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Avalon CEO on Hot Rare Earth Metals Trade

Tuesday, 4 Jan 2011 | 2:02 PM ET

Rare earth metals has been a hot trade, as of late and on Tuesday, Avalon Rare Metals CEO Don Bubar appeared on the "Fast Money Halftime Report" to talk about it.

The Toronto-based company is currently constructing a mine, but Bubar said it won't be operational until 2015. Asked by CNBC's Melissa Lee if it may open any earlier, Bubar said it wouldn't be likely.

Regarding production, Lee noted that 23 percent of total rare earths produced by Avalon is heavy rare earths. That's notable because just 1 percent of rare earths produced by competitors Molycorp and Lynas are heavy rare earths. Bubar said that puts Avalon at an advantage because heavy rare earths are more scare and sell at a higher price. In addition, he said there is diminishing supply and few short-term prospects for additional heavy earths to come into the market — at least until Avalon's new mine opens in four years.

Call to the Floor: Avalon Rare Metals CEO
Don Bubar, CEO of Avalon Rare Metals, goes on the record with the "Fast Money" traders.

"We think that heavy rare earth prices could appreciate from here," Bubar said. "It looks pretty clear that demand is going to outstrip supply for some time to come and it's definitely getting the attention of policy makers in the U.S. and elsewhere."

To see the full conversation with Bubar, watch the video.

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Trader disclosure: On Jan. 4, 2011, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Cortes is short Gold. Cortes is short Corn. Cortes is long USD vs. the Yen. Cortes is short (LVS). Cortes is short (BCS). Cortes owns (TSN). Cortes owns (EXC). Cortes is short (XRT) vs. the S&P. Cortes is short (XHB) vs. the S&P. Joe Terranova owns (GM), (C), (VRTS), (UPL), (PEP), (OXY) and (GS). Joe Terranova owns (SLW) puts. Joe Terranova owns (GLD) puts. Jon Najarian owns (AAPL), is short (AAPL) calls. Jon Najarian owns (AA), is short (AA) calls. Jon Najarian owns (BP), is short (BP) calls. Jon Najarian owns (BBY), is short (BBY) calls. Jon Najarian owns (BAC), is short (BAC) calls. Jon Najarian owns (GS), is short (GS) calls. Jon Najarian owns (GM), is short (GM) calls. Jon Najarian owns (MSFT), is short (MSFT) calls. Jon Najarian owns (V), is short (V) calls. Jon Najarian owns (CSCO), is short (CSCO) calls. Jon Najarian owns (WMT), is short (WMT) calls. Jon Najarian owns (VZ), is short (VZ) calls. Jon Najarian owns (FMCN).

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