 Hello everyone. This is Critical Materials Corner. I'm Byron King with Jack Lifton and today we have a very special guest, Konstantin Karinopoulos of Neopreformance Materials. Konstantin, you have been a fixture of the rare earth world as well as other exotic metals for a long time and I won't embarrass any of us by saying how far back it goes. You have an astonishing personal and business track record and you're running a very successful company right now. Give us just a real quick one minute elevator summary of where things stand with what you're going because I have lots of deeper questions but for people who are perhaps new to the story or the idea, tell them what it is you do because it's quite a story. Sure. Thanks Byron, thanks for not calling me old, but I've been called a lot worse than fixture so the company has been around for 30 years or so. In fact, one of our divisions that makes magnetic materials has been around since, you know, for 40 years and our rare metals plant in Estonia has been around since the 20s. So we're a collection of, what on the surface will appear as a disparate collection of assets and people. But what we do is we buy rare earths from mining companies, rare earth concentrates from mining companies, we refine them to a very large degree. We take them beyond sort of the separation stage and we add a lot more value by turning them into specialties that a lot of folks will pay us a good amount of money for, whether in the catalytic material space or the electronic space. And in one of our divisions, we take these rare earths even further, we turn them into metals, alloys and magnetic powders as well as magnets and we have a very strong franchise in the small magnets, small motor area where our magnets impart energy efficiency, precision, physics, shapes, light weighting, etc. So we sit in sort of the midstream of the rare earth supply chain, where we were essentially a collection of engineers, scientists, material scientists, chemical engineers, mechanical, electrical engineers and so on. And we just add value to stuff that comes out of the ground, and we turn them into the products that sit on your desk, you wear on your wrist, you have them in your pocket and you drive them on the road. So, you know, it's a fun business, we're doing well. In fact, we've always done well. After breaking even in quarter number five in 1995, we've been consistently profitable. And in these days, we're I guess, perhaps, even more profitable than we would normally be given what's happening with supply demand, the volatility and pricing and the like. Wonderful. Jack, I know that you have a question or two you wanted to ask why don't you, why don't you kick off with Constantine and and Yes, good morning, Constantine. I do have a question. Since you are the only truly non Chinese global rare earth company. And you, you have significant operations in Europe. In fact, I believe you're operating the only where earth separation plant in Europe. Now there's turmoil in the European scene. And I'd like to ask you, how is the situation in Eastern Europe affecting your business, your rare earth products business in Europe. Right. Well, great question, Jack. And of course, I might make a minor correction. There is another rare earth facility in France, but it's essentially idle. It reprocesses separated material. So we're the only commercially operating rare earth facility in Europe, but perhaps in the fullness of time, there will be others for the time being. Yeah, we're the only Yemen town. So, listen, as I said in my earnings call a couple of weeks ago, it, it's a huge tragedy. What's going on in Ukraine. And I think the world is letting all of us down and the powers that be really need to be doing a much better job ensuring that people don't die unnecessarily and aimlessly in in conditions like this. So in the larger scheme of things, the issues around rare supply chains are very secondary to the human tragedy that's been unfolding over the last month in Ukraine, having that leaving that aside. You know, we all have responsibilities to our stakeholders to our customers to our employees, the communities that we operate. So it behooves us to keep going as hard as we can. So we've been very successful so far running without interruptions, but it's not an easy thing. I mean, when I wake up in the morning, the first thing I look for is emails from our lawyers or a plant in Estonia, letting us know how things are going, you know, I guess it's a fact that about two thirds of our materials of our raw materials for a plant in Estonia come from Russia. And in the rarest industry, you have an opera, you know, the operating mines in Russia and Southeast Asia, Vietnam, Myanmar, and so on. You have a mine in Australia that Linus operates and a separation plant in Malaysia. And then you have a Russian mine in the north of Russia, which is operating has been operating for 30, 40 years, 50 years. And we get our raw materials or two thirds of our raw materials from there. However, we've been fortunate enough that as you know, and we've talked about it before, we did a deal with energy fuels we started a couple years ago, and now, fully a third of our materials and we're growing that our raw materials rather come from energy fuels in Utah, where energy fuels is utilizing a byproduct monazite stream that they process in Utah in this industry, the rarest raw materials for processing in Estonia. So we're not as dependent on Russia and a Russian suppliers who by the way we've had zero problems for the last 3040 years that have been very reliable very high quality. So we continue to do that they we check almost daily to make sure that this company is not on any sanctions