Protecting critical minerals industry
Protect industry as China expands influence: report'
OTTAWA • The federal government is due for a “wake-up call” on the need to protect Canada's critical minerals industry, as China tightens its grip on supplies of rare earths and other crucial materials, a new parliamentary report says.
The minerals, which include magnesium, lithium and cobalt, are used to make electric car batteries, mobile phone components, solar panels and guided missiles.
A study by the House of Commons natural resources committee, tabled last week, details how Ottawa has failed to secure supply chains for the strategic minerals — a shortcoming that could have major consequences as next-generation technologies take up a growing share of the global economy.
“This study should be a wake-up call for the federal government,” the report said. “It has been made abundantly clear that the overarching issue within this industry is the fact that the federal government has created a business environment where Canada will be unable to meet the growing global demand for critical minerals and, therefore, be reliant on other countries to meet our needs.”
Canada has yet to tap its immense mineral wealth, the report found, because of regulatory burdens and hesitancy among capital investors, among other roadblocks.
But the need to secure supply chains for strategic products has taken on new urgency in recent years, particularly amid efforts by the Communist Party of China to corner the market for supplies of strategic metals, as well as the 17 rare earth elements, as a way to manipulate prices and supplies.
China in 2010 cut Japan's supply of rare earths in response to a dispute over the Diaoyu Islands, for example, restricting the country's ability to manufacture hybrid cars and other products.
The warning comes as experts push for Canada to outline a framework to develop and protect critical minerals, everything from incentives for investment to national security protections aimed at guarding against foreign takeovers of Canadian assets.
China for decades has invested heavily in acquiring strategic mineral assets in Africa and elsewhere, and now possesses as much as 80 per cent of global processing capacity for rare earths. It also refines around 80 per cent of battery chemicals, the committee report said.
The committee made five key recommendations, including new revisions to the Impact Assessment Act, the regulatory review process for major projects that was amended by the Trudeau government.
The current review process, the committee said, “imposes barriers and represents a serious financial risk for reputable mining companies to move forward with new projects.”
At the same time, the capital-intensive nature of mining lesser-known commodities, or to build downstream capacity for those minerals, will require investments in infrastructure by both provincial and federal governments, it said. Ottawa more generally needs to deepen ties with Europe, the U.S. and Japan as a way to strengthen non-chinese supply chains.
Greg Rickford, Ontario's minister of northern development, mines, natural resources and forestry, said mining development in the province will face new regulatory hurdles after Ottawa recently declared that all new projects in the northern “Ring of Fire” region will be subject to federal environmental assessments.
But he said the region, rich in chromite, nickel, copper, platinum and other minerals, will nonetheless play a vital role in building Canada's supply chains, particularly if Ottawa provides federal funding for infrastructure.
He said China's efforts to control strategic minerals “frequently” comes up in conversations with mining executives and others, and he said there is widespread realization of the need to develop the province's resources.
“We're talking about the here and now,” Rickford said in an interview. “People have to get with the times and get with critical minerals or they're going to lose.”
“The question is will we be riding on the crest of that wave, or will we feel the impacts of federal government bearing down on us as opposed to walking in lockstep.”
Simon Moores, managing director of Benchmark Mineral Intelligence, told the committee that China is likely to possess 67 per cent of global capacity to build lithium-ion batteries by 2030, due in large part to significant investments the country has made, including in several “mega factories.” North America, by comparison, will have just 12 per cent of the market, according to BMI research.