Should a new Canadian lithium or cobalt mine get fast-tracked under Canada’s new critical minerals strategy, what’s to stop the mine owners from selling these key battery minerals to battery makers in China?
After all, the strategy is all about energy security in a world that is transitioning from fossil fuels to cleaner energy and fostering economic development.
And it has become clear to western nations that there are risks involved in relying on “non-democratic” countries like China and Russia to supply the raw materials, like rare earth metals, needed for the energy transition.
The strategy, released Friday in Vancouver, aims to develop a made-in-Canada critical minerals industry, from the mining of lithium and cobalt to using it in Canadian-made batteries and electric vehicles.
That’s not to say that Canada is aiming to close it doors to other countries with respect to critical minerals. But it will ensure that those trade partners are allies.
“Western countries are increasingly concerned about being dependent on a small number of non-democratic jurisdictions for critical mineral supply and processing,” Natural Resources Minister Jonathan Wilkinson said Friday in Vancouver.
“And as European allies have recently experienced the consequences of dependence upon non like-minded countries for strategic commodities like oil and gas, there is a strong desire to avoid recreating these kinds of vulnerabilities in emerging markets such as critical minerals.”
Canada’s new critical minerals strategy aims to secure Canada’s position in the growing market for certain minerals and metals used in everything from batteries to renewable energy and electronics.
“There is no energy transition without critical minerals, Wilkinson said.
The strategy identifies 31 critical minerals, and prioritizes six: lithium, graphite, nickel, cobalt, copper, and rare earth elements.
Wilkinson said the World Bank projects a 500% growth in demand for critical minerals by 2050.
“Against the backdrop of this skyrocketing demand, emerging geopolitical dynamics are creating other challenges,” Wilkinson said.
“Part of the critical minerals strategy, from an international perspective, is about geopolitics. It is about ensuring that, not just Canada, but democratic countries around the world have access to the resources that they require that does not make them vulnerable to pressures from Russia.”
Wilkinson pointed out his government recently ordered Chinese companies to divest from three Canadian junior exploration companies in the lithium and rare earths space, based on national security concerns. He hinted there could also be restrictions on who can and can’t buy certain critical minerals mined in Canada.
“I would tell you there is a broader review of foreign investment going on in this country,” Wilkinson said. “And some of the issues around, not simply equity stakes, but also offtakes are certainly on the table. That being said, we welcome foreign investment from countries like Australia, and United Kingdom and United States and others.”
Wilkinson said there are clear economic imperatives to developing a critical minerals industry, from mining to manufacturing.
“Around the world financial markets are increasingly pricing climate risk into investment decisions,” he said. “Smart money is flowing away from assets that are not compatible with a net zero world and towards opportunities that are.
The strategy is backed with $4 billion in commitments to help foster the industry. That includes $1.5 billion each for two infrastructure programs – one for infrastructure like roads and power for mines, and one for downstream infrastructure for industries like smelting, advanced manufacturing, processing and recycling.
There is $144 million for critical mineral research and development, and $79 million for public geoscience and exploration aimed at improving data on geology and mineral deposits.
The strategy drew praise Friday from by both Canadian and B.C. mining associations, and the First Nations Major Projects Coalition (FNMPC).
Michael Goehring, president of the Mining Association of BC (MABC) said the strategy is “an ambitious plan that’s potentially transformative.”
Pierre Gratton, president of the Mining Association of Canada, said the strategy is “ambitious yet realistic” and is backed by significant financial commitments.
“The challenge is big, but we can do this, because we aren’t starting from zero,” he said. “We have a substantial pan-Canadian mining, smelting and refining sector, the third largest mining supply sector, skilled labour, fiscal and political stability and vast resources.
“Key elements of the value chain are in place, are being filled, and, by implementing the strategy, will be expanded.”
The strategy addresses the need for First Nations reconciliation and participation.
“Indigenous peoples and communities need to see long-term benefits that flow from resource projects located in their traditional territories,” Wilkinson said.
Fort Nelson Chief Sharleen Gale, president of the FNMPC, said the adoption of the United Nations Declaration on the Rights of Indigenous People (UNDRIP) by the federal government means that exploration, mining and the development of downstream industries, like smelting or manufacturing, need to include impacted First Nations as partners.
“Critical battery mineral supply has become a priority for some of our First Nation members who want to make sure their nations’ values and priorities are central to any and all infrastructure projects going forward,” Gale said. “It is important to First Nations to be able to negotiate a good deal for their nations with proponents and the coalition is doing just that.”
She added it is important for proponents of any project to approach First Nations in the earliest stages, “and that an option for equity is always part of the proposed critical battery mineral projects on indigenous lands.”
Perhaps the single biggest barrier to Canada maintaining a competitive advantage, especially in new mine development, is regulatory and permitting inertia – something Wilkinson said will be addressed.
“With respect to regulatory delays, we must be clear that it cannot take us 12 to 15 years to open a new mine in this country – not if we want to achieve our climate goals and move rapidly through the energy transition,” he said.
Wilkinson said a “concierge service” will be set up in Natural Resources Canada to “accelerate processes and timelines” under existing regulatory frameworks for critical mineral exploration and development projects.
He said some companies may enter environmental review processes prematurely, only to get bogged down. One function of the concierge service would be to help the companies be better prepared.
“Nationally, we are reviewing federal regulations and processes to identify opportunities for more rapidly advancing clean growth projects, including critical minerals, while safeguarding the interests of Canadians, protecting the environment and respecting the rights of indigenous peoples.”
He said the federal government is also working with provincial and territorial governments to align federal and provincial regulations.
The opportunity for a single environmental review already exists through a substitution option, in which provincial regulators, like the BC Assessment Office, lead environmental reviews. But B.C. is currently the only province opting for these substitution reviews, Wilkinson said.
“Ideally there is one project, one assessment,” Wilkinson said. “There is absolutely no reason why the federal and government and province need to conduct independent assessments. We need to ensure we are closing the gap on that.
“We are looking internally right now at ways in which we implement the Impact Assessment Act…in a manner that actually will allow us to be better in terms of expediting things, going forward."
“The Mining Association of B.C. is pleased with the government’s recognition that we need to speed and accelerate permittings and authorizations across all orders of government,” Goehring said. “Here in British Columbia, while we need the federal government to move expeditiously to try to streamline permitting, so too does the provincial government.”
Earlier this week, Philip Bazel and Jack Mintz of the University of Calgary’s School of Public Policy published a brief suggesting Ottawa’s ambitions with respect to critical minerals are bigger than Canada’s actual reserves, compared to many other major mining jurisdictions.
For the reserves that it does have to exploit, much will depend on regulations and taxes. On the latter score, Canada actually stacks up fairly well, Bazel said.
“We’re very competitive,” Bazel told BIV News. “For instance, exploration in Canada is already fully expensed. So you can write if off entirely as a cost.”
One new tax incentive that is sure to be welcomed by junior miners is a new 30% flow through tax credit for critical mineral exploration.