because, you know, at the end of the day, we want to make sure that whatever we do is absolutely legal, both morally and ethically defensible. So this company exports to the United States exports to to Estonia. So, so far so good. However, we can rely just not so we're in all of our conversations with energy fuels are about expediting their next campaign and shipping us more raw materials which they're doing. And we're very grateful to Mark Chalmers and the team and energy fuels for being able to respond very quickly and helping us out with it so our Estonian plant is running like normal is running flat out. We have a few other issues that we're dealing with because some of our other reagents are coming from Ukraine. But that's a fairly common problem for Europe because a lot of, especially the automotive industry and the chemicals industry relies on raw materials reagents, acids, ammonia, things like that that come from the Ukraine, Volkswagen buys all of its cables for its cabling systems of the automobiles that they built from Ukraine. So this is creating, you know, disruptions in the supply chain. But so far, we've been able to to respond our folks have been working really hard on the ground, and so far so good you know knock on wood. We're good at the same time we were hiring more people in Estonia from the Ukraine, the Estonian government has a program to to accelerate the applications from folks in the Ukraine and we're working with them and we're doing what we can. But in the meantime, we have a great responsibility to our communities and our folks and our customers to keep running as hard as we can. I would like to just go now beyond Europe and ask you a question about your global operation. I want to amend EME and the Byron's comments on magnets, because I know that your company specializes in what are called bonded magnets, which is the distribution of magnetic powders and a resin carrier so to speak, and then their solidification and their desired shape and magnetization. Alright, final thing said that it's my typically most of the magnets of the world are centered. They're a different type, but it's my understanding that your company not only pioneer founded magnets but remains the leading supplier of this type of magnet in the world. Having said that I want to ask you a question. It's my understanding also that certain automotive manufacturer working with you to replace the centered magnet with your bonded magnet in applications and electric vehicles. And it seems to me that would be a dynamite future business for your company. That was a very good description, Jack. I give you a 90 of this, but I'll correct you in one day. Yes, the bonded magnet space is the smaller of the two, meaning bonded versus centered, about 90% or 95% of all the magnets, the rare earth magnets in the world are centered. We don't play in that yet. In the bonded magnet space, we dominate that space. We have about a two thirds market share in the magnetic materials that go into these bonded magnets. And as of three years ago, we started making those magnets ourselves and we had to implement three different expansion strategies for manufacturing capacity. So that is true. That has been our bread and butter for years. And in fact, our Magna quench division was the original inventor of the Neo Demi Marambora magnet. So we know a thing or two about how to make rare earths, how to get the right magnetic properties. What has happened in Europe, as you very rightly pointed out, is that we have been, you know, we've had our arms twisted very hard by the automotive supply chains by our tier one customers who produce drive trains, drive train motors, as well as other auxiliary motors for automobiles. I mean, in the average car would say a medium level car with the reasonable amount of power functions, you'd have 140, 150 small motors. In addition to what you have now that one or two large electric traction motors in the in the EVs, but you know your seats, your mirrors, your windows, etc. These are the types of power functions that I'm talking about that are driven with by by our magnets. So it's a great business that we have with automotive more than 50% of our magnetic materials and magnets business is without a motive. On the hand, we were very close to all these tier one producers, especially in Europe and Japan, who are now really pushing us hard to go to get into the centered magnet business, as Europe is driving towards greater self reliance on rare earth, rare earth magnet rare earth motor supply chains. I think we've had a number of conversations with with the OEMs in Europe with the tier ones in Europe, as well as the various governments in the EU and in the member states. We're putting the finishing touches on a on a plant that we will start. I expect that we'll start building in Estonia as an expansion to our existing facility where we'll take our separated rare earths. So instead of sending those rare earths, you know, into Asia, Japan, Southeast Asia, etc., the United States will turn them into metals. And perhaps heavy rare earth metals will then take those metals make them into alloys and the alloys into magnets and keep in mind that we already do about 80% of this today in China and in Thailand in our existing facility. So we don't have to reinvent wheels and learn we don't are learning curves and all that steep. So yeah, we're getting there because we think it represents a massive opportunity. And, you know, as you pointed out earlier, Jack, the Estonian plant that we have is the only commercially operating plant in Europe of its kind, and it's a massive strategic asset. So we would fully intend to capitalize on that fact. Constancy, that really segues