Yellowknife city councillors gave a warm reception Monday to a mining venture being proposed by Avalon Rare Metals Inc., which wants to mine for minerals that are used in environmentally friendly products like electric cars.

Officials with Avalon spoke to council Monday about its Thor Lake project, located about 100 kilometres southeast of the N.W.T. capital.

The site has a deposit containing rare elements such as terbium, which can be used to make wind turbines and electric cars. Those minerals are currently produced only in China, company officials say.

"Things that industry's looking at, in terms of improving or decreasing our output of CO2, relate to technological advances that require rare earths and other rare minerals," said Bill Mercer, Avalon's vice-president of exploration.

Avalon is looking at the feasibility of setting up a mine and processing facility at Thor Lake, as well as building transportation routes to the mine.

Councillors welcomed Avalon's work to explore for minerals in the area, as well as the company's efforts to consult with communities.

"I'm very interested in and also very encouraged to see the emphasis you're putting in early on in community engagement and consultation," Coun. Paul Falvo said at Monday's meeting.

If it goes ahead, Mercer said a Thor Lake mine could create as many as 400 jobs and begin production as early as 2013.

"Normally people think of mining as something that's against the environment," he said.

"Here it is that we can not only do things the right way, but we can actually produce something that's essential to a greener economy, greener energy, and so on. So this is a big selling point, and it creates a bridge with people who might otherwise not be so friendly towards the mining industry."