This month, Canada and the United States announced the finalization of the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration.
The bilateral plan seeks to address concerns about reliance on other countries, such as China, for the supply of minerals critical to defence, aerospace, communications and other strategic industries.
A list published by the U.S. in 2018 of 35 minerals viewed as critical to U.S. economic and national security1 stated that of these critical minerals, China is one of the top suppliers of 20, and of those, the top supplier of 10. China is the world’s largest producer of rare earth elements (REEs), accounting for over 70% of annual global production.
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, calling for enhanced international trade and cooperation to maintain access to important sources of critical minerals and reduce vulnerability to potential supply disruptions3.
While 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.
Canada’s role in the sector
Canada is well-placed to supply the U.S. with many critical minerals. We have historically strong political and economic ties between countries, and Canada has not only a stable political, economic and regulatory environment, but also 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, 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.
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.
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 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 also 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 early this year. NRCan has indicated that the CMMP will “provide a foundation for Canada’s critical minerals industry and help ensure good projects get built”.
As part of the joint action plan, Canada and the U.S. have identified 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?
Details of the bilateral cooperation remain to be determined, but we believe this initiative could be highly supportive in developing new and existing mineral projects in Canada and the U.S.
Specific measures that could provide a significant boost to the domestic mining sector and downstream industries might include:
streamlining environmental approvals and the mining permitting process;
incentives to develop 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.
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 Nations expressing concern in recent years include the European Union, Japan, South Korea and Australia.
3 Initiatives include the 2019 U.S. paper A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals, and the 2019 U.S.-led multilateral Energy Resource Governance Initiative (ERGI).