into a whole nother point that I want to bring up. You know, we're talking about a lot of things that, you know, early on we discussed, you know, being old. But we're talking a lot of things that you can only do if you've been around for a while. And I remember talking with you, this is, you know, 1012 years ago. And you were talking about how you would spend literally decades establishing your, you know, yourself and in previous corporate versions of what you are now as a trusted supplier within this chain. I mean, nobody just sort of shows up with a bushel basket and says, Hi, I've got this product here. Would you like to, you know, use this in your, in your car, your jet airplane. No, no, no, it doesn't work that way. You have to establish yourself. So here you are with this credibility that you've built over, you know, decades and, you know, massive supply chains and lots of very smart people who work for you over the years. And out in the rest of the rare earth space, we see lots of small operations, let's you know, relatively speaking, you know, mining companies exploration company who all come up with these great, great saying, Oh, we've got this high grade deposit here. We've got this high grade deposit there where to do this or do that. And they're going to come up with some sort of a product, you know, some sort of a concentrate, you know, ideally. Right. And are you going to be buying that from them because I don't see a lot of these, you know, exploration and, you know, so called mining plays turning into what you're doing they're not going to be selling magnets to Volkswagen or anything like that. What's your comment on that. Yeah, well, both with you and with Jack, over the years we've had this discussion about how difficult it is to do what I guess we do. On the other hand, I perhaps more conversation with Jack, I've sort of commented on some of the mistakes of the junior mining in the junior mining space that I've seen over the years, you know, I don't want to be critical but I think when a junior mining company whose skills are exploration, geology, mineral processing, etc. decides to be a magnet company, unless you've been in the field and your knuckles have worn out and you've been beat up by some really, really smart people around the world, you really don't have a true appreciation of what it takes to to sell either a separated rare earth that makes very demanding specs on both chemical and physical properties and the physical part is the really hard part that's where material science needs to kick up into another level. But when you're making a magnet, you're talking about a field of study and development that is light years away from developing a deposit on the ground. And I think the mistake that a lot of junior miners made in the last run up to prices when everybody was developing rare earth projects around the world is that the skill set that you need to get a project off the ground are vastly different from the skills you need to separate the rare earths to turn them into metals and eventually turn them into alloys and magnets. You know, it's very different now unless you have very deep pockets and very patient investors, it'll take you a decade. But some of the, I mean, one of my favorite projects that we worked on is the project with Honda, where we developed a new electric motor that Honda tells us it's the most energy efficient in the world and they use it in all their electrified drive trains. It's a traction motor and it uses magnets that our customers in Japan, Daido, are making. And we made a dedicated magnetic material. We played around with the composition, the chemistry, the morphology in order to get the right magnetic properties that Daido needed in order to make that magnet that now goes to Honda. That was a seven year project. It was a seven year project having Honda, Daido and Mio, three companies that, you know, perhaps, you know, if I may say so, we're at the top of our game in our respective industries. And it took a seven year 150 different iterations. And, you know, it takes time and it takes smart people and you know I'll exclude myself from this conversation. We have a lot of really smart kids working around the world, but it takes a lot of smart people who are dedicated, it takes a long time to get it right. And this is what I guess some of the folks, some of the smaller companies that haven't been around for as long, they don't have the scars in their backs. And in the experience, what it takes, you know, usually underestimate. I mean, they did attend 12 years ago and I see some of these signs again today. Although having said that, this is not an arc on any of the bigger folks with deep pockets. I think MP materials, for example, they have so much money and they have a very robust balance sheet, and they have a collection of very good people. So I would think that a company like that, given enough time, they should be able to get it right, should is the operating word. You know, I want to add one more thing or ask one more question along these lines. We've been talking about magnets and allies and things like that. There's a part of your company that's in a very intriguing space. And it's called water purification. When you look around the world, I mean, one of the, I mean, there's a lot of problems in this world with, you know, with just fresh water and water availability. You're doing some astonishing things there, too, but can you give a quick description of the water purification side? Sure. To give credit where credit is due, this is a project that was started by Molycorp about 10 years ago. Because Molycorp, given how much cerium it had in its deposit, they needed to figure out what to do with