The radioactive protoplasm was what was used to turn Basil Karlo into Clayface.
The radioactive protoplasm was located deep in the jungle. Black Mask somehow learned of the protoplasm and sent some men to retrieve it and bring it back to Gotham City. How Black Mask learned of the protoplasm is unknown however; he somehow knew that if a person was placed in the protoplasm that person would be turned into a creature made of clay. Black Mask then hired Basil Karlo and placed him in the protoplasm which turned him into Clayface.