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Industry Bulletin: Avalon Actively Participates in U.S. REE Supply Chain Discussions at Phosphor Global Summit 2010 and TREM'10 Conferences

March 30, 2010

In this Industry Bulletin, we present some of the highlights from the TREM'10 (Technology and Rare Earth Metals for National Security and Clean Energy) policy conference held in Washington, DC on March 17th and 18th, and the Phosphor Global Summit 2010 technical conference held in San Diego, CA on March 23rd to 25th where security of supply issues with respect to the rare earth elements ("REE") were front and centre. Readers will recall that phosphors are used in lighting and are made from heavy rare earth elements such as europium, terbium and yttrium.

TREM'10 - Washington, DC

TREM'10 attracted some 150 delegates including senior US government policy makers and bureaucrats, technology companies that use REE, industry analysts, investors and mineral developers from the US, Canada, Australia, Japan and China.

A highlight was US Representative Mike Coffman (R-CO) addressing the gathering to describe the new bill he introduced into the U.S. House of Representatives "to address the looming rare earths crisis." The proposed legislation is called the Rare Earths Supply-Chain Technology and Resources Transformation Act of 2010 (RESTART Act). This is a first step in working to pass the proposed Bill into law. The Act would require that the United States develop a policy to "take any and all actions necessary to ensure the reintroduction of a competitive domestic rare earth supply chain, to include the reintroduction of the capacity to conduct mining, refining / processing, alloying and manufacturing operations using domestic suppliers to provide a secure source of rare earth materials as a vital component of national security and economic policy."

Amongst other things, the RESTART Act would provide government-backed loan guarantees for domestic rare earths supply-chain development and create a national stockpile within the Department of Defense for important rare earth materials. There is, of course, no certainty that the law will be passed but it will certainly help raise awareness about the issue amongst U.S. lawmakers. The delegates were also addressed by David Sandalow, the Assistant Secretary of Energy for Policy and International Affairs at the US Department of Energy who announced "The Department of Energy will develop its first-ever strategic plan for addressing the role of rare earth and other strategic materials in clean energy technologies."

Avalon's President & CEO Don Bubar sat on a three-person panel along with two Australian representatives to discuss the role of imports in developing primary supply chain solutions. Mr. Bubar made the case for Canada and Nechalacho being that solution due to the close trading relationship that the two counties already enjoy under NAFTA and the importance of mineral and energy commodity exports generally to the Canadian economy. "U.S. consumers need not be concerned about Canada imposing "Chinese-style" restrictions on exports of key raw materials," commented Mr. Bubar, "Canada can produce many commodities including rare earths in quantities far exceeding domestic needs and accordingly, exports to the U.S., our largest trading partner, will undoubtedly remain vital to a healthy Canadian economy."

Phosphor Global Summit 2010 - San Diego, CA

Phosphor 2010 attracted over 100 delegates from some 12 countries representing phosphor producers, lighting manufacturers, researchers and two rare earth raw material suppliers (Avalon and Molycorp Minerals). While this conference is primarily focused on advanced developments in phosphor and lighting application technologies, there is a significantly growing interest and concern in this sector with regard to future rare earth supply, particularly the supply of the heavy rare earth elements, which are key to the technology.

Avalon, represented by Ian London, who serves as Avalon's market development & energy advisor, delivered the opening remarks "Growing Demands and the Delicate Balance for Rare Earth Supply". The presentation included an overview of key supply/demand fundamentals for REEs needed for the relatively small, but rapidly growing, high value phosphor industry. During his presentation and subsequent discussions, Mr. London also elaborated on several key raw material supply realities including:

         The recent proliferation of announcements from various small cap public companies about new rare earth element "discoveries" that, despite optimistic projections from project proponents, face long development timelines and significant technical challenges before they can be realistically considered as potential new supply sources. Reality is most will not succeed. Furthermore, the delegates were reminded that most new rare earth developments were predominately light rare earth deposits, respecting the needs of the phosphor materials sector that are primarily reliant on heavy rare earths such as europium, terbium, gadolinium and yttrium.

         The fact that there are counter pressures building on the supply-demand balance of individual REEs with the accelerating demand from new REE-based technologies and other industry sectors.

         How industry and new government policy initiatives or incentives are being considered to ensure that a reliable long-term domestic supply of critical raw materials, such as the heavy rare earths and including recycling, are developed and maintained.

The conference addressed a broad range of related subjects, including Europe's staged implementation toward banning all incandescent light bulbs by 2012 and the continued lowering of energy-consumption standards across Europe and North America. Lighting consumes in the order of 20 percent of all energy generated in the world today (25 percent in the US), which is driving the R&D and the implementation of lower-energy consuming compact fluorescent (CFL's) and light emitting diodes (LEDs) technologies, both of which rely on heavy rare earth-based phosphors.

At both conferences, Avalon emphasized that with its Nechalacho Rare Earth Elements deposit at Thor Lake, NWT, being the only known North American REE deposit containing economically significant quantities of the heavy rare earths, it is in a unique position to play a key role in developing a North American solution to the emerging U.S. REE supply chain "capability gap".

If you have any comments or questions on this article or the rare earths generally, please do not hesitate to post them on www.raremetalblog.com or feel free to contact the company directly at ir@avalonraremetals.com.

ABOUT AVALON RARE METALS INC.
Avalon Rare Metals Inc. (TSX:AVL) (OTCQX:AVARF) 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.