The world is undergoing a massive transformation due to climate change; where does Neo Performance Materials fit in?
The decarbonization equation has two sides: one where we need to generate energy without adding to our carbon footprint, and another where we need to consume energy much more efficiently. EVs are the most visible manifestation of this, but we can also rely on better pumps, motors, and so on. This is where we can help.
Let me give you an example: a startling 10% of the world's energy is spent on moving water, whether it is clean water to drink, wash, cook with; or waste water. If all these pumps were converted to high-energy efficient ones, that figure would be reduced by about 40%. We collaborated with Grundfos, one of the world's largest pump manufacturers, ten years ago when they decided to develop a new pump for residential use. The pumps they sold over the past decade have saved enough energy to avoid the construction of two new power plants in Europe. We can achieve massive positive results by solving small problems, as long as we capture the benefits over millions of people and applications.
How has access to raw materials impacted your business in recent years?
Access to rare earths has been a challenge ever since we started 30 years ago. In fact, we got into the business because China was emerging with some fantastic resources in the north. In the 1980s, they invested massive amounts of money to develop resources and the associated technology, and we were the first foreign investor to go in and take control of two rare earth operations.This is why
China dominates the market, it is the result of successful five-year plans and an industrial strategy that recognized that rare earths were essential to develop their economy. China is also the largest consumer of rare earths, taking 60-70% of global production. Some believe that their success is due to their failure to adhere to ESG standards, but the reality is that they have some of the most stringent regulations, especially when it comes to Western companies.
Other parts of the world, such as Europe and North America, are now attempting to increase rare earth production. Is it possible for the West to compete at this point?
Our global footprint is a direct result of customer demand. It made sense to build a new facility in Thailand when JVC and Nidec decided to produce their micromotors for hard disk drives there, and serve other nearby projects, like Panasonic in the Philippines. I always say that if someone decides to set up shop on the Moon, it makes sense for us to follow suit - the idea is to supply customers where they actually need it. There is an ongoing effort now to shorten supply chains and many of our European customers have mentioned it. It has nothing to do with geopolitics, but rather with the fact that companies need resilient, circular, low carbon footprint and localized supply chains. This is a major reason why we decided to expand our footprint in Estonia.
Will you elaborate on that please, what is the plan for Estonia more specifically?
We already have a plant in Estonia, the only commercial operating rare earths producer in Europe. The production process is relatively complicated though. We buy raw materials from Russia (less than we used to and with a lot of difficulty, and have diversified our sources through the American company, Energy Fuels). We separate the rare earths and recover neodymium and praseodymium, ship them to our plant in Thailand and convert them to metals, alloys and magnets, which then come back to Europe.
All project designs are completed and we are going throguh the permitting process. We also completed our negotiations with power companies and now we are working on obtaining the necessary funding. WE intend to seek assistance from various European funding agencies (for example, The Just Transition Fund) to manage the financial risk. I expect to have this sorted out by the end of the year, which means we can start construction in early 2023. This would allow us to begin production in 2024 and deliver to customers in 2025.
What other strategic goals are you pursuing in the coming 2-3 years?
We aim to develop new upstream sources of rare earths that can further diversify the feedstock for our value-added processing facilities, as well as increase the optionality of our supply chains for customers. We recently announced our intent to develop a very rich rare earth deposit in southwestern Greenland, known as the Sarfartoq Project. It hosts a mineral deposit enriched in neodymium and praseodymium, two essential elements for rare earth permanent magnets used in electric vehicles, wind turbines, and high-efficiency electric motors and pumps that help reduce greenhouse gas emissions. It has been under early development for some time by Vancouver-based Hudson Resources, and we see it as a potentially very valuable asset for our European growth strategy, and our global Magnets-to-Mine vertical integration effort. It is located just 60 kilometers from the international airport in Kangerlussuaq, is close to tidewater and a major port facility, and is directly adjacent to some of the best hydroelectric potential in Greenland. We see this as a prime example of how a new rare earth mine can be developed with a strong focus on sustainability and environmental protection. We also want to get the ball rolling on the North American expansion - to be in the same position there in the next couple of years, as we are in Europe today.
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