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Industry and Information Bulletins

Industry Bulletin: Industries, countries scrap over high-tech metals and a potential CleanTech "Perfect Storm"

April 13, 2009

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 of various rare and strategic metals. In this edition, we report on the growing concerns around the risk of raw material supply shortages in realizing the full implementation of a number of CleanTech energy solutions.

In a recent (April 7th) Agence France-Presses (AFP) article entitled Industries, countries scrap over high-tech metals, reports on the findings of a recent report from Germany's IZT and Fraunhofer institutes for the economy ministry:

"As demand booms for ever dwindling stockpiles of rare metals used in high-tech appliances, industries and countries are scrambling to secure their supplies, according to German research. Indium, germanium, scandium, gallium may not be household names ... yet, they are vital components in the flat-screen displays, mobile phones and solar panels being snapped up by technology-hungry consumers. Demand for these metals is set to explode over the next two decades"

The article describes the demand for a range of rare metals as well as China´s grip on their supply. The article also anticipates that production may struggle to keep up with demand with the attendant threat of higher prices. The article goes even further in quoting Rolf Kreibich, IZT´s Scientific Director, calling for government intervention to ensure adequate supply at reasonable prices,  "If the G20 (group of leading industrial and developing nations) can manage to regulate something as intangible as the financial markets, it should be possible for metal."

If you would like to read the complete AFP article, please click on
http://news.my.msn.com/sci-tech/article.aspx?cp-documentid=3069077

The following day (April 8th), Deborah Cohen, who covers small business for Reuters.com, noted in her article "Perfect storm" puts clean tech in investor sights:

"As the (economic stimulus) tide from Washington flows toward clean technology, investors increasingly are dipping their toes in the sector, making it the fastest growing area for venture capital investment last year. The Venture Capital Association, a trade group, says venture capital money in clean technology rose 54 percent to $4.1 billion. That compares to just $444 million in 2004 and is music to the ears of start-up ventures ranging from makers of solar panels to electric cars and technology that cleans the air at traditional coal-fired electric plants.

Fuelled by a $787-billion U.S. economic stimulus plan with significant incentives for green initiatives, the race to secure start-up funds dedicated to sustainable ventures is heating up as a multitude of companies try to capitalize on the heightened awareness toward the environment and social responsibility." "You have kind of a perfect storm where you see technology at the point where it can actually be commercialized and the government recognizing the need," says Emily Mendell, the group's vice president of strategic affairs.

Cohen´s article does not, however, address the very real risk of supply shortages in the rare metals needed to produce these new clean technologies. As Jack Lifton has frequently pointed out in his recent articles on resourceinvestor.com, unlike the Europeans, America seems oblivious to the raw material supply issue.

Clearly, this factor could create an even more powerful perfect storm than that contemplated by Emily Mendell in the Cohen article.

If you would like to read Deborah Cohen´s complete article, please click on
http://www.reuters.com/article/smallBusinessNews/idUSTRE5383C220090409

Avalon is well positioned to benefit from this growing demand for a diversified supply of rare metals through the development of its large rare metals resources at the Lake Zone deposit, Thor Lake, NWT. These include Rare Earth Elements, Yttrium, Gallium, Zirconium, Hafnium, Tantalum and Niobium. A major work program is in progress to produce a pre-feasibility study in 2009, which could lead to production by 2013, if feasibility studies are positive and financing can be arranged.  www.avalonraremetals.com

This story has already been posted at www.raremetalblog.com . If you have any comments or questions on this article or the rare earths generally, please do not hesitate to post them on the blog or feel free to contact the company directly at office@avalonraremetals.com.