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This transcript has been generated using machine learning technology. While this technology was trained with CIBC terminology, it may contain errors.
Tom Heintzman: Welcome to The Sustainability Agenda, a podcast series focusing on the evolving complexities of the sustainability landscape. I&#8217;m your host, Tom Heintzman. Please join me as we explore today&#8217;s most pressing issues with special guests that will give you some new perspectives and help you make sense of what really matters.
Pull Quote (Ahmad Ghahreman): Our rare earths oxides, apples to apples when compared to mining industry, comes with 65% less carbon footprint. And we consume only 5% of the water that mining industry would consume to make the same quality, same amount of product.
Tom Heintzman: Over the last several episodes, we&#8217;ve explored the role of electrification in the transition to clean energy. Soon we&#8217;ll be switching over to a series of podcasts on carbon. Before we do, I&#8217;d like to take a look at the electrification topic from a slightly different perspective and briefly explore the role of rare earth elements in electrification. Rare earth elements are a set of metallic elements with magnetic luminescent or electrical properties that make them valuable for industrial applications and in manufactured products. Rare earth elements are critical to the energy transition due to the role in technologies such as batteries, motors, and electric vehicles. In this discussion, we&#8217;ll dive into the work of one company who is recycling these elements from end-of-life products like motors. We&#8217;ll also discuss the benefits of creating a circular supply chain for rare earth elements, how this can strengthen supply security and transform how industries source critical materials. I&#8217;m delighted to welcome my guest, Ahmad Ghahreman. Ahmad is the CEO and co-founder of Cyclic Materials, a clean tech company building a circular supply chain for rare earth elements and other critical materials essential to the clean energy transition. Interestingly, Cyclic is originally based out of Kingston, home of The Tragically Hip, so I&#8217;m proud to be supporting a local champion here as well. You may have heard Cyclic&#8217;s name in the news when China recently implemented export controls and several critical minerals since Cyclic is one of the few technology companies that provide a domestic source of these materials. Ahmad is a serial entrepreneur with over 15 years of experience in clean technologies and resource recycling. He holds a PhD in materials engineering and numerous patents. Good morning, Ahmad, and welcome to the show.
Ahmad Ghahreman: Good morning, Tom. Great to be here.
Tom Heintzman: So Ahmad, let&#8217;s start at the highest level and just explain to the audience exactly what your company does and how it works. Your company reclaims rare earth elements from end of life products. Could you explain exactly how your technology works? What materials or feedstock you&#8217;re recycling? How you&#8217;re separating the rare earths and critical minerals? And in the end, what you&#8217;re producing?
Ahmad Ghahreman: Absolutely. We truly are introducing a new supply chain for rare earth sediments. Today, more than 99 % of rare earth sediments are coming from mining operations. So they are mined from the ground. Recycling basically is non-existent for rare earth sediments from end of life products and cyclic materials is changing that. What we do is we take end of life products from your electric toothbrush to hard disk drives in our data centers that enables us to have these video calls to electric bikes, electric cars, and MRI machines, medical devices to wind turbines. We receive those end of life products that carry magnet in them and we do recycle those through our two at the same technologies that we have in the company. The first one enables us to isolate the magnet from end-of-life products. Let&#8217;s say we start with a power tool that you might have in your garage or a dishwasher that you might, an end-of-life dishwasher that you use in your kitchen. And we start with the electric motors in those units and we isolate magnet. Our second technology now, takes that magnet and recycles that back to the raw materials that you would require to make fresh magnets or because those are raw materials, you could use them to make other products as well.
Tom Heintzman: Got it, okay. And these magnets were in the press recently as the Chinese embargo was threatening things like the defense industry in the United States with the difficulty of supplying magnets. So it&#8217;s certainly topical. Part of what we cover here is technology, but part of what we cover are entrepreneurs. And I&#8217;m curious about the cyclic material story. Can you give us an overview or a quick explanation of why you co-founded the company? your nature of your business model and where do you see the company over the next five years?
