Canada’s Arctic moment: realizing critical mineral development in Canada’s North

 
At the same time, the country’s first Defence Industrial Strategy underscores the growing geopolitical importance of the Arctic and the need to strengthen northern defence capabilities through dual‑use infrastructure and partnerships with Indigenous and northern communities. Together, these initiatives create a generational opportunity to advance critical mineral development in Canada’s North, a region rich in iron ore, gold, rare earths, and other critical minerals¹. We discuss the region’s infrastructure constraints, available federal investment tools, international partnerships, and policy considerations needed to unlock project viability.

The hazards of Canada’s North

Critical mineral development in Canada’s North faces several structural barriers. The most significant is the lack of core infrastructure: the region is not connected to the southern electricity grid, leaving projects and communities dependent on costly diesel generation². Further, the absence of all‑season roads or reliable transport corridors makes accessing deposits and getting products to market difficult and expensive. These constraints, combined with commodity price volatility, make many early‑stage projects uneconomic, particularly for junior developers that lack the capital to build supporting infrastructure.

Climate change is compounding these pressures. Shorter winter road seasons and the growing instability of discontinuous permafrost are increasing the cost and complexity of transportation infrastructure. For example, the Tłı̨chǫ All-Season Road is located on discontinuous permafrost that varies along the road, and has to contend with thawing ground that can lead to the road surface settling or slumping. These challenges ultimately drive up maintenance costs for critical transportation infrastructure. Permafrost-related damage is not exclusive to roads; between 2014 and 2017, the Iqaluit airport required $300M in repairs to maintain the functionality of its landing strips and facilities³. These trends collectively elevate project risk and cost, and undermine the viability of new critical mineral developments in the Arctic.

How Canada is addressing these challenges

Recognizing these structural barriers, Canada has begun advancing initiatives, investments, and strategic alliances that aim to close the North’s infrastructure gap and improve access to Arctic mineral deposits.

1. Expediting projects of national importance

On March 12, the federal government announced $35B to defend, build, and modernize the North, including $10B for major infrastructure projects⁴. This commitment supports the development of critical minerals, clean energy, and northern trade corridors, and directs new funding toward forward operating locations, support hubs, and airports across the Arctic. These actions aim for a near-persistent presence in the North.

A key component of this approach is the referral of several northern infrastructure projects to the Major Projects Office (MPO). Established under the Building Canada Act, the MPO is intended to streamline regulatory processes for projects considered nationally significant. Although these projects have not yet been formally designated as “national interest projects”, referral to the MPO signals to investors that the federal government prioritizes these infrastructure projects and intends to expedite the regulatory timeline, ultimately benefiting the mineral-rich Slave Geological Province.

The March 12 announcement referred the following “Northern Resilience Projects" to the MPO⁵:

• Mackenzie Valley Highway. An 800‑km all‑season transportation corridor in the Mackenzie Valley, creating a direct route from Yellowknife to Inuvik. The project intends to improve year-round access to Indigenous and remote communities, open commercial opportunities along the route, and bolster inter-provincial and inter-territorial trade opportunities.
• Grays Bay Road and Port. A 230‑km all‑season road from the Nunavut border to a deepwater port and airfield at Grays Bay. The project includes a deepwater mineral export terminal and an airstrip, “which will both have dual-use civilian and military potential”.
• Arctic Economic and Security Corridor. A roughly 400‑km all‑season road through the Slave Geological Province to the Nunavut border (where it will connect to Grays Bay Road).
• Taltson Hydro Expansion Project. A planned expansion that adds 60 MW of capacity, effectively doubling the Northwest Territories’ hydro system, together with a 320-km transmission line connecting the North and South Slave Lake electrical grids.

While the Mackenzie Valley Highway and Taltson Hydro Expansion directly support northern infrastructure needs, projects like the Taltson Hydro Expansion, the Grays Bay Road and Port, and the Arctic Economic and Security Corridor aim to create the interties that connect mineral deposits to clean and reliable power, national road networks, and tidewater. Collectively, these initiatives are intended to improve market access, reduce project costs, and enable the exploration and development of strategic mineral resources in the Arctic.

2. Supporting domestic critical mineral development

Building on these infrastructure initiatives, Canada has also introduced several policy and financial tools designed to strengthen domestic critical mineral production and enhance supply chain security.

As noted in our previous bulletin, Pillar IV of Canada’s Defence Industrial Strategy commits the federal government to ensuring a reliable supply of critical raw materials (including critical minerals, steel, and aluminum). By the second quarter of 2026, Canada will also release a plan to expand the production, processing, stocking, and procurement of defence-released critical minerals.

