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Industry Bulletin: Earth-Friendly Elements, Mined Destructively (NY Times, December 26, 2009)

January 4, 2010

On December 26, 2009, The New York Times featured the article "Earth-Friendly Elements, Mined Destructively" by Keith Bradsher, the Times' Hong Kong bureau chief. Mr. Bradsher first published on the rare earth elements story September 1, 2009, drawing attention to the vital importance of the rare earths in green technology and China's control of 95% of the world's primary supplies.

The December 26th article highlights the strategic importance specifically of the heavy rare earth elements while pointing out that these scarce commodities are presently only sourced from one district in southeastern China using environmentally-destructive mining methods. The story graphically describes some of the severe environmental impacts on the local people being caused by uncontrolled illegal mining and processing of the unusual low-grade "ionic clay" heavy rare earth ore.

The Chinese government is presently attempting to curtail this illegal heavy rare earth production which will undoubtedly result in shortages of the heavy rare earths until new sources of supply come on stream. China is already reacting by imposing increasing restrictions on the export of unprocessed heavy rare earth materials, creating opportunities for new producers to emerge outside of China.

Avalon is ideally-positioned to become that new producer as its flagship Nechalacho Rare Earth Elements Deposit, at Thor Lake, Northwest Territories, is emerging as one of the largest and richest potential new sources of heavy rare earth elements in the world. Importantly, being a hard rock mineral resource geologically unlike the Chinese ionic clays, means it will not create the same environmental impacts that are the cause of concern in Southern China. Further, Avalon is committed to developing this world class deposit in an environmentally responsible manner and its current practice at the project site has already earned praise from local community leaders. (See news coverage of July 2009:

With a pre-feasibility study on the deposit due for completion this spring, the Nechalacho deposit is already well-advanced towards achieving initial production of heavy rare earths by 2014.

Earth-Friendly Elements, Mined Destructively, By KEITH BRADSHER

GUYUN VILLAGE, China Some of the greenest technologies of the age, from electric cars to efficient light bulbs to very large wind turbines, are made possible by an unusual group of elements called rare earths. The world's dependence on these substances is rising fast.

Just one problem: These elements come almost entirely from China, from some of the most environmentally damaging mines in the country, in an industry dominated by criminal gangs.

Western capitals have suddenly grown worried over China's near monopoly, which gives it a potential stranglehold on technologies of the future.

In Washington, Congress is fretting about the United States military's dependence on Chinese rare earths, and has just ordered a study of potential alternatives.

Here in Guyun Village, a small community in southeastern China fringed by lush bamboo groves and banana trees, the environmental damage can be seen in the red-brown scars of barren clay that run down narrow valleys and the dead lands below, where emerald rice fields once grew.

Miners scrape off the topsoil and shovel golden-flecked clay into dirt pits, using acids to extract the rare earths. The acids ultimately wash into streams and rivers, destroying rice paddies and fish farms and tainting water supplies.

On a recent rainy afternoon, Zeng Guohui, a 41-year-old laborer, walked to an abandoned mine where he used to shovel ore, and pointed out still-barren expanses of dirt and mud. The mine exhausted the local deposit of heavy rare earths in three years, but a decade after the mine closed, no one has tried to revive the downstream rice fields.

Small mines producing heavy rare earths like dysprosium and terbium still operate on nearby hills. "There are constant protests because it damages the farmland - people are always demanding compensation," Mr. Zeng said.

"In many places, the mining is abused," said Wang Caifeng, the top rare-earths industry regulator at the Ministry of Industry and Information Technology in China.

"This has caused great harm to the ecology and environment."

There are 17 rare-earth elements some of which, despite the name, are not particularly rare but two heavy rare earths, dysprosium and terbium, are in especially short supply, mainly because they have emerged as the miracle ingredients of green energy products. Tiny quantities of dysprosium can make magnets in electric motors lighter by 90 percent, while terbium can help cut the electricity usage of lights by 80 percent. Dysprosium prices have climbed nearly sevenfold since 2003, to $53 a pound. Terbium prices quadrupled from 2003 to 2008, peaking at $407 a pound, before slumping in the global economic crisis to $205 a pound.

China mines more than 99 percent of the world's dysprosium and terbium. Most of China's production comes from about 200 mines here in northern Guangdong and in neighboring Jiangxi Province.

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