West faces daunting task to compete with China in critical minerals race, says Neo Performance CEO

Engaging in the global critical minerals market means facing up to the huge challenge presented by China, says Neo Performance Materials' (TSX: NEO) CEO and president Constantine Karayannopoulos.Speaking during an exclusive Q&A session at Wednesday's Critical Minerals Summit 2022, held at the National Club in downtown Toronto, Karayannopoulos outlined the task ahead for Western countries and companies."We should do a session just on that alone," the CEO told moderator and organizer Tracy Weslosky.While Karayannopoulos said that Neo has four plants, including two rare earth refineries in China, many Westerners have failed to understand the how and why of the east Asian country's industrial development."For the last 20 years there has been a very rational, deliberate industrial strategy that would have been very easy to predict today if you had been following how each successive five-year plan plays into that industrial strategy," he said."They're absolutely determined to dominate the electric vehicle market [and] 34% of all EVs are made and sold in China...in order to achieve that they need raw material security."

Tracy Weslosky, left, speaks with Neo Performance Materials' CEO and president Constantine Karayannopoulos at the Critical Minerals Summit 2022 in Toronto, on Wednesday. Blair McBride photo

For China to achieve its decarbonization and electrification targets will require trillions of dollars of investment, as will the rest of the world, Karayannopoulos explained."That's mind boggling. There's a massive task ahead of us and I don't think governments around the world really appreciate how complex this is. I consider myself an environmentalist. [But] you can't have your cake and eat it too. If you want to decarbonize...we need more factories to take whatever comes out of the mines and make them into the products that will allow us to decarbonize."But such enormous industrial development in the West will have to be done by skilled professionals, and Weslosky asked Karayannopoulos where they would come from. "It has taken two decades for the supply chains to migrate from North America to Asia," he said. "It will take at least as long for them to come back. And it starts with education. China graduates more engineers than North America is graduating graduates!"The Neo president also touched on where critical minerals might be mined in the coming years, and gave the example of his company's efforts to source rare earths from Greenland.

In August, it announced it had secured a licence from Hudson Resources (TSXV: HUD) for its Sarfartoq Carbonatite Complex to explore for neodymium and praseodymium at relatively high ratios of 25%-40% total rare earth oxides, according to a 2011 preliminary economic assessment.

He acknowledged that the largely undeveloped country guards its resources closely, and permits no oil and gas development and no uranium mining.

But he added that Neo took the time to consult properly with the Greenlandic government."We really need to understand the lay of the land, to make sure that you've done all the right things. Don't walk into people's geography and expect to be in business just like that," he said.Karayannopoulos spoke at the summit just hours after it was announced that his company was awarded a grant of up to ?,?18.7 million ($25.3 million) from the Estonian government under Europe's Just Transition Fund for its rare earth permanent magnet manufacturing plant in the Baltic state. It was reportedly the first ever grant given out to a critical minerals company in the European Union.Both that facility and its Greenland project are part of the Toronto-based company's aim to diversify rare earth sources and expand supply chains.