Avalon waiting for prices to rise
CEO says project still in the game
Karen K. Ho
Northern News Services
Monday, October 19, 2015
THOR LAKE
Avalon Rare Metal's Nechalacho project near Thor Lake may have been suspended but the company said it is not completely pulling out of the territory.
Avalon Rare Metals president and CEO Don Bubar speaks at the NNSL offices Oct. 14 citing low
commodity prices as the reason for suspending operations in the territory. - Karen K. Ho/NNSL photo |
President and CEO Don Bubar said his company's involvement in the territory has an uncertain future due to the current state of the rare earth industry and the diminished demand for materials but that the company is waiting for commodity prices to come around.
"Molycorp, who aspired to be the United States' first big primary producer in rare earths, failed to deliver to on the expectations they created in that marketplace," he said. "They filed for bankruptcy a few months ago and that was not well received by the investment community. It's hurt every company in the rare earths sector in terms of credibility of the business being able to make money."
"We've (been) forced to slow down and put (Nechalacho) on hold," he said.
In a letter sent to Erin Anderson, acting land use advisor for the Department of Lands, Avalon withdrew its application for a quarry permit for the Thor Lake Area on Sept. 8.
Bubar also said that currently no one is at the Nechalacho site, the company has gotten rid of everything and laid off approximately 45 part-time and full-time staff.
However, he said Avalon is in a position to wait for more favourable conditions with the current operation of its other two exploration projects located in Ontario and Nova Scotia.
Bubar said given the investment his company made in the NWT, typically they would have moved onto other projects in the region.
"We haven't because of the uncertain regulatory environment in the Northwest Territories," he said.
Bubar said the environmental assessment (EA) and permitting process now takes longer than four to five years, more than the period of commodity price cycles.
"It's almost impossible to get through the EA and permitting process in one cycle which means you probably need 15 years to take a project through exploration, development and production," he said. "It's a whole new ball game and be prepared to wait for the right circumstances. We're in that position right now."
Bubar also said that high estimates for the costs of extracting the rare earths have also been a deterrent to further work in the territory. The company is looking into other methods and partnerships with the Saskatchewan Research Council for extraction alternatives that are more efficient.
"We're going to put ourselves in a position to take advantage of that when it happens," he said.