Ahmad Ghahreman: That&#8217;s a great question, Tom, and I do get this question very often. I&#8217;m a technical person by training. did my PhD at the University of British Columbia on extraction of metals. So I have been in this space of metals mining as well as recycling for past 15, 20 years. One of the metals that I have been working on in this space, the group of metals was rare earth elements. Building a business on rare earths elements is challenging than other metals simply because majority of these metals are mined and supplied by China, one country. And that adds volatility to the market that is a bit more than other metals or commodities categories. With that in mind, from day one I knew to make rare earths elements outside China to produce them, you need a business plan that is so robust and hedged that the volatility of our earth&#8217;s elements will be able to be hedged within that business unit. So going back to those days, recycling of end of life products really gave us the opportunity to deliver that business model. What I mean by that, when you recycle end of life materials, you recycle copper, aluminum, steel, and rare earth elements. The copper aluminum steel portion of the revenue, which in our case is a substantial percentage of our revenue overall in the company, close to 50%, that basically creates a baseline of a sustainable, baseline of a stable revenue in the company that helps us to now absorb a bit more risk on the volatility of rare earth elements. And that was the whole idea from day one to make sure that we are a multi-metal portfolio company rather than just reverse elements portfolio company. So that was the thought behind it. But then to create this business end of life, we needed to be closer to the collection point of end of life products. Because in a end of life recycling business, logistics becomes really an important conversation. So the strategy on day one then became that we break the business into two pieces. Our first unit is deployed closer to larger cities where people consume products and then the products are available for us to recycle. But the chemical process which takes in magnet in the second step and produces rare earth elements could be in a central location in each continent or country and basically process the material centrally. And with that, we defined and designed spoke and hub model in our business to basically address this. This gives us multi-metal portfolio to stabilize our revenue and also gives us the proximity to end-of-life products to optimize our operating costs.
Tom Heintzman: Fantastic. I love the idea of having certain metals provide you with a stable revenue in order to allow you to get into the rare earths. And also the hub and spoke is very wise and I can definitely see how that limits your costs and make you more efficient. So let&#8217;s talk about your customers. Who&#8217;s using the rare earth oxides that you produce? Who are these off-takers? How might this transform how industries will source critical materials going forward? I know you&#8217;ve got a bunch of leading customers. Maybe you could touch on who they are and why they&#8217;re choosing to source from you.
Ahmad Ghahreman: One of the customers that we have announced is Solvay. And I&#8217;m only focusing on rare earths elements, copper, aluminum, steel, other products of us, of our operations are a bit more straightforward. So on rare earths element overall, we have three categories of customers. One category are chemical companies such as Solvay that we already have an off take and we have announced it last year. So these category of companies are the companies that basically need these chemicals to use or reagents to use in their products and refine them and use in many different applications. Not related to Solvay but rare earth elements overall have application in screen of our phones and iPad, in catalysts and many other applications. So it&#8217;s not just magnets that we use these rare earth elements in. Magnets happens to be one of the key industries. The second category of our off-takers are magnet manufacturers themselves. They do have a lot of need for these materials and they do know that majority of rare earth elements, which is the key ingredient in their magnets, comes from China. So from supply chain perspective, they are quite nervous and they want to diversify their supply chain. they have become a good pipeline of customers for us that we are talking to them. The last one would be the end users of magnets. This would be the auto companies. This would be the product companies, electronic gadget companies. This would be the owners of data centers in really large scale because every single hard to strive in data centers has neodymium magnet in the corner. So these companies are not manufacturers of magnet. These companies are not chemical companies, but they are large enough companies that they can basically work with their supply chain. These group of companies have two perspectives to reduce risk on their supply chain because they are heavily dependent again on China for access to those magnets. And also some subcategory of these companies have really ambitious goals of reducing waste or minimizing their carbon footprints by a target date. And that also we do see is partially part of the initiatives that those companies are taking to work with us. And for a good reason, I will give you two stats here. Our rare earths oxides, apples to apples when compared to mining industry, comes with 65 % less carbon footprint. And we consume only 5 % of the water that mining industry would consume to make the same quality, same amount of product. So those stats are really critical for those larger corporations that have those goals for 2030 or 2035.
Tom Heintzman: Fascinating. Could geopolitical tensions have put more pressure on the development of cross border supply chains for critical minerals and metals and supply security. For instance, in response to US tariffs, as I&#8217;ve mentioned earlier, China introduced export restrictions on some rare earth elements, including magnets. How have recent tariff dialogues affected you? And do you see any immediate impact or is this something that&#8217;s going to play out over years or decades?
Ahmad Ghahreman: So Tom, usually I differentiate between the tariffs and the Chinese policy on rare earth settlements. And let me establish why I think that way. So basically when you do a deep dive on China and their interest in rare earth settlements, there is little bit disconnect between that and tariffs. China in December of 2023 banned the export of any technology and equipment related to rare earth elements. Then in summer of 2024, if I&#8217;m not mistaken in July or June of 2024, they nationalized rare earth industry. They consolidated a lot of companies into much fewer companies to improve their controls on that. Doing those two moves in that timeline, China actually did ban export of some other critical metals. So this was not the first time they were thinking of this. Now, fast forward to 2025 and April 4, China basically put export control on rare earth sediments. I really believe that putting export control on technology and equipment, export ban. Then nationalizing the industry was part of the move. And the next step was to put the process on how to control the export of rare earth sediments. Now, as of April of this year, China has introduced a tool that they anytime can utilize and ban or can open up the export of rare earth sediments because they have the export control process in place for it. So this has been in making or coming in past few years. This was not a surprise to Cyclic Materials or myself in April 4 when China put the export control in there. The moves that, I will do this again. The response that US government has delivered in the past couple of weeks with their actions has been actually phenomenal in counteracting what Chinese policies are creating in the environment of our earth sediments globally. And I hope really some other countries, including Canada, to look into some of those possibilities and implement a version of that because from Critical Metals perspective, Canada also truly is a leader in this space globally. Now coming back to tariffs, again, I differentiate that from Chinese policy, but I will add that on day one, cyclic materials was built on spoken hub model. And the idea was we&#8217;re going to localize the availability of our earth&#8217;s elements, but by recycling in countries and making products available within those countries. So tariffs are something that we really are not impacted significantly with. And we don&#8217;t really spend much time on those details at the moment. But I will tell you, Transferring products, shipping products, and moving equipment from one location to another location. For instance, some of our equipment comes from Europe to US. It&#8217;s a bit more challenging today than what it was last year this time.
Tom Heintzman: Got it. One last question, Ahmad. You mentioned Canada, and I&#8217;d love to explore that in order to wrap up the podcast here. As you noted, Canada holds some of the world&#8217;s largest reserves of rare earths. As a Canadian company, I&#8217;m curious about your thoughts on how Canada could or should compete in critical minerals and rare earths.
Ahmad Ghahreman: On critical minerals, Canada has vast resources of nickel, cobalt, graphite, many more rare earths elements. So from that perspective, I really think Canada can be the largest or one of the largest suppliers of those critical minerals to the allied countries. But when it comes specifically for rare earth elements, think, for instance, allied countries and NATO would have requirements and needs for those very critical, in fact, the most critical of metals globally. And they, at the moment, have struggles to access those metals. So I think there are a lot of work that could be done with a list of countries that we can ally with and basically provide them the critical metals that they require. Canada could take their leadership role on that side and basically support those activities. We have benefited from grants in support of government of Canada in the early years of cyclic materials with what we have developed in the company mostly on the R&amp;D side and developing the technology side and we really appreciate that. In Canadian space, the early years of companies have clear process on how to access to some of those dollars and start a company but on growth side of Come growth stage of the companies probably that&#8217;s an area that we can focus maybe a bit more in Canada and support the companies so they can basically look within Canada for support to grow the business rather than alternatives and that that would be one of the things that I would advocate for significantly within Canada to help Canadian companies.
Tom Heintzman: Fantastic. A real Canadian champion and particularly important given all the turmoil that&#8217;s going on in the world right now. So thank you, Ahmad, for taking time to join the show today. And thank you to our listeners for tuning in.
Ahmad Ghahreman: Thank you so much, Tom. It was great to be on the show.
Tom Heintzman: Please join us next time as we tackle some of sustainability&#8217;s biggest questions, providing you different perspectives to help you move forward. I&#8217;m your host, Tom Heintzman, and this is The Sustainability Agenda.
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Cyclic Materials: Meet the innovator building a circular supply chain for rare earth elements

Cyclic Materials: Meet the innovator building a circular supply chain for rare earth elements

Tom Heintzman

MD & Vice-Chair, Energy Transition & Sustainability

CIBC Capital Markets

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