Canada and the U.S. announce Joint Action Plan on Critical Minerals

On January 9, Canada and the United States announced the finalization of the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration. The plan aims to facilitate development of secure supply chains for critical minerals that are key to strategic industries such as defence, aerospace and communications.

What you need to know

• This bilateral initiative seeks to address concerns about reliance on other countries for the supply of minerals critical to the defence, aerospace, communications and other strategic industries.
• Canada is well-placed to supply the U.S. with many of these critical minerals due to: historically strong political and economic ties; a stable political, economic and regulatory environment; an extensive mineral endowment; and a robust metals and mining sector.
• While the details of the bilateral cooperation remain to be determined, we believe this initiative could be highly supportive of the development of new and existing mineral projects in Canada and the U.S.

Background

In 2018, the U.S. published a list of 35 minerals viewed as critical to U.S. economic and national security¹. Of these critical minerals, China is one of the top suppliers of 20 such minerals and of those, the top supplier of 10. The U.S., Canada and several other nations have expressed concern in recent years about being overly reliant on China for imports as well as processing of certain critical minerals². China is the world’s largest producer of rare earth elements (REEs), accounting for over 70% of annual global production.

On June 4, 2019, the U.S. released A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals. Among other steps, this strategy paper called for enhancing international trade and cooperation with allies such as Canada, Australia, the EU, Japan and South Korea in order to maintain access to important sources of critical minerals, and to reduce vulnerability to potential supply disruptions.

Canada’s role

On December 18, 2019 Canada announced that it had joined the U.S.-led multilateral Energy Resource Governance Initiative (ERGI). ERGI aims to support secure and resilient supply chains for critical minerals by identifying options to diversify supply chains and facilitate trade and industry connections.

Canada is well-placed to supply the U.S. with many of the critical minerals it is seeking to secure due to: historically strong political and economic ties; a stable political, economic and regulatory environment; an extensive mineral endowment; and a robust metals and mining sector. Of the 35 critical metals identified by the U.S., Canada is a sizable supplier of 13 of such minerals including being the largest supplier of potash, indium, aluminum and tellurium to the U.S. and the second-largest supplier of niobium, tungsten and magnesium. Canada also supplies approximately one quarter of the uranium needs of the U.S.

With its significant mineral endowment, Canada has a robust pipeline of major mining projects that are in or near development. In 2019, Natural Resources Canada (NRCan) identified 108 major mining projects that had been announced or were under construction in Canada including 16 advanced projects for REEs, 70 advanced stage cobalt and nickel projects, 14 advanced stage graphite projects and 17 advanced and near production stage lithium projects.

This latest bilateral initiative with the U.S. comes at a time when Canada is working to better define the strategic direction of its own domestic metals and mining sector. In March 2019, Canada’s Minister of Natural Resources, together with his provincial and territorial counterparts, released the Canadian Minerals and Metals Plan (CMMP). The CMMP focuses on six strategic areas to drive industry and competitiveness and further the long-term success of the Canadian metals and mining industry. The plan recommends various levels of government taking steps to increase the economic development and competitiveness, advance the participation of Indigenous peoples, increase investment in science, technology and innovation, support environmental initiatives and enhance Canada’s global leadership in the sector. The first in a series of action plans to be released under the CMMP is expected in early 2020. NRCan has indicated that the CMMP will “provide a foundation for Canada’s critical minerals industry and help ensure good projects get built”.

Areas of bilateral cooperation

As part of the joint action plan, Canada and the U.S. have identified a number of areas for cooperation, including:

• securing critical mineral supply chains for strategic industries and defence;
• improving information sharing on mineral resources and potential;
• engaging with the private sector;
• collaborating in multilateral fora and with other countries;
• undertaking research and development initiatives;
• engaging in supply chain modelling; and
• increasing support for the metals and mining industry.

What will this mean for the mining industry?

While the details of the bilateral cooperation remain to be determined, we believe this initiative could be highly supportive of the development of new and existing mineral projects in Canada and the U.S. Specific measures might include:

• streamlining of environmental approvals and the mining permitting process;
• incentives for the development of new mining projects and processing facilities through infrastructure support, financial investments, committed offtake arrangements and other measures;
• enhanced commercial opportunities through the establishment of new supply chains;
• new exploration incentives;
• enhanced support for research and development relating to exploration, mining methods and mineral processing techniques; and
• facilitation of industry engagement with Indigenous communities in order to facilitate project development, community support and the sharing of benefits.

Such measures could provide a significant boost to the domestic mining sector and downstream industries.

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¹ The final list includes: aluminum (bauxite), antimony, arsenic, barite, beryllium, bismuth, cesium, chromium, cobalt, fluorspar, gallium, germanium, graphite (natural), hafnium, helium, indium, lithium, magnesium, manganese, niobium, platinum group metals, potash, the rare earth elements group, rhenium, rubidium, scandium, strontium, tantalum, tellurium, tin, titanium, tungsten, uranium, vanadium, and zirconium.

² Most notably the European Union, Japan, South Korea and Australia.