In parallel, several federal programs have been announced to directly support domestic critical mineral development:

1. Canadian Critical Minerals Strategy. The Strategy and its more recent Progress Update emphasize three main priorities: (i) promoting production and processing in strategic regions; (ii) protecting critical mineral value chains to bolster sovereignty and resilience; and (iii) partnering with Indigenous groups, domestic stakeholders, and allies.
2. $1.5B Critical Minerals Infrastructure Fund. This fund is intended to support strategic mining and enables infrastructure projects that strengthen Canada’s critical mineral value chains. While the fund’s contribution funding limits expenses to 50% of a project’s total eligible expenses, the fund will provide up to 75% of eligible expenses for “Arctic, Northern and Indigenous-led projects”⁶.
3. $2B Critical Minerals Sovereign Fund: This fund is expected to officially launch in the spring of 2026, providing equity investment, loan guarantees, and supply and offtake financing to advance priority critical mineral projects and companies⁷.
4. Stockpiling of critical minerals to safeguard against shortages. In October 2025, Canada designated certain critical minerals for stockpiling under the Defence Production Act to protect against potential supply disruptions.

While many of these initiatives are national in scope rather than northern‑specific, they nonetheless provide a meaningful toolkit to be utilized to support critical mineral development in the North and help bridge the gap between policy ambition and project viability.

3. International partnerships and the G7 Critical Minerals Production Alliance

Canada has also leveraged its position as a middle power to deepen international cooperation on critical minerals, primarily through the G7 Critical Minerals Production Alliance (the Alliance). Created by Canada in June 2025, the Alliance aims to build secure, diversified supply chains and counter market concentration in key minerals⁸. By October 2025, Canada had announced 26 strategic investments and partnerships, accelerating approximately $6.4B in critical minerals projects through a mix of offtake arrangements, co‑investment agreements, and technical collaboration with allied countries⁹,¹⁰.

At PDAC this March, Canada expanded this effort, announcing a second round of 30 new partnerships, purporting to unlock an additional $12.1B in allied‑supported project capital. Canada also signed new bilateral agreements with Australia, Japan, India, and Norway, each focused on tighter cooperation in mineral supply chains¹¹.

We highlight two of these agreements here. First, Canada’s agreement with Australia references Australia’s existing critical minerals stockpile and commits both countries to closer coordination, including alignment with Canada’s upcoming Critical Minerals Sovereign Fund¹². Second, Canada’s memorandum of understanding with Norway focuses on strengthening supply chain resilience through commercial partnerships, investment, and the exchange of technical knowledge and best practices in mineral exploration. Information‑sharing between two Arctic nations may be especially valuable¹³.

Together, these Alliance initiatives and bilateral agreements reinforce Canada’s “buyers’ club” approach—diversifying supply, aligning allied demand, and helping reduce price uncertainty for capital‑intensive critical mineral projects in the North.

Further considerations to facilitate critical mineral development in Canada’s North

While recent federal initiatives and international partnerships represent important progress, several other considerations will be critical to translating Canada’s Arctic ambitions into investable projects.

First, dual‑use infrastructure must be designed and financed in a way that works for both civilian and industrial users. As we noted in our previous bulletin on Arctic defence opportunities, projects such as the Arctic Economic and Security Corridor can improve military mobility while connecting northern communities and mineral deposits in the Slave Geological Province to southern transportation networks. However, these projects face significant hurdles, including capital constraints and regulatory complexity. Referral to the MPO is a positive step, but investment gaps remain. The $1B Arctic Infrastructure Fund provides useful support for projects that improve regional connectively and strength supply chains, yet it is unlikely to meet the scale of need, particularly in light of Budget 2025’s signal that Canada’s broader infrastructure agenda may require approximately $500B in private co‑financing. Ensuring a clear investment framework and a predictable path through regulatory approvals will be essential to attract the necessary capital.

Second, Canada may need to complement its “buyers’ club” approach with measures that provide greater price certainty. The United States has proposed a preferential trade zone with price floors for key critical minerals, aiming to reduce exposure to market volatility and offer investors predictable revenue in a capital‑intensive sector¹⁴. Canada has deferred a decision on joining this initiative, tying it to upcoming USMCA discussions, but the policy question remains relevant domestically¹⁵. As Canada advances its second round of Alliance partnerships and negotiates new offtake agreements, it may wish to consider whether targeted price‑stabilization mechanisms, including price floors for higher‑risk Arctic projects, could help de‑risk investment.

Together, these considerations highlight the importance of aligning regulatory certainty, infrastructure planning, and market‑stabilizing tools with Canada’s broader northern strategy. Achieving that alignment will help ensure these policy commitments translate into meaningful progress on critical mineral development in the North.

Final thoughts

Canada’s recent policy moves, investment commitments, and international alliances have created meaningful momentum for Arctic critical mineral development. The challenge now is execution: ensuring that infrastructure planning, regulatory certainty, and market‑support tools come together to make northern projects investable. If Canada can sustain this alignment, it is well‑positioned to convert a generational opening into long‑term economic and strategic benefit.