In our ongoing efforts to provide you with broader communications
and industry information, we are pleased to issue another Industry Bulletin
discussing recent trends in the markets that are driving the growth in
demand for various rare and strategic metals. In this edition, we focus on
the significance of the launch of the Montreal Climate Exchange on May 30,
As reported by Paul Brant of the National Post on April 22nd, "May 30
is opening day for trading carbon dioxide equivalent units at the new Montreal
The Montreal Climate Exchange, or 'MCeX' is a joint venture of the Montreal
Exchange and the Chicago Climate Exchange (est'd. 2003), the latter being
"North America's only and the world's first global marketplace for
integrating voluntary legally binding emissions reductions with emissions
trading and offsets for all six greenhouse gases ("GHG"; e.g.
carbon dioxide)". Effectively, these Exchanges are financial
institutions whose objectives are to apply financial incentives to advance
social, environmental and economic goals.
The primary regulatory framework that underlies the new market is what is
referred to as a "cap-and-trade" system. As briefly explained in
Fasken Martineau / Perkins Cole's recent issue of Climate PERSPECTIVES
"What Is a Cap and Trade Program?
Cap and Trade is market based-regulation in which governments establish
maximum GHG emissions, and distribute or auction emission allowances
permitting emissions up to but not exceeding the cap. The allowances
decrease with time to meet the government's target future emission levels.
For each compliance period, regulated emitters must remit allowances equal
to their actual emissions. Emitters with excess emissions or excess
allowances may "trade" them with others in market transactions.
Each program determines its own emission goals, regulated sectors, level
and allocation of allowances, and methods to verify compliance and regulate
Canada is taking aggressive action to achieve an absolute 20% reduction in
GHG by 2020, and 60-70% by 2050. Regulated industries will be required to
improve the 'emissions intensity' of their existing facilities by 18% by
2010 and a 2% continuous improvement each year thereafter. Intensity
reductions of this magnitude are expected to yield absolute emission
reductions even as the economy grows.
In response to the growing concern for the environment and economic
imperatives, there is a surging demand for clean energy, the efficient use
of resources and sustainable technologies.
How does these new market drivers and innovative technologies increase the
demand for rare metals and specialty minerals? As Avalon has shared in
previous Bulletins, the rare metals are fundamentally important alloying
elements in making lighter, stronger, and new innovative materials
available to efficient solar power, rechargeable batteries, permanent
magnets for hybrid vehicles, catalytic converters, communications, glass
and structural material that will help reduce energy intensity and our
overall carbon foot print.
These initiatives are becoming ever so important in meeting soon-to-be
regulatory/compliance requirements, which introduce economic incentives and
impacts. As presented at the 2nd Annual Carbon Trading conference held in
Toronto last week, Blaine Kennedy of Sustainable Development Technology
Canada reported that the "Cleantech' segment grew from US$92.6B in
2006 and to $148.4B in 2007, and is expected to grow to US$450B by
2012". Quoting Blaine Kennedy again "
a stream of technologies with the
ability to have significant credit creation for
Susan McLean, Senior Manager, Strategic Initiatives of TSX Markets reported
at that same conference, that the "annualized 3 year return
(2004-2007) of leading Cleantech indices have significantly outperformed
standard benchmarks, with returns in the order of 30% (NASDAQ CleanEdge) to
44% (S&P Global Clean Energy). The FTSE Global ET enjoys returns in the
order of 30 plus %"
Avalon is well positioned to benefit from the new demand for rare metals
and specialty minerals through the development of its large rare metals
resources at the Thor Lake project in the Northwest Territories and lithium
resource at its Separation Rapids project near Kenora, Ontario.
For further information, please visit Avalon's website at http://www.avalonventures.com
If you have any comments or questions, please do not hesitate to post them
on Avalon's official investor relations hub at http://www.agoracom.com/IR/Avalon .
AGORACOM Investor Relations