National Post (Latest Edition)

Trump could tap Canada for ‘critical’ minerals

Executive order cites less dependence on China

- Gabriel Friedman

Even as U. S. President Donald Trump labelled Canada a national security threat based on its aluminum exports, his administra­tion is taking steps to strengthen the two countries’ collaborat­ion on critical minerals, possibly including aluminum.

On Wednesday, Trump signed an executive order that opens the door for potential U. S. government investment in projects related to 35 so- called “critical minerals,” and even projects located outside its borders, in an effort to decrease its dependence on China.

The latest executive order describes its reliance on China as “particular­ly concerning” and accuses the country of using “aggressive economic practices” to dominate the minerals sector.

It also points at a trend toward increasing government interventi­on in a North American supply chain for electric vehicles, as many of the critical elements are needed as raw materials for the batteries and other parts of that nascent sector. China is the world’s dominant supplier for many of these minerals.

The executive order directs the U. S. Secretary of State, the U. S. Trade Representa­tive and other relevant U. S. agencies to submit a report within 45 days that details opportunit­ies to “help allies build reliable critical mineral supply chains within their own territorie­s.”

In January, the two countries announced the finalizati­on of the “Canada– U. S. Joint Action Plan on Critical Minerals Collaborat­ion” to guide co-operation on developing a North American supply chain for the 35 critical minerals.

The critical minerals include well- known metals such as aluminum and tin, but also far lesser known elements such as rubidium, strontium and others. Such alloys are used in electronic­s or for military and industrial purposes.

Natural Resources Canada declined to make anyone available for comment.

In February Natural Resources Canada made a presentati­on to the Saskatchew­an Mining Associatio­n that noted “China has become the leading producer of minerals critical to the modern economy,” including 80 per cent of all rare earths, 95 per cent of gallium, a critical metal for semiconduc­tors and a large share of several other minerals.

It stated Canada is an important supplier of 13 of the 35 minerals listed as critical by the U. S. and sized up opportunit­ies, showing a map of where potential critical deposits may exist.

But some of its projection­s may miss the mark. For example, the presentati­on suggested Canada could supply 100 per cent of the U.S. aluminum by 2030.

Yet, in August, weeks after a U. S.- Canada free trade agreement took effect, and despite an agreement for the two countries to collaborat­e on critical minerals such as aluminum, President Trump accused Canadian aluminum producers of flooding the U.S. market, calling it a national security threat and imposing a 10 per cent tariff.

In a partial reversal last month, Trump said he would temporaril­y remove the tariffs, but imposed new thresholds on Canadian aluminum imports. Pending a review in mid- November, he may reimpose tariffs.

Lynette Ong, a professor of political science at University of Toronto, said the problem for Canada is the U. S. could once be counted on to protect both countries’ mutual interests, but not anymore.

“Under President Trump, the U. S. has veered off from its traditiona­l position as an ally,” said Ong. “There’s a great deal of uncertaint­y.”

China has advanced its control of the mineral supply chain through its Belt and Road Initiative, a multi- billion dollar plan that dates back to 2013, which aims to invest in critical infrastruc­ture, commoditie­s and logistics in at least 70 mostly- emerging markets bankrolled and developed by its state-owned enterprise­s.

Ong said while it makes sense for the U.S. and Canada to collaborat­e on critical minerals supply chains, there is a new element of uncertaint­y in the relationsh­ip which is likely making Ottawa “wary.”

Paul Evans, a public policy professor at the University of British Columbia, said via email that as a general rule, “there’s a compelling logic to greater North American co-operation.”

But he added, increasing Canada’s dependence on the U. S. in order to “thwart China” carries its own risks.

One mining industry executive, who asked for anonymity, said overall the executive order was a positive step as it raises awareness about the importance of many minerals, particular­ly those which investors are not necessaril­y interested in. But he doubted it would have a major impact on Canadian companies unless they built a project in the U.S.

“My feeling is with everything happening in the U. S., they will prioritize projects in the U.S. and if they don’t have enough projects in the U. S, then they will look at Canadian projects,” he said.

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