The COVID-19 crisis is forcing countries to find suppliers outside of China. Here’s how that turned out badly for firms that tried for a decade to take on their state-controlled mining machine
A decade ago, the future for Toronto-based Avalon Advanced Materials Inc. looked bright. Its flagship Nechalacho development project in the Northwest Territories was on track to produce rare-earth elements, crucial ingredients in a wide array of technologies from wind turbines to cruise missiles to MRI machines.
Avalon’s market capitalization would eventually climb close to a billion dollars. Today things look very different. Avalon’s value has dwindled to just $26-million, its shares trade for pennies and Nechalacho lies undeveloped.
“Unfortunately the bubble burst before we could get all the capital in place,” said Don Bubar, Avalon’s chief executive officer.
Avalon could be considered one of the lucky ones – it still exists. Many other Canadian rare-earth exploration companies did not survive. Chinese state-controlled producers have dominated the market for decades, crushing most contenders.
But amid escalating Sino-American tensions, global customers are searching for alternative sources of rare earths with a renewed sense of urgency.
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