- The Washington Times - Tuesday, August 2, 2011

Elk Creek, Neb. (population 112), may not be so tiny much longer. Reports suggest that the southeastern Nebraska hamlet may be sitting on the world’s largest untapped deposit of “rare earth” minerals, which have proved to be indispensable to a slew of high-tech and military applications such as laser pointers, stadium lighting, electric car batteries and sophisticated missile-guidance systems.

Canada-based Quantum Rare Earths Developments Corp. last week received preliminary results from test drilling in the area, showing “significant” proportions of “rare earth” minerals and niobium.

The only people more excited than Quantum? The residents of Elk Creek, where nearly one in seven people live under the poverty line, but whose economy has been booming ever since the company showed up late last year to start laying the groundwork for a possible mining bonanza.

“It’s been a very, very positive experience for our community,” said state Sen. Lavon Heidemann, an Elk Creek farmer. “When Quantum came in here, they put money in the local community. And any time you have money flowing in a small town, that’s a positive.”

The potential mining operation, the first in the U.S. in a decade, could have an international impact as well. U.S. officials and lawmakers in Congress have been eager to break the near monopoly on global production of the 17 rare-earth elements in China, which has shown its willingness to use its power in the market for political ends.

Quantum acquired a circular piece of land - a bit more than 4 miles in diameter - near Elk Creek late last year. The land, which the U.S. Geological Survey projects may have one of the world’s largest deposits of niobium and rare earths, has since been poked, prodded and drilled to determine whether it held any niobium, which has never been mined in the U.S., or rare earths, which the U.S. has not mined in almost 10 years.

The local buzz

Boom times based on natural-resource strikes can disrupt a community and its economy, but it’s hard to find anyone in Elk Creek bad-mouthing the potential rare-earth bonanza.

“The whole community is behind Quantum,” said Greg Krueger, a local contractor. “When the drillers showed up this spring, people just opened their arms up.”

The town of Elk Creek consists of not much more than a Lutheran church, a village tavern and a grocery store called Scotty’s, owned by a local family. Even in the exploratory phase, Quantum has brought some big changes.

“They’ve rented houses, they go to our local grocery store for their food, and straight off they signed all of their leases with local farmers, just like they promised,” Mr. Heidemann said.

Mr. Krueger added that Elk Creek residents were eager to provide any help they could, including allowing the drills to be dragged across their land free of charge.

“It was, ‘What do you need? Where do you need to stay?’ Nobody is pessimistic, as far as thinking, ‘They’re here to destroy things,’ ” Mr. Krueger said.

“Elk Creek is a very small community,” he added. “And [Quantum] has provided a lot of business.”

The minerals

The Quantum project is the latest example of U.S. attempts to become less dependent on foreign sources for the obscure minerals found in few places on earth, but essential to a variety of modern gadgets.

The U.S. has relied on China for years for the 17 minerals that are defined as rare earths by the International Union of Pure and Applied Chemistry. Despite having such obscure names as praseodymium, promethium and samarium - no copper or zinc here - they are necessary for such routine contemporary technologies as magnets, laser pointers and miniature electronics, such as iPods.

“Without these minerals, our cellphones would be 3 pounds,” Quantum CEO Peter Dickie said.

The U.S. used to produce rare earths through the Mountain Pass Mine in California, but it was shut down in 2002, primarily because of environmental concerns, including the spillage of hundreds of thousands of gallons of water carrying radioactive waste into a nearby lake.

China has emerged as the world’s predominant supplier, controlling 97 percent of the global market for rare earths. In recent years, lawmakers have expressed concerns about China’s “rare earth” dominance, and these concerns were heightened when Beijing temporarily halted exports to Japan last year during a territorial dispute.

Another essential mineral Quantum hopes to mine is niobium, a steel strengthener used by the automotive and aerospace industries.

Using niobium, “you get a thinner, lighter, stronger steel,” Mr. Dickie said. “It’s important to the automotive industry, where they’re trying to get lightened-up vehicles” needed to meet fuel-economy standards without compromising safety.

The U.S. imports most of its niobium from Brazil, and has never mined it at home.

U.S. resources

Mineral mining has created many a boomtown in the West over the past two centuries, such as the Klondike gold rush and the copper industry of Butte, Mont. But some places have been left holding the bag, or turned into ghost towns, when the deposits were tapped out, leaving behind environmental damage from storage, mining processes and waste.

Environmental groups have remained silent on the Quantum project in Nebraska, but rare earths are used in many aspects of “green” technology, including hybrid-engine cars and wind turbines.

The Sierra Club of Nebraska has declined to comment on the mine until production begins.

Said Brian McManus, a spokesman for the Nebraska Department of Environmental Quality, “The project is still in early stages, so we don’t have a lot of detail on it.”

He added that the permits the company has obtained will help to make sure they stay environmentally cautious.

The U.S. Environmental Protection Agency did not return requests for comment.

Although studies have shown the U.S. has 13 million metric tons of rare-earth minerals, National Mining Association spokeswoman Carol Raulston said it does not mine any of it - partly as a result of the difficulty of obtaining permits.

“One of the key problems that investors tell us about is that the permitting regime in this country is so complicated and time-consuming that it has hurt investments here in the United States,” Ms. Raulston said.

Mr. Dickie said a bill approved by the House Natural Resources Committee late last month may help Quantum and other U.S. mining operations.

The National Strategic and Critical Minerals Policy Act of 2011 states that it is “essential to the national interest to ensure an expanding and competitive manufacturing industry built upon a healthy mining and minerals industry.”

The bill “helps to ensure a steady supply in the event of a breakdown of a normal supply chain, but the other thing that’s important to us is that it has brought to the forefront of the minds of politicians and users - who are, quite frankly, everybody - the knowledge that these materials are critical,” Mr. Dickie said.

On July 5, the U.S. and European Union won a major case against China when the World Trade Organization ruled that China was engaging in restraint of trade by keeping world supplies low on several other minerals on which it is the major supplier. Trade analysts said that ruling could set a precedent for a future rare-earth minerals case that also could loosen China’s grip on that market.

But Rep. Mike Coffman, Colorado Republican, who fought for rare-earth amendments on the bill, said that it is not enough to open up supplies from abroad.

“It’s important to develop other sources [for rare earths] in the United States and not be so reliant on China,” Mr. Coffman said. “It’s a bipartisan bill with a very strong chance of passage.”

Looking forward

Elk Creek residents say they know the riches won’t pour in overnight. They don’t care.

“It’s not short and sweet,” Mr. Dickie said of the process to open a mine. “There’s obviously regulatory and permitting issues that you run into.”

Mr. Dickie said the next step is to get results of metallurgical testing, followed by a full feasibility study.

He said the date for mine construction to begin is “fluid,” but hopes it will be in the next couple of years.

Minerals and money flow aren’t the only benefits to Elk Creek of the proposed Quantum mine: The project will create several hundred jobs in addition to the handful it created while test-drilling proceeds.

Other companies racing to exploit the rare-earth rush include Molycorp, which is attempting to reopen the former Mountain Pass Mine in California and recently secured the environmental permits to proceed there.

Molycorp did not return requests for comment on its permit, but Quantum does not see the California mine as a threat.

“They’ve been processing some of the mine tailings and building new facilities. It’s been very minor production,” Mr. Dickie said. “We don’t anticipate that we could supply the entire U.S. requirement of rare earths, so obviously there’s room for several other players.”