Even in nickel, where Canada was a one-time global leader, it holds just 2.1 per cent of reserves, while Indonesia and Australia hold 22 per cent each.Yusuf Ahmad/Reuters
Canada is unlikely to benefit much from the explosion in global demand for critical minerals because of a dearth of reserves, according to two Calgary academics, who also argue in favour of cutting red tape to make domestic miners more competitive.
“Most of North America’s critical transition minerals will have to come from reserves in South America, Africa and the Caribbean as well as Australia and China,” Philip Bazel, research associate at the University of Calgary’s School of Public Policy, and Jack Mintz, a president’s fellow there, wrote in a report released on Tuesday.
“Canada’s participation in the energy transition mining market may hinge on the shape of its regulatory and taxation framework.”
Citing worldwide critical minerals reserves data from the U.S. Geological Survey, the authors point out that Canada is a bit player in lithium, cobalt, copper, graphite and nickel, all of which are used in low-carbon energy, such as electric vehicle batteries. Reserves are minerals in the ground whose economic viability has been proven.
The stark reality of Canada’s weak standing in critical minerals goes against the rhetoric often espoused by federal and provincial politicians, who have claimed that Canada is a critical minerals powerhouse.
Ontario Premier Doug Ford, for example, has repeatedly asserted that the province is set to be a battery metals behemoth as it unlocks a “generational” opportunity in its remote but undeveloped Ring of Fire region in the far north.
Canada does not feature as a power player in any of the key critical minerals highlighted in the report. The country has 2.9 per cent of global cobalt reserves, compared with 46.1 per cent held by the Democratic Republic of Congo. Turkey has 28.1 per cent of graphite reserves, while Canada is listed as not having any.
Ottawa orders Chinese divestment in three Canadian critical minerals companies
Even in nickel, where Canada was a one-time global leader, it holds just 2.1 per cent of reserves, while Indonesia and Australia hold 22 per cent each. Over the past decade, the drop in Canada’s nickel reserves has become evident, with production plummeting in Sudbury and Voisey’s Bay, N.L., where Brazil’s Vale SA is forced to mine deeper into the earth to harness lower grade ore.
Canada also is far behind in lithium, arguably the most important critical mineral because of its ubiquity in EV batteries. The only lithium mine in Canada is owned and operated by Sinomine Resource Group Co. The federal government in 2019 approved the sale of the mine to the Chinese mining giant without conducting an in-depth national security review.
Earlier this year, federal Industry Minister, François-Philippe Champagne also gave the nod to the sale of Neo Lithium Corp., which owns a promising lithium project in Argentina, to Chinese state-owned Zijin Mining Group Ltd.
Facing an avalanche of criticism, Ottawa later cracked down on Chinese investment in the Canadian critical minerals industry in October, saying it would only allow future investment by China on an exceptional basis. And last month Ottawa ordered state-owned Chinese companies to divest from three small Canadian lithium companies.
Mr. Mintz says Canada’s ability to gain a bigger share of the critical minerals market may depend on reducing regulatory burdens on mining companies. The permitting processes for large resource projects in Canada can take decades and often involve multiple overlapping studies.
There are currently six provincial and federal environmental studies underway on a proposed road into the Ring of Fire. One that has been in process since 2019 isn’t expected to be finished until 2026. A larger federal review that looks at how mining development will affect the entire region was ordered two years ago, but it hasn’t started yet, as stakeholders are unable to reach agreement on its terms.
“Permitting has been just a very slow process here, and it’s affecting everything,” Mr. Mintz said in an interview.
While Canada has a competitive international taxation framework for mining companies, new carbon taxes due to take effect in a few years will likely hurt competitiveness, said Mr. Mintz, especially compared with mining-friendly jurisdictions in the United States such as Nevada. That may be something Canada also needs to address.
Niall McGee