Canada's "Generational" Critical Minerals Opportunity Needs Efficient Regulatory Support

Critical minerals represent a "generational" economic opportunity for Canada, Minister of Natural Resources Jonathan Wilkinson said during a Prospectors & Developers Association of Canada (PDAC) convention keynote.

“Effectively, there is no energy transition without significantly augmented supplies of critical minerals,” he said, highlighting a trend that mining market participants are watching closely — the World Bank forecasts that a 500 percent increase in the production of critical minerals, including lithium, cobalt and graphite, will be necessary to meet demand by 2050.

When it comes to mining, Canada is reviewing its regulatory process for clean energy projects, including critical minerals, as permitting is one of the biggest hurdles faced by junior miners today.

“The urgency of the climate crisis means it simply cannot take us 12 to 15 years to permit a new mine in this country,” Wilkinson said. “The work to establish new mines must be efficient if we are to affect the transition to a net-zero future.”

He told the audience at the conference that approvals must be done in a manner that both ensures environmental sustainability and respects the rights and the interests of Indigenous peoples.

To reach its net-zero emissions ambitions by 2050, Canada will ban the sale of fuel-burning new cars and light-duty trucks from 2035. That means the need for metals such as lithium, which is used in electric car batteries, will increase rapidly.

Speaking at a panel during PDAC, lithium producer Livent's (NYSE:LTHM) CEO Paul Graves said that today the global lithium supply chain is “completely unfit for purpose” when looking at total demand for the material in the coming years. By 2030, lithium consumption is expected to reach nearly 3 million metric tons from about 160,000 to 170,000 metric tons in 2018.

“If we all just produce mine materials, not a single kilo will find its way into a battery. This is a chemical business, first and foremost,” Graves said. “The key to Canada and everywhere is less about how do we get the base material out of the ground, but how do we build a supply chain that's capable of turning this into usable battery chemicals.”

For Graves, it's also important to look at how to stop raw materials from being exported to merchant chemical plants in China, and instead keep as much of the value as possible in the countries where mining actually takes place.

“My one takeaway for anybody who has the resources that Canada has is: Do not think that having the resources alone is sufficient for you to succeed,” Graves said. “If your industrial policy does not encourage, allow, support and incentivize the building of downstream capabilities in country, then some other country will benefit from your resources.”

Supply chain security has become a key topic for governments around the world as they seek to take more control and reduce their dependence on Asia. “We are all increasingly aware of the need for like-minded countries that share values to actually have access to strategic resources that are required going forward,” Wilkinson said. “And that certainly includes your critical minerals.”

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Securities Disclosure: I, Priscila Barrera, currently hold no direct investment interest in any company mentioned in this article.