Prime Minister Mark Carney held up a small silver bar between his fingers as he made closing remarks at the latest G7 meetings this week in Kananaskis, Alta.
Turning to Canada's “immense potential” to be a leading supplier to the world of critical minerals — such as went into the permanent magnet he had in his hand, made by a Canadian firm — he hinted a deal among governments to fast-track the development of this group of minerals and metals key to the energy, telecom and defence industries was imminent.
As the intergovernmental meetings wound down, Canada, France, Germany, Italy, Japan, the UK, the US and the EU together announced a high-level “action plan” to head off what is perceived as the global “economic threat” posed by volatile critical minerals markets. It is a topic recently reinvigorated by China’s sector-shaking export ban on a range of rare earth elements “vital” to many industries.
The plan is a response to the fast-emerging reality that Beijing has gained massive geopolitical leverage in recent decades by assuming control of some 70 per cent of global critical minerals mining and processing. The G7 plan has three pillars: internationally-agreed standards of operation, mobilizing sustainable finance, and fast-tracking the development of missing links in critical mineral supply chains.
“We recognize that critical minerals are the building blocks of digital and energy-secure economies of the future,” the Prime Minister’s Office said in a statement on behalf of the industrialized nations’ group.
The G7 leaders said the statement reflected “shared national and economic security interests” which hinged on a reliable and internationally competitive critical minerals supply chain, noting “non-market policies and practices” were threatening access to materials “vital” for industrial production.
By “diversifying responsible production and supply” of critical minerals, while backing investments in a new generation of mines that create “local value”, and funding industry innovation,” the G7 said it could “swiftly protect economic and national security” from critical mineral market manipulation.
This would be done by jointly anticipating coming critical mineral shortages, coordinating G7 nations' responses to “deliberate market disruption,” and diversifying sectors across the areas of mining, processing, manufacturing, and recycling.
‘United effort’ by G7 nations
Alla Kolesnikova, head of data and analytics at Adamas Intelligence, an industrial market research firm, called the action plan “crucial” as it “united the efforts of seven major economies rather than relying on individual nations working alone in addressing the global challenge of securing critical minerals supply.”
She commended the plan for emphasizing “diversifying supply chains, promoting responsible production, encouraging investment, and fostering innovation to reduce reliance on a few dominant producers and ensure sustainable resource management.”
For Canada, progress on the action plan will determine the speed of its clean economic expansion through the energy transition. The action plan is to be refined into a sector “road map” by the end of this year, the government said.
The Canadian Climate Institute has said the country risks squandering a $12-billion-a-year domestic critical mineral market by 2040 — and multi-billion-dollar export plays beyond this — if Ottawa cannot attract the capital needed to build new mines to extract five key critical minerals (copper, nickel, lithium, graphite and cobalt) and a range of rare earth elements.
Gillian Holcroft, CEO of Green Graphite Technologies, a Montreal-based start-up developing high-grade graphite for use in lithium-ion batteries, told Canada’s National Observer that the plan represented “a clear recognition that secure and sustainable supply chains are foundational to the energy transition.”
“Responsible sourcing and international cooperation will strengthen our ongoing collaborations with graphite miners and battery recyclers around the globe,” she said.
Canada’s critical mineral wealth set the country up to be “uniquely positioned to help anchor a secure North American battery supply chain while generating high-tech manufacturing jobs," Holcroft added.
Fresh focus on 'risk reduction'
The current global geopolitical tumult is reframing energy transition discussions in terms of energy security, said Merran Smith, president of New Economy Canada. This is focusing minds in government on risk reduction as they shape new industrial policy.
“Countries are looking to reduce risk in their transition and that means electrification, which requires renewable energy and the technology to produce it. Clean energy is secure energy,” she told Canada’s National Observer.
“But of course critical minerals are at the heart of so many of the technologies we are going to increasingly be relying on: wind turbines, solar panels, batteries and so on. Given the resources Canada has, this is a huge opportunity.”
Along with large deposits of some 34 of the most sought-after critical minerals, Canada has other important market attributes: political stability, strong labour laws and high environmental standards, she said.
“G7 countries want high standards in all these areas” when looking to source critical minerals, she said. “Canada fits the bill well. This is a chance for us to double-down on our minerals and metals sector and create the conditions to attract global investment.”
Skyrocketing capital spend ahead
The Canadian Climate Institute, in a recent report, calculated that for Canada to make meaningful inroads into global critical minerals markets, at least $30 billion in capital would need to be invested in the country’s mining and mineral processing supply chain over the next 15 years.
In 2022, as part of an early critical minerals industrial development strategy, Ottawa announced $3.8 billion in federal funding to finance associated geoscience and exploration, mineral processing, manufacturing and recycling applications, as well as research and development.
But only a handful of critical minerals mining projects have gained traction since then, with embryonic developments in British Columbia, Manitoba, Ontario and Quebec in the past year receiving a further financial boost from the $1.5 billion Canadian Critical Minerals Infrastructure Fund.
Marisa Beck, clean growth research director at the Canadian Climate Institute, said the G7 highlighting the investment gap in critical minerals as a "significant risk factor” was an encouraging "reality check" for the sector.
“There is a huge need for new capital to flow into Canada’s mining sector to advance critical mineral markets here,” she said. “It was good to see the emphasis on strict environmental standards because this is part of finance too, lower risk projects attract less expensive capital.”
Critical minerals projects built according to “shared international standards” should help the competitiveness of future Canadian mines in global export markets.
Meeting worldwide demand for the key critical minerals and rare earths studied in the Canadian Climate Institute report — a market forecast by the International Energy Agency to reach $770 billion by 2040 — will call for investment in Canadian mines to rise to $65 billion by the end of the next decade.
Canadian critical minerals leadership ‘aspiration’
Canada’s potential international leadership role as a standard-bearer for environmental and social practices in critical mineral mining should be the federal government's “aspiration” through the G7 action plan, said Keith Brooks, programs director at Environmental Defence, an NGO.
“Canada will have a competitive advantage in this market and we should certainly be extracting more critical minerals rather than more tar sands,” he said.
But Brooks cautioned that the rush to develop these energy transition resources should not lead to “compromises to the Canadian commitment to do so with the highest environmental standards and consideration for reconciliation.”
While the action plan points to the importance of “intensified collaboration” among G7 nations “to fill targeted innovation gaps in critical minerals processing, licensing, recycling, substitution and redesign,” some industry observers are concerned about the strategy.
Marilyn Spink, director of operations at the Canadian Critical Minerals and Materials Alliance, a sector advocacy body, worried "that what makes most sense for Canada might not be sufficiently prioritized” in the action plan.
“Processing [of critical minerals] gets a mention, but there remains a danger that we just continue digging up raw materials and the value gets added in the processing, in the manufacturing, wherever we ship it,” she said.
“The action will fail us if it doesn’t get us away from our old mining paradigm and start thinking about making the energy transition materials that we in Canada and the world will need more and more,” Spink said.
If the critical mineral action plan meant Canada “keeps giving away” its natural resources “for others to add value to,” she said, “the impact on our economy will go from bad to worse.”
New Economy Canada’s Smith believes time is of the essence to get an action plan moving — but she wants to see it done right and as swiftly as possible.
“Move Canada forward in a way that says to the world that the Canadian critical mineral sector is open for investment — and that we are committed to getting big things built responsibly and sustainably," she said.
Comments
Re: “ at least $30 billion in capital would need to be invested in the country’s mining and mineral processing supply chain over the next 15 years”.
Our government spent more than that in half the time on the TMX pipeline, at least half of which will probably never be recovered. It would not surprise me if all the mining companies would use this as a precedent and wanted our government to chip in; that means our taxes.
«...If the critical mineral action plan meant Canada “keeps giving away” its natural resources “for others to add value to,” she said, “the impact on our economy will go from bad to worse.”...» That is the key strategic statement!!!
China is using the leverage of those minerals in order to achieve dominance in the renewable energies and the economy of the 21st century. We must do the same. It is our strategic resource; it doesn't belong to Trump! It's a key bargaining chip to use when negotiating a new trade deal with the USA. Let's use it right!
I'm curious why CNO is repeating roughly the same message, from the same reporter, on consecutive Thursdays.
Should we look for a trifecta next week?
Setting aside the urgent tone inherent in the "critical minerals" rhetoric, it befuddles me as to why the "Canadian Climate Institute has said the country risks squandering a $12-billion-a-year domestic critical mineral market by 2040". Are these minerals going to become mushy pumpkins at midnight on a certain day? Are they found in such broadly scattered and copious deposits that if we don't immediately dig up the Canadian supplies, their value will be lost forever?
The overall tone of this piece, notwithstanding the reporter's recent award, is one of advocacy, if not an outright advertorial.
CNO is not doing Canadians any favours by avoiding comprehensive and critical reportage.
Minerals are a commodity, and only the cheapest mines flourish.
BUT!
If you gain "first mover" advantage, and have your mine up and running and producing - and the competitors are a decade away from competing - they may have trouble getting investments in their mine, even if it would be cheaper since running - time-value-of-money keeps them from beating you.
The strategy is to use our available capital just washing around and being wasted on Metaverses and data-centres for AI that is mostly hype - to gain that first-mover advantage.
Frankly, we're at a big disadvantage: most of these critical minerals, on the globe, just happen to be in China. The way all that oil we needed was in the Middle East and it's distorted global politics for three generations.
This is the time to renew Canada's industrial and resource strategy. The federal government must now start dictating terms to industry, rather than allowing industry to put governments on a leash through political donations.
TMX was the latest egregious example of public absorbtion of costs with industry taking most of the profits offshore. To add insult to injury, industry and its No. One provincial puppet never gave thanks but instead accused the feds of "working against industry" and then demanded more. Alberta hasn't even addressed cleanup costs yet even after years of criticism.
That all MUST change with critical minerals and the accommodation of the energy transition. No more extraction and shipping of raw resources to foreign lands. Lay down some solid, enforceable rules that Canadian minerals and metals will be fully processed in Canada using Canadian labour and talent. Make finished products in Canada (e.g. batteries) and carry on to full life cycle processing, creating as much of a closed cycle reprocessing loop as possible. Capture value at every step along the entire supply chain.
Companies that follow suit should see the feds reciprocate with clean power supply and transportation infrastructure and possibly with some direct investment, not necessarily with throw away subsidies but with an equity stake. Invite First Nations into the businesses as full partners or as owners.
This will all dovetail with climate policy, and will be especially effective if accompanied by strict regulated criteria on environmental remediation of mines and processing plants. One way to ensure enforcement is to require remediation performance bonds right up front, to be held back to finance cleanup costs. The bonds must be calculated or financed on realistic long range terms.
Norway practiced much of the above with its oil and gas resources, notably to bank the royalties instead of artificially subsidizing its annual budgets, and is noted for far better management than Alberta, which has clearly squandered its resources and return to the people who own it in favour of giving far too much control to industry. And now Alberta is facing an approaching peak demand in oil and gas. It is clearly deluded to deny it. Doing so will lead the people into a rude awakening with little to show for a half century of exploitation and few resources left to deal with a monumental cleanup cost. What's more, most of the oil companies may well have suddenly gone home.
I wonder how the Calgary Herald editorial board couch all that? It would take some mighty contorted logic to excuse these terrible business management practices.
Simple, they will blame the Liberal government.
As I said, contorted logic. Not even the Herald would suggest the federal Liberals actually ran the Alberta legislature in diguise since Peter Lougheed left office.