the cerium because today, the cerium market isn't a huge oversupply. There's way more cerium produced than people want to use. So they developed a process to use cerium and lantanum as a wastewater treatment material that eliminates phosphates out of wastewater. While following Molycorp's restructuring, Neil kept that technology and we've taken it to the next step. So today we sell a few thousand tons of cerium and lantanum based materials to the wastewater treatment industry around the Great Lakes, primarily. And that's because as we go on, the specs, the discharge limits for phosphate and phosphorus containing compounds is dropping to very, very low levels, one part per billion kind of thing in some jurisdictions. And the only way to get there is this technology. Conventional technology will take you down to a few PPM, parts per million, but then you need to keep going further. And the rare earths in the right shape and size and formulation and the right characteristics show tremendous affinity for phosphates. It's not that you remove it and then you move the problem somewhere else. The complex phosphates very strongly, almost in an irreversible chemical reaction in a very nice big crystalline shape. And you can easily filter it out and safely land farm and it doesn't leach back out and so on. So that way you eliminate phosphates from getting out into large bodies of water. And then the driving force here is that phosphates and phosphorus chemicals are the primary nutrient for algae growth. So wherever you have algae blooms, if you can eliminate the phosphor source, then you can deal with the algae. And that's what we've been doing that we would launch it into Europe. We will take it globally. And we're looking always at potential alliances that would allow this business to grow faster into markets that clearly the demand is there driven by regulatory changes. So divine justice there because not a few rare earth minerals are in the appetite family which is a phosphorous based mineral. So you take the mineral, you remove the rare earths, you take the rare earths and you remove the phosphorus and you prevent the eutrophication of lakes or bodies of water. So that's a terrific strategy. I think there's a big growth in front of that. Jack, did you have a last question for Constantine? Just one short question. When are you going to introduce your total supply chain concept into the United States? Well, that cannot be a short question, Jack. Well, I'm hoping the short answer would be in the next couple of years, two to three years, I would hope, but it really will take a much different marketing and regulatory pull push that we've seen so far. So in Europe, we're being led by our customers and their customers and that sort of environment has yet to materialize in North America. When it does, we'll be right there. In Europe, you're seeing an industrial policy, aren't you, by the EU? And we don't have that in the United States. That's a big problem, in my opinion. That's a correct observation, Jack. In Europe, it started with the EU. And I think the EU learned some lessons from China, how China sort of developed the whole EV industry to the point where China is the leading producer and the leading market for EVs in the world. They're absolutely determined to dominate that space. And that man, you can reach the right conclusions as to why China is a regulatory environment is doing the things that it's doing, whether it's market supply chains, etc. Europe has learned, I think, from that playbook and they have put in regulations, both in terms of generating consumer demand for EVs and energy efficient appliances, devices, etc. But also now they're putting the finishing touches on the supply chain industrial strategy. They started with batteries. Every battery producer in the world has built a gigafactory somewhere in Europe, in Germany or Scandinavia. So Europe, the European automotive industry is becoming self-sufficient in batteries. And now they're really putting the finishing touches on drivetrains for EVs, starting with rare earth magnets. So clearly it takes an industrial strategy to get this right in the shortest amount of time possible. That amount of time is like two, three, four, five years. It's not one year or six months. So it takes time, but it also takes informed smart folks doing the right things at many different levels. In North America, as you said, you know, industrial strategy over the last few decades has become a bit of a four letter word as we, you know, detest too much government involvement in too many things. But there is a role for government and I think the Europeans figured it out here. And I think they're doing the right things. And we need to learn from that as well. Both my government in Canada as well as yours in the United States, there's all kinds of lessons to be learned and we should not be reinventing wheels ad hoc. But anyways, I'm pontificating here unnecessarily. No, that's great. It is an absolute pleasure and a privilege to, you know, have this discussion with you. You know, sad to say that, you know, they, they, we can't, we can't talk with you all day, although we could. You have things to do and company to run. And, you know, our, our, our publisher wants to, you know, bring it into, you know, endless videos. This has been such a pleasure to speak with you. Thank you so much for your valuable time and your incredible insight, which is just so deep and so deeply informed. Jack, thank you. Constantine, thank you to the viewers out there. Thank you. And take take a good hard look at Neil performance materials. It's a it's a company with it's a company on a mission and it's going places. Thank you. Thank you, Jack.