As some Canadian companies reevaluate their ties to China, Toronto-based Neo Performance Materials Inc. is planting new stakes there, opening a new US$70-million production plant there — constructed on time and under budget.

Canada’s largest and oldest rare earths company is bucking the anti-China trend while operating in one of the most geopolitically charged areas, rare earths, a group of 17 metals that are used in everything from wind turbines to electrical vehicles to military equipment.

“There’s hair on investors’ concerns about (Neo) being in China,” Neo’s chief executive Rahim Suleman said. “I say that there’s hair, but I don’t think it’s warts. I think that the problem is quite honestly overstated.”

He agrees that Neo is involved in a “sensitive” industry. Canada, along with the United States and Europe are all passing new industrial policies aimed at building an electric vehicle supply chain that’s independent from China, which has exacerbated geopolitical tensions.

But Suleman added that his company has operated in China for three decades and understands the rules.

Still, in late August, Neo announced the sale of two midstream processing facilities in that country for US$30 million. In case any investors have been wondering whether it marked a prelude to the company’s exit from China, Suleman explicitly said the answer is no.

The sale of those facilities was a result of business realities, not geopolitical pressure, he said, since Neo’s competitive advantage in the midstream space in China had eroded as its rivals grew larger and achieved economies of scale to purchase feedstock.

“At core, we are a downstream company,” Suleman said.

Its latest plant in Zibo — which Suleman visited on Friday — will produce a rare earth oxide coating that can be applied to catalytic converters in internal combustion engine vehicles.

By Monday, he and Vasileios Tsianos, vice-president of corporate development, had already flown from there to Thailand, where the company operates one of the largest permanent magnet facilities outside China.

Tsianos said permanent magnets, made from rare earths, are far stronger than ordinary magnets and are considered critical to modern technology because of the space and energy savings they provide.

“Rare earth permanent magnets are energy-saving magnets,” he said. “If you use a small amount of them in a motor of anything, whether its an offshore wind turbine, an electric vehicle or a water circulation pump in a green building, you save a multitude, or an order of magnitude, in energy use.”

The obscure rare earth metals have emerged as a source of tension between Western countries and China, which dominates the rare earth supply chain. By Suleman’s estimate, China controls 92 per cent of the downstream magnet supply and 60 per cent of the upstream raw materials, though he said the numbers fluctuate year by year.