  and                                                               
electricity, which  could be  supplied by  an in-state  gas line.                                                               
He  called attention  to an  application available  on the  Ucore                                                               
Rare Metals  Inc. web site  that is  a source for  information on                                                               
REEs,  and quoted  a  price for  a specific  element.   China  is                                                               
trying  to  control   the  entire  supply  chain   of  REEs  from                                                               
extraction to the export of a finished product.                                                                                 
                                                                                                                                
CO-CHAIR  FEIGE recalled  the U.S.  used to  have REE  mines, the                                                               
largest of which was in  Mountain Pass, California, but they were                                                               
regulated out  of existence.   He cautioned that  the traditional                                                               
manufacturing   process    of   REEs    encompasses   significant                                                               
environmental impacts if improperly managed.                                                                                    
                                                                                                                                
2:29:01 PM                                                                                                                    
                                                                                                                                
KEN COLLISON,  Chief Operating Officer,  Ucore Rare  Metals Inc.,                                                               
informed the  committee the technology  used today  was developed                                                               
in Montana  and from an  environmental perspective, is  a totally                                                               
different process than that used in  China.  The new process uses                                                               
a series of columns to  separate the individual rare earths, thus                                                               
environmentally, there are  not the issues raised  by the solvent                                                               
extraction process.   In addition, the reagents  are recycled and                                                               
nitric  acid  is used  instead  of  sulfuric  acid.   Further,  a                                                               
sorting  technology is  used  to  sort the  ore  and  all of  the                                                               
tailings, with some of the  waste rock, will go back underground.                                                               
As an  aside, he said  the Massachusetts Institute  of Technology                                                               
(MIT)  recently  identified  Ucore's  project as  an  example  of                                                               
sustainable mining.  In response  to Co-Chair Saddler, he advised                                                               
there  are light  and heavy  REEs; in  fact, light  REEs are  not                                                               
rare, and the mine  at Mountain Pass is a light  REE mine.  Bokan                                                               
Mountain is  unique in that  40 percent  of the deposit  is heavy                                                               
REEs,  which are  critical  to the  automotive  and green  energy                                                               
industries,  Boeing, and  the U.S.  Department of  Defense (DoD).                                                               
In  further  response to  Co-Chair  Saddler,  he said  the  Bokan                                                               
Mountain deposit could supply about  one-half of the current U.S.                                                               
demand for dysprosium.                                                                                                          
                                                                                                                                
2:32:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON  asked  why  the  U.S.  Department  of                                                               
Homeland Security (DHS) is interested in the project.                                                                           
                                                                                                                                
MR.  COLLISON  said the  main  interest  is  from DoD,  which  is                                                               
interested  in the  technology of  the production  of dysprosium,                                                               
and has agreed to  fund Ucore's pilot plant.    He was unaware of                                                               
interest from DHS.                                                                                                              
                                                                                                                                
CO-CHAIR SADDLER opened public  testimony, and after ascertaining                                                               
no one wished to testify, closed public testimony.                                                                              
                                                                                                                                
2:34:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE JOHNSON  pointed out China's  REEs are mined  on a                                                               
large plain, and the procedure is  to remove two feet of surface,                                                               
process  that, and  return the  earth.   This  procedure is  very                                                               
disruptive environmentally, without  protections for ground water                                                               
or air,  and unhealthy for  people and the environment.   Because                                                               
REEs are very  valuable and compact, a small shaft  mine has very                                                               
little  environmental  impact and  the  tailings  are mixed  with                                                               
concrete  for   fill.    He   opined  this  type  of   mining  is                                                               
environmentally  as  un-intrusive  as possible.    Representative                                                               
Johnson relayed his knowledge of  REEs began several years ago at                                                               
a seminar on REEs that was  focused on batteries and their use in                                                               
hybrid cars and  micro-engines.  He restated his  support for the                                                               
resolution,  saying  "this  is a  totally  different  outlook  on                                                               
mining than anything we've seen in Alaska."                                                                                     
                                                                                                                                
REPRESENTATIVE P.  WILSON added  that the  refining process  is a                                                               
new process and completely different than  in the past.  She said                                                               
the mine  will expand economic  activity in Southeast and  can be                                                               
done in an environmentally safe manner.                                                                                         
                                                                                                                                
2:37:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE moved  to report  the House  committee substitute                                                               
for  CSSJR  8,  Version  28-LS0324\P,  Bullock,  4/8/13,  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal  notes.  There  being no objection, HCS  CSSJR 8(RES)                                                               
was reported from the House Resources Standing Committee.