Canada's Critical Minerals List is out. Now what?

Recently, Canada’s Minister of Natural Resources, Seamus O’Regan, announced the release of the country’s critical mineral list, consisting of 31 minerals/metals . Canada is the latest country to publish such a list, USA, EU, Japan and South Korea have previously published, as summarized in the table below.

Note that there are 9 items that appear on all lists: antimony, cobalt, gallium, indium, lithium, niobium, PGE/PGM, tungsten and vanadium.

Critical minerals list came about mainly from a geopolitical perspective to recognize the limited geographical diversity of supply of certain minerals and metals across the value chain, as well as the strategic importance of these minerals and metals for military, technology and sustainability applications. There are a few themes:

·      Minerals/metals where mine supply is limited to a few countries (e.g. cobalt from DRC, PGM and vanadium from South Africa, niobium from Brazil, REE and tungsten from China, lithium from Australia and Chile)

·      Minerals/metals that are recovered as byproducts of refining other metals, where production is limited to a few countries (largely dominated by China), such as indium and germanium from zinc refining, tellurium from copper refining, etc.

·      Minerals/metals that are key ingredients into sustainable technologies (e.g. lithium, nickel, cobalt and graphite for batteries, with resulting pathways to GHG emission reduction).

·      There are specific concerns relating to security of supply of REE from China, and the threat of withholding of supply to countries such as Japan and USA.

Criticality varies by region, and of the countries listed, Canada is unique in that it is a major net exporter of mineral and metal products, whereas the other countries are net importers. The Canadian list was selected to reflect the potential for Canadian mine and refined production, and potential integration with downstream manufacturing. While one aspect is on starting production of new critical minerals mines (e.g. for lithium, graphite and REE), another aspect is protecting the current production base. For aluminum, Canada has a world class smelting sector supported by low carbon electricity.

Canada has suffered declines in some critical metals production in the last 20 years, especially the reduction in zinc mining and zinc and copper refining. This has also led to declines in refined critical byproduct metals such as indium and bismuth. The table below shows the relationship between typical base metals production and byproduct metal production, including some critical minerals. For Canada, the continuation of plants such as Trail Smelting and Refining Complex, the Sudbury nickel smelters, Horne Smelter and CCR copper refinery are vital for production of refined critical metals in Canada.

Should the Canadian Government wish to further promote critical minerals production in Canada, it will be important to realize the intent of the Canadian Minerals and Metals Plan by providing incentives for mine development, assistance with strategic infrastructure, certainty on permitting processes, facilitating Indigenous engagement and participation in development, and support for in country smelting and refining.

Governments can sometimes help to facilitate development of, or fund, infrastructure for remote mine sites such as roads and ports.In certain cases, Canada should continue to recognize responsible supply chains for the refining of Canadian mined mineral and metal content, such as the refining of Ni-Cu-Co-PGM matte from Glencore Sudbury Nickel Operations into refined Ni, Cu, Co and PGM at Nikkelverk Refinery in Norway, and the export of copper concentrates from Western Canada to Asia.

Cooperation with trading partners and allies such as USA, UK and EU will be important to ensure that Canada is playing an effective role in supply of reliable, ethical and low-carbon critical minerals. The geography of Canada should be considered for the location of new smelting and refining capacity given transport costs and logistics. There may be good opportunities for integrated mining, smelting, refining and downstream manufacturing in Ontario and Quebec, building off existing Glencore and Vale operations. It will be harder to grow such complexes in BC due to distance from the Canadian manufacturing regions and US customers.

While the publication of the Canadian critical minerals list won’t in itself lead to immediate production increases, it signals government interest in the mining sector, and a belief that industry can contribution to supply the ingredients for sustainable technologies. This may well elevate the business case for certain mining, smelting and refining projects here in Canada. Watch this space!

References:

Humphries, M, Critical Minerals and U.S. Public Policy, Congressional Research Service, June 28, 2019.

Houses of Parliament (UK), Parliamentary Office of Science and Technology, Access to Critical Minerals, PostNote Number 609, September 2019.

Australian Government, Department of Industry, Innovation and Science, Australian Trade and Investment Commission, Australia’s Critical Minerals Strategy, 2019.