Canada has declared specific critical minerals as a national security priority under the Defence Production Act, enabling the government to support the mining industry by ensuring it a buyer and a minimum price. This decision was made during a G7 energy and environment meeting in Toronto, where nations aimed to counter China’s dominant position in critical mineral production. These minerals are crucial for technologies like electric vehicles and clean energy, prompting concerns among Western countries about China’s supply chain control.
According to Canada’s Energy Minister Tim Hodgson, creating demand certainty and stable pricing is essential for the development of mines and processing facilities. As part of the initiative, G7 nations are investing $6.4 billion in 26 critical mineral projects across Canada to bolster the domestic mining sector and reduce dependence on Chinese minerals.
Among the funded projects are Nouveau Monde Graphite’s Matawinie mine near Montreal, Rio Tinto’s Scandium production plant in Sorel-Tracy, Que., and Torngat Metals’ Strange Lake project in Quebec, focusing on rare earths. The minimum price set for purchasing these minerals is undisclosed for security and commercial reasons, as stated by the government.
To address China’s dominance in critical minerals, Canadian companies face challenges in launching projects without state intervention. Pierre Gratton, president of the Mining Association of Canada, emphasized that Chinese suppliers could undercut prices, making it difficult for Canadian projects to secure financing and compete effectively.
Hodgson has been in discussions with G7 counterparts to establish a critical minerals production alliance, aiming to invest in projects within the bloc to set price floors and long-term buying agreements. This strategy reflects concerns over China’s significant control of critical minerals refining and market share, particularly in technologies like battery-electric vehicles and solar panels.
Canada’s vast resources in critical minerals present a significant economic opportunity, but currently remain largely untapped. According to Eyab Al-Aini, a senior research associate at the Canadian Climate Institute, prioritizing minerals such as copper, lithium, graphite, cobalt, nickel, and rare earths could meet the growing demand driven by the shift towards clean technologies. The domestic demand for critical minerals in Canada could reach $16 billion annually by 2040, driven by the rise of local battery production and clean energy investments surpassing fossil fuels.
