Avalon Rare Metals Inc. (TSX and NYSE-Amex: AVL) is pleased to issue this
Industry Bulletin to share with our readers some perspectives on rare
earth market trends presented at the recent Metal-PagesTM
Minor Metals and Rare Earth Conference held in Beijing, China on September
13-17, 2011, and some perspective on other recent research commentary on
the rare earth industry.
The Metal-PagesTM Conference
was attended by some 300 delegates, from around the world and may have
been the best-attended rare earth conference to date. Vice President of
Sales & Marketing, Pierre Neatby,
represented Avalon at the four-day conference and addressed the delegates
with an update on the rapid progress Avalon is making on its Nechalacho Heavy Rare Earth Project.
Independent rare earth market analyst, Dudley Kingsnorth
(IMCOA), also addressed the conference, providing an update of his
supply-demand forecast to 2015. Kingsnorth has
reduced his estimate on total rare earth demand in 2015 to approximately
170,000 tonnes of rare earth oxide per annum (tpa), from 195,000 tpa nine
months ago. Kingsnorth believes the
extraordinarily high prices have reduced demand in some applications
where substitution is possible, citing the example of rechargeable
batteries where the lithium ion battery can replace the nickel-metal
hydride battery which uses the light rare earth lanthanum. Kingsnorth also notes that the economic slowdown
being experienced in many parts of the world will soften demand in the
short term but he adds that long-term demand will continue to grow,
forecasting 240,000 to 280,000 tpa of global
demand in 2020.
Kingsnorth emphasized that the heavy rare
earth elements europium, terbium, dysprosium, and erbium along with the
light rare earth neodymium will continue to be in short supply.
Dysprosium was singled out by several conference speakers as an element
whose future supply is a significant concern.
Another prominent theme was the hundreds of new rare earth
exploration projects being promoted around the world. Several speakers
noted that, regardless of their size and grade, very few new deposits
discovered would ever achieve production due to the relatively small size
of the global market outside China (50,000 tonnes
in 2015 according to Kingsnorth). The consensus
view was that perhaps four to six new producers might emerge outside
China to serve this demand over the next five to ten years.
In an interview last week on BNN's The Commodities Report, Avalon's
President, Don Bubar, reminded viewers that
given the small size of the rare earths market outside China, the
opportunity to serve this market is really only open to the few first
producers or early movers to bring new supply to the market. In this
regard, Avalon is very well positioned, having the most advanced heavy
rare earth development project in the world outside China, with the
potential to bring a significant new supply to the market by 2015.
Further, Bubar observed "much of
the recent research commentary published on the rare earths industry does
not discuss the importance of early mover advantage to the business
opportunity nor highlight it as a risk factor for investors." To be
considered "advanced," the consensus view is that a rare earths
project must have at least produced a positive pre-feasibility study. Kingsnorth sets the bar even higher stating that only
those projects where a successful pilot plant trial has been completed
can be considered "advanced." The fact is, very few of the
hundreds of exploration projects around the world being characterized as
"advanced" by some analysts, actually
meet either of these criteria.
If you have any comments or questions on this article or the rare
earths generally, please do not hesitate to contact Avalon directly at ir@avalonraremetals.com..
ABOUT AVALON RARE METALS INC.
Avalon
Rare Metals Inc. (TSX & NYSE Amex: AVL) is a mineral
exploration and development company focused on rare metals deposits in
Canada. Its flagship project, the 100%-owned Nechalacho
Deposit, Thor Lake, NWT, is emerging as one of the largest undeveloped
rare earth elements resources in the world. Its exceptional enrichment in
the more valuable 'heavy' rare earth elements, which are key to enabling
advances in green energy technology and other growing high-tech
applications, is one of the few potential sources of these critical
elements outside of China, currently the source of 95% of world supply.
Avalon is well funded, has no debt and its work programs are progressing
steadily. Social responsibility and environmental stewardship are
corporate cornerstones. Avalon's performance on community engagement in
the north earned it the 2010 PDAC Environmental and Social Responsibility
Award.
|