Canada could gain billions from refining more metals

Canada risks leaving more value from its critical minerals abroad unless it builds more processing capacity at home, the government’s trade boosting agency says.

A sustained shift into more sophisticated exports could add as much as $98 billion (US$70 billion) a year to the country’s economy by 2035, Export Development Canada (EDC) said on Thursday.

“By exporting raw commodities rather than more complex, processed products, companies leave significant profits on the table,” Alison Nankivell, president and CEO of the Crown corporation, said in a new report. “The ability to sell more complex products generates gains that compound over time.”

For miners, the report reframes the push to expand critical-minerals output: extracting more won’t deliver the largest economic payoff unless Canada keeps more processing, technology and manufacturing at home. EDC pointed to rare earths, graphite, lithium, copper and uranium as commodities with scope for more domestic value creation.

The report comes two days after Prime Minister Mark Carney’s Canada Investment Summit in Toronto put mining and critical minerals at the centre of Ottawa’s push to draw more capital into Canadian industry. Banks pledged billions in resources financing. Ottawa expanded investment tax deductions to mining and backed Generation Mining’s (TSX: GENM; US-OTC: GENMF) Marathon copper-palladium project with $140 million.

Downstream gains

Critical minerals offer a clear example of the gap EDC wants Canada to close. Canadian companies are moving beyond mining rare earths, graphite and lithium toward processing and refining products for electric vehicles, advanced manufacturing, digital technology and defence, according to the report.

EDC’s report, From resources to resilience: How Canada can capture more value through trade, mapped a similar path for uranium. Mining supplies the raw material, but more value lies downstream in nuclear fuel, reactor components, control systems and services.

Copper follows the same pattern. Canada could move from mined metal into specialty conductors, transformer components and equipment for power grids, data centres and artificial intelligence infrastructure.

Value gap

EDC described the broader problem facing resource-rich economies such as Canada and Australia as a “commodity trap.” Strong demand for raw materials can reinforce extraction while processing, technology and manufacturing develop elsewhere.

Commodity dependence has traditionally been associated with developing economies, particularly in sub-Saharan Africa and South America, EDC said. But Canada can face a version of the same problem if it doesn’t build industries around mining.

The country needs to use those resources to build refining, advanced materials, technology and specialized services that command higher margins.

Complexity slide

Canada ranked 35th globally in economic complexity in 2024, down from 17th in 1995, according to EDC. Economic complexity measures how well an economy turns knowledge and know-how into competitive exports. China and South Korea have climbed sharply, to 10^th from 42^nd and to third from 21^st, respectively.

EDC linked Canada’s decline since 1996 to about 3% less growth in real GDP per person over a decade. Its model estimated moving into products close to Canada’s existing capabilities could add about $53 billion to GDP by 2035. A broader shift into more complex exports could lift the gain another $45 billion.

That figure applies to the whole economy, not mining alone. EDC said the estimate may be conservative because building new capabilities can open the way to more advanced industries later.

Capacity gaps

Building those industries will take more than new processing plants. EDC identified shortages of long-term capital, skilled workers, commercialization capacity and trade infrastructure as barriers to higher-value production.

Canadian companies often struggle to secure patient, risk-tolerant capital for large growth plans, the agency said. That can leave firms unable to finance the plants, technology and expertise needed to move beyond extracting and selling commodities.

Infrastructure poses another constraint. Canada’s transport network remains geared largely toward bulk commodities, while higher-value supply chains need tighter links among mines, processors, manufacturers, roads, railways and ports.

EDC said port delays, weak automation and limited digital systems raise costs and hurt competitiveness.