Report outlines what Canada must do to secure supply of critical minerals

The Standing Committee on Natural Resources has presented a report before Canada’s House of Commons that stresses the importance of securing a supply of critical minerals, particularly in the face of China’s dominance.

Currently, the Asian economic giant owns as much as 80% of the global processing capacity for rare earths, as it has been investing for decades in acquiring strategic mineral assets across the world, and according to data gathered by the committee, it is likely to hold about 67% of the global capacity to build lithium-ion batteries by 2030.

Based on the information and feedback received from industry, First Nations, research institutions, market analysts and other experts, the Committee said it is time for the Canadian government to step up its game, leverage the Canadian mining industry’s high environmental, social and governance standards and involvement of Indigenous communities, and take concrete steps to reduce the country’s dependence on foreign markets while positioning itself in global markets.

The report points out that Canada has everything it needs to work towards such a goal, as it produces 60 minerals, including some critical minerals, and it is the only nation in the western hemisphere that has copper, cobalt, rare earth elements, graphite, lithium, manganese and nickel deposits, which are all needed to produce advanced batteries for electric vehicles.

The Committee proposed five courses of action that call for the federal government to renew its support for the Canadian mining sector by increasing its capacity to carry out geoscience work, including effectively evaluating mineral resources and taking into account critical mineral potential in the decision-making processes for infrastructure, land management and conservation in close cooperation with the provincial and territorial governments and Indigenous communities.

The group also pointed out that project assessment processes need to be streamlined and complexity reduced, as going through different levels of government tends to make them lengthy and convoluted.

Support for the mining industry is also suggested in the form of an expansion to the scope of financial and tax measures, such as the Mineral Exploration Tax Credit and the flow-through share system, to spur investment in critical mineral exploration projects.

The federal government is also being asked to work with the provincial and territorial governments, Indigenous communities and governments, the mining industry, and research and education institutions, to develop a strategy that involves the potential establishment of an office of critical minerals within the Government of Canada.

Such an office would support the developing critical mineral supply and value chains by coordinating the efforts of the sector’s various stakeholders and capitalizing on the strengths and assets of each province and territory. It would also lead the development of collaborations with key international partners, in particular the United States, and would be in charge of assessing the potential to establish a critical minerals strategic reserve in Canada to attract and meet the needs of Canadian value-added processing companies.

Senior geologist Chris Pedersen in a core shack at Avalon Advanced Materials’ Separation Rapids lithium project near Kenora, Ontario. Credit: Avalon Advanced Materials.

Support for the creation of processing facilities is also mentioned as an important tactic to increase the number of markets for critical minerals in the country and to build a domestic industry and domestic expertise.

According to the report, this can be achieved by helping set up demonstration facilities for value-added product manufacturing, ensuring no duplication with provincial facilities, as well as by assessing the possibility of expanding the scope of financial and tax measures, such as the Mineral Exploration Tax Credit and the flow-through share system.

In addition, it suggests that the federal government should support research on critical minerals, including the development of research infrastructure and technological innovation platforms, and encourage initiatives to develop mining and mineral processing activities that reduce the sector’s environmental impact.

Key moves are the integration of renewable and low-greenhouse gas energy into off-grid mine energy systems in remote and northern regions, together with the implementation of best practices for electrifying mining operations and increased investments in transportation and communication infrastructure to improve access to mineral resources.

In the commissionaires’ view, reducing the carbon footprint of the mining industry has to go hand-in-hand with decarbonizing the entire Canadian economy, which creates a cyclic process. They believe that strategically electrifying transportation across the country involves dedicating budgets to building a Canadian electric vehicle battery industry and, thus, ensuring access to an adequate domestic supply of the critical minerals needed for their manufacture.

To foster such processes, the Committee proposes implementing public procurement policies that favour the purchase and use of technologies that help reduce greenhouse gas emissions, including the electrification of mining operations’ vehicle fleets; assessing the possibility of using existing mechanisms, such as the Canada Infrastructure Bank, to fund transportation electrification projects; and offering labour force training programs in new manufacturing sectors such as EV battery factories.