Canada has officially designated specific critical minerals as a national security priority under the Defence Production Act. This decision will enable the federal government to back the mining industry by ensuring it has a buyer and a minimum price. The announcement was made at a G7 energy and environment meeting in Toronto, where countries discussed addressing China’s dominant position in critical mineral production. These minerals are crucial for modern technologies such as electric vehicles and clean energy, and Western nations are increasingly concerned about China’s control over their supply chains.
Canada’s Energy Minister Tim Hodgson emphasized the importance of establishing demand certainty and pricing stability to facilitate the development of mining and processing facilities. Hodgson disclosed that G7 countries are investing $6.4 billion in 26 critical mineral projects across Canada to bolster the domestic mining sector and create alternatives to Chinese minerals. The funded projects include Nouveau Monde Graphite’s Matawinie mine near Montreal, Rio Tinto’s Scandium production plant in Sorel-Tracy, Que., and Torngat Metals’ Strange Lake project in Quebec, focusing on rare earths. The pricing floor for purchasing these minerals is confidential for security and commercial reasons.
To counter China’s dominance in critical minerals, Canadian companies require state intervention to avoid being undercut by Chinese suppliers, according to industry experts. Pierre Gratton, president of the Mining Association of Canada, highlighted the challenges faced by Canadian projects in securing financing due to vulnerability to price fluctuations caused by China’s market influence.
Hodgson has been engaging with G7 counterparts to establish a critical minerals production alliance aimed at setting price floors and long-term buying agreements within the bloc. This initiative reflects concerns over China’s extensive control of the critical minerals supply chain, as highlighted by the International Energy Agency’s data showing China’s significant market share in refining strategic minerals. The initiative aims to capitalize on Canada’s abundant critical mineral resources, projecting substantial growth in domestic demand driven by industries like battery production.
Eyab Al-Aini, a senior research associate at the Canadian Climate Institute, emphasized the untapped potential of Canada’s critical mineral resources, identifying copper, lithium, graphite, cobalt, nickel, and rare earths as key minerals with significant growth potential. The analysis suggests that Canada’s demand for critical minerals could reach $16 billion annually by 2040, primarily due to the local battery production industry’s expansion. Al-Aini highlighted the increasing global investments in clean technologies, underscoring the critical role of these minerals in supporting the transition to sustainable energy sources.