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Canada's Prime Minister Justin Trudeau attends a news conference to announce details on the construction of a gigafactory for electric vehicle battery production by Volkswagen Group's battery company PowerCo SE in St. Thomas, Ont. on April 21.CARLOS OSORIO/Reuters

Giancarlo Da-Re and Matthew Funk are master of global affairs candidates at the Munk School of Global Affairs and Public Policy, University of Toronto. Mr. Da-Re is also a fellow at the Lupina Innovation Policy Lab. Rachel Ziemba is founder of Ziemba Insights and adjunct senior fellow at the Center for a New American Security. They recently wrote a report on Canada’s critical minerals strategy.

The federal government and many provincial governments have taken some big steps to seize the potential of the green transition, most recently with the $13-billion subsidy, multiyear subsidy for the St. Thomas, Ont., Volkswagen electric-vehicle battery plant. However, this is not a financially sustainable approach.

Less than a month after that subsidy’s price tag was revealed, news emerged that Ottawa is under pressure to match it for Stellantis STLA-N and LG Energy Solution’s Windsor, Ont., battery plant, with construction at the site halted.

And for all their hefty price tags, there is a key ingredient missing from these subsidies.

So far, the investment in Volkswagen’s VWAGY EV battery plant was more than three times the entire amount dedicated to Canada’s admittedly broad Critical Minerals Strategy, which focuses on sourcing the raw materials for making those batteries. These are critical minerals that Canada has in abundance, but has been slow to build mines to extract and plants to process.

This country has zeroed in on the end product and ultimate goal, but it has neglected the necessary ingredients and the path to get there. It’s a sign of a focus that is further downstream than Canada’s advertised advantages (its mining capabilities), and of a lack of resources dedicated to the deeper challenges holding our country back.

While this issue is far from unique to Canada – U.S. companies have also been quicker to announce battery plants than mining or midstream processing projects – it raises concerns about whether the economic and national security goals intersect and whether the timelines being proposed are realistic.

Canada needs a full battery supply chain, from raw materials to the end product. It needs mines, processing plants and recycling facilities, and not just a battery plant. Canada must act with purpose to realize that.

The Ring of Fire in northern Ontario has been said to hold up to $90-billion worth of minerals. However, while it has garnered excitement for at least a decade, mining has yet to begin.

Inadequate transportation infrastructure and permitting issues continue to go unresolved, plaguing development. It is expected that road construction alone will cost in excess of $2-billion, which is $500-million more than the total amount allocated to critical minerals infrastructure by the federal government in 2022.

Standoffs over permitting challenges and a social licence to operate are also slowing the development of mineral extraction in provinces such as Ontario and British Columbia. In response to the lengthy 15-year duration to open a mine in Sudbury, the provincial government is proposing regulatory changes to Bill 71, which has prompted a response from First Nations communities concerned about impacts on their land.

Likewise, in B.C., the average time to take a mining project from discovery to approval and construction is roughly 13 years. Current government efforts to reform permitting laws will also likely see pushback from First Nations communities.

Mining executives might take a lesson from the natural gas industry, in which some of the few liquefied natural gas projects going ahead involve Indigenous owners. Such equity arrangements aren’t panaceas, but they can help to align interests.

The gap in investment is perhaps greatest in the midstream, or processing of battery materials, which is currently the part of the supply chain most dominated by China. It was thus disappointing to hear that Vital Metals Inc.’s pilot processing project in Saskatchewan was put on hold last month due to the inability to source commercially viable supplies from the Northwest Territories. This issue reflects the need to co-ordinate projects along the supply chain and invest in new financial tools and strategic reserves to better hedge against price volatility.

While the federal government has allocated $40-million to support northern regulatory processes that review and grant permits to critical minerals projects, not only is this a relatively small amount, but specific actions that will be taken to resolve regulatory issues remain vague and high-level. In part, this reflects challenges stemming from having different levels of government, but official actors also need to be honest with Canadians.

Canada’s critical minerals strategy has large aspirations, but these plans will go unrealized without a higher degree of focus and funding. To truly unlock Canada’s critical minerals potential, more attention and resources need to be paid to upstream challenges such as First Nations partnerships, infrastructure development and permitting reform.

A future in which Canada is a leading supplier of critical minerals, generating billions of dollars in gross domestic product and creating hundreds of thousands of jobs, is on the table. Let’s not leave it there for another decade.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 11/04/24 5:43pm EDT.

SymbolName% changeLast
STLA-N
Stellantis N.V.
-4%25.94
VWAGY
Volkswagen Ag ADR
-2.15%15.38
VUX-X
Vital Energy Inc
0%0.215

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