Avalon Rare Metals Inc. (TSE:AVL) Industry Bulletin: Chinese Production of Dysprosium to Be Temporarily Halted in Three Mining Districts

Toronto, Canada (ABN Newswire) - In its ongoing efforts to provide you with broader communications and industry information, Avalon Rare Metals Inc. (TSE:AVL) (PINK:AVARF) are pleased to issue this Industry Bulletin which provides its readers with an update and brief analysis on recently reported targeted rare earth production restrictions announced in China.

The state-run Xinhua News Agency reported Monday (September 5, 2011) that Ganzhou, the number one producer of dysprosium (Dy), a heavy rare earth that is vital to many magnet formulations, has ordered strict compliance with annual production quotas in three areas in southern China. Since they are believed to have already exceeded their annual quotas, production will likely be suspended until at least the end of the year.

Ganzhou, which produces dysprosium-based alloys in Jiangxi Province and elsewhere, sees potential for global dysprosium supply shortages in two to three years should China continue with its strict regulation of rare earth production.

The move comes despite the Japanese call for a softer Chinese approach to regulating rare earth production. Japan is concerned that reduced exports from China would lead to supply shortages for the metals and price hikes on products that use them. Alternative sources of dysprosium and other rare-earth metals will not be found quickly.

Rare earth production is active in the north, centering on the Inner Mongolia Autonomous Region, as well as in and around Jiangxi in the south. Production in the north has been controlled by major state-run companies, which have complied with the regulations. But down south, small and midsize operators have engaged in illegal production. To tighten control in the south, the Chinese government in January designated 11 locations in Jiangxi as mining areas subject to national planning.

Dysprosium is a fundamentally important additive in neodymium-iron-boron magnets (or Neo-Magnets), to raise the coercivity or strength, for demanding applications such as drive motors for hybrid electric vehicles and wind turbines (i.e. Dy allows the magnet to operate effectively at higher temperatures). Dysprosium additions to Neo-Magnets can represent as much as 6% of the weight of the magnet. The dysprosium addition also tends to improve the corrosion resistance of the magnet. According to Metal-Pages, dysprosium oxide FOB China is presently offered at US$2,300/kg, up from just US$100/kg two years ago.

International forecasters anticipate annual demand for dysprosium oxide of approximately 2,850 tonnes ( /- 20%) in 2105, for which there is expected to be a supply shortfall of 950 tonnes. Avalon's view is that its Nechalacho project, which is one of the world's largest and richest heavy rare earth deposits, will make a significant contribution to relieving the supply shortage when it is brought into production in late 2015. Avalon should produce approximately 270 tonnes annually of dysprosium oxide, and be, by far, the largest single producer of dysprosium in the world outside China.

About Avalon Rare Metals Inc.:

Avalon Rare Metals Inc. (TSX:AVL), (NYSE Amex:AVL) 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.

Source:

Avalon Rare Metals Inc.

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Avalon Rare Metals
Tel:  416-364-4938
Email: office@avalonraremetals.com 
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