INDUSTRY BULLETIN: Avalon participates in Metal Events' 10th annual International Rare Earths Conference in Singapore

November 19, 2014

In our ongoing efforts to provide you with broader communications and industry information, Avalon Rare Metals Inc. is pleased to issue this Industry Bulletin, which reports on the 10th International Rare Earths conference held in Singapore, November 11 to 13, 2014.

There were 168 registered delegates for the event, compared to 200 last year when it was held in Hong Kong. Avalon was represented by Vice President of Sales and Marketing, Pierre Neatby. The conference was held in Singapore to accommodate a site visit to Lynas’ LAMP rare earth processing plant in Pahang, Malaysia. Avalon was again recognized as a title sponsor for the two luncheons at the conference.

The first three speakers of the conference discussed the current and expected future state of the rare earth market. Jean-Claude Steinmetz, Chief Commercial Officer of Lynas, Geoff Bedford, CEO of Molycorp, and Kerry Satterthwaite, Senior Analyst of Roskill all had similar views on the future demand of rare earths, each predicting total growth of 5% to 9% per year for rare earths as a whole, with the highest growth coming from magnets end use, and lower growth coming from phosphors for lighting applications. Magnets used for wind turbines, hybrid and electric vehicles and other sectors will help consumption of neodymium, praseodymium, dysprosium and terbium. The replacement of fluorescent light bulbs by LED light bulbs could limit the demand growth for yttrium, europium and terbium in phosphors for lighting applications. Roskill’s Satterthwaite was of the opinion that phosphor demand would grow to 2018, but at a lower rate.

The producers and potential producers of light rare earths generally downplayed the potential growth in demand for heavy rare earths, while consumers of heavy rare earths continued to express concern about security of supply. They noted the efforts to reduce consumption of elements like dysprosium, but this appears motivated more by uncertainty over security of supply and price and not its performance characteristics. Dysprosium and other heavy rare earths remain vital in a number of market applications.

The current market environment of lower prices and relative stability of rare earths supply outside China has reduced the urgency for consumers to facilitate the emergence of a rare earth supply chain outside China. Unfortunately, China’s virtual monopoly on rare earth supply continues and the risk of future supply shortages and higher prices are just as great today as they were in 2010-11, when prices reached their peak. In fact, Ms. Satterwaite of Roskill noted that 2014 supply-demand for rare earths is actually tighter now than it was in 2011.

“Avalon continues to have discussions with consumers interested in off-take and with potential investors,” comments Mr. Neatby, “The market has lost some of the sense of urgency it felt a couple of years ago, but consumers reiterated they want to see a supply chain, complete with heavy rare earths, emerge outside China.”

Avalon Rare Metals Inc. (TSX & NYSE MKT: AVL) is a mineral development company focused on rare metal deposits in Canada, with three advanced stage projects. Its 100%-owned Nechalacho Deposit, Thor Lake, NWT is exceptional in its large size and enrichment in the scarce 'heavy' rare earth elements, key to enabling advances in clean technology and other growing high-tech applications. Avalon is also advancing its Separation Rapids Lithium Minerals Project, Kenora, ON and its East Kemptville Tin-Indium Project, Yarmouth, NS. Social responsibility and environmental stewardship are corporate cornerstones.