The new government measures follow efforts by successive U.S. administrations to break the country’s dependence on China for rare earths and other metals.
In February, U.S. President Joe Biden issued an executive order that called for a 100-day review of U.S. supply chains for several products including rare earth elements, which he noted are “used to make everything from harder steel to airplanes.”
The problem, Karayannopoulos said, is that the U.S. and Canadian governments are still largely relying on market-based solutions, while a hybrid-system has helped the rare earths sector in China thrive.
“Over the last 30 years, I haven’t been able to figure it out — what their cost of capital is,” he said about Chinese rare earths companies, “All I know is it’s massively lower than mine.”
There are still advantages to operating outside China, he said. For one thing, it’s difficult to conduct an environmental audit in China, according to Karayannopoulos.
At Neo, which has facilities in China, Japan, Thailand, Singapore, South Korea, Estonia, Germany, the U.K., U.S. and Canada, rare earth products fetch a premium when they come from a facility that’s been environmentally audited, and all of its emissions have been catalogued, he said.
He praised Europe for creating incentives for consumers to purchase electric vehicles, which have helped make it the fastest growing market. Now, Karayannopoulos said if Canada and the U.S. want the rare earths sector to thrive, they need to do the same.
“We live and die in the West as public companies on the basis of our quarterly share price,” he said, “and we are competing against people (in China) who are looking five, 10, 50 years down the road, and it’s tough to compete against rational, well-thought out, long-term planning.”
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Correction: The CEO of Energy Fuels is Mark Chalmers. The error is regretted.