The state's encouragement of Alaska's rare earth minerals industry appears to be starting to pay off.

Ucore Rare Metals Inc. announced Monday it had staked claim to about 11,400 acres in the Ray Mountains in central Alaska, an area the company thinks holds significant potential for the minerals. Ucore already is at work at Bokan Mountain, the state's largest active development site for rare earth elements, or REEs.

Ucore president and CEO Jim McKenzie said in a prepared statement that the state has shown "tremendous support" for the Canadian company and its Bokan Mountain operation on Prince of Wales Island, southwest of Ketchikan.

"With this in mind, we've elected to even further invest in Alaskan REE exploration and development," McKenzie said, adding that he believes the Ray Mountains, along with Bokan, to hold "two of the most prospective remaining REE exploration targets."

Gov. Sean Parnell has been an enthusiastic supporter of expanding Alaska's REE industry. The minerals are used in a variety of strategic and industrial applications, from defense and military weapons systems to hybrid vehicles to computers and cell phone technology. China has been the main producer of REEs, accounting for more than 90 percent of the world's supply. But as China more closely controls the flow of the metal and prices go up, other countries including the U.S. have stepped up efforts to find and develop more producing mines.

Alaska Sens. Lisa Murkowski and Mark Begich recently joined with a number of other senators to co-sponsor a bill that would require the U.S. Geological Survey to identify REEs that are critical to the U.S economy and come up with policies to address their supply.

Ucore's Bokan Mountain is on federal land but the recently acquired acreage in the Ray Mountains is on state land, generally north of Tanana and south of the Kanuti National Wildlife Refuge . The state's fiscal year 2012 budget, recently passed by the Legislature, contained about $500,000 sought by Parnell for a strategic assessment of REEs on state lands.

According to Ucore, both Bokan Mountain and the Ray Mountains site contain significant deposits of dysprosium, a mineral that has been identified by the U.S. Department of Energy as important for energy and defense-related technologies. That mineral currently is produced only in China, Ucore said.

Curt Freeman, a geologist and owner of the Fairbanks-based mineral exploration company Avalon Development Corp., said Ucore's latest acquisition is a sign that industry is responding favorably to the state's encouragement as well as renewed federal interest.

"Certainly there's cognizance at the federal level that we are very much dependent on these elements for military as well as civilian applications," Freeman said. "The demand is up, the prce is up and the supply is limited."

"How does Alaska play in that? Alaska is relatively well endowed with minerals, there's just not a lot of activity," he said. "The state's encouragement of this industry is the kind of thing companies from Outside are looking for."

Contact Patti Epler at patti(at)alaskadispatch.com