Critical Minerals Strategy focuses on faster timelines, building remote infrastructure

The federal government on Friday unveiled the details of its Critical Minerals Strategy, a plan first introduced in its April budget that earmarks almost $3.8 billion over eight years to further develop Canada’s place in the global critical minerals industry.

A significant portion of the total funding — $1.5 billion — is allocated over seven years for constructing infrastructure for critical minerals projects in remote areas, such as the Ring of Fire in northern Ontario. And $40 million is set aside to support northern regulatory processes in reviewing and permitting projects.

Officially announced in Vancouver by Natural Resources Minister Jonathan Wilkinson, the 52-page document outlines the government’s plan for Canada “to become a global supplier of choice for critical minerals” and the digital technologies they enable.

“There is no energy transition without critical minerals,” Wilkinson said at the Pinnacle Hotel Harbourfront. “The sun provides the raw energy but electricity flows through copper, nuclear power requires uranium, [and] electric vehicles require batteries made with lithium and cobalt.” 

Out of a list of 31 critical minerals in Canada, the strategy prioritizes six for their economic growth potential and status as inputs for supply chains: lithium, graphite, nickel, cobalt, copper, and rare earth elements.

It also focuses on five segments in the critical mineral value chain: geoscience and exploration; mineral extraction; intermediate processing; advanced manufacturing; and recycling.

To build competitive value chains in Canada, the stages of the industrial process must be integrated, and all can be built domestically so that mineral resources aren’t just exported for processing before they’re re-imported as final products, the strategy says.

Wilkinson said the focus of the strategy is to expand the critical mineral sector while doing things in the right way. 

“It can’t take us 12-15 years to open a mine in this country if we want to accomplish our climate goals,” he said, adding that the government plans to accelerate processes and timelines while respecting the environment and Indigenous peoples, who “must see benefits through mining projects.” 

The document doesn’t identify any new funding streams that weren’t already set out in Budget 2022.

Areas of focus

The strategy is guided by six areas of focus: driving research, innovation, and exploration; accelerating project development; building sustainable infrastructure; advancing reconciliation with Indigenous peoples; growing a diverse workforce and prosperous communities; and strengthening global leadership and security.

In seeking to drive innovation and exploration, $79.2 million will be earmarked for public geoscience and exploration to help identify and assess mineral deposits. Under this focus, the new 30% Critical Mineral Exploration Tax Credit for targeted critical minerals will be introduced, and $47.7 million allocated for upstream critical mineral research and development through research labs. Another $144.4 million is set for further R&D, and the use of technologies to support critical mineral development for upstream and midstream segments of the value chain.

Wilkinson said that more investment in geological mapping across more areas of the country will benefit the operations of exploration companies. 

“[And] there’s $1.5 billion in the funding for infrastructure that can include roads or transmission lines in the north that can actually help mines,” he said. 

To accelerate project development, the strategy identifies the need to streamline project assessments and permits, as well as strategic investments to unlock potential in mineral-rich regions.

To that end, three main funding initiatives identified in the 2021 and 2022 federal budgets will be accessed: the $1.5 billion critical minerals envelope under the Strategic Innovation Fund (SIF) to support advanced manufacturing, processing and recycling; $40 million to support northern regulatory processes in project reviewing and permitting; and $21.5 million for the Critical Minerals Centre of Excellence to develop policies to assist project developers in navigating regulatory processes.

The SIF will be among the “most significant” direct funding avenues, the strategy notes, with the fund helping to build critical mineral value chains where prefabrication and manufacturing activities are done domestically, while supporting projects that decrease reliance on foreign critical mineral inputs. SIF funding will begin in 2024-2025 and last for six years.

While the strategy says the government is exploring regulatory harmonization with U.S. partners, Wilkinson said Canada isn’t going to wait for the U.S. to formulate its own permit approach and would go ahead with its own. 

The minister also said that with permitting rules differing by province and territory, the “common theme” is they have to be expedited but must not “cut corners environmentally and they must respect Indigenous peoples.” 

The focus on building sustainable infrastructure aims to address the challenges of developing critical mineral projects in remote or underdeveloped areas. The strategy states that the costs of building infrastructure in those areas discourage investment and “hinder the socio-economic development” of communities open to mineral development. And in northern regions, underdeveloped infrastructure poses challenges for industrial development and access to Canadian and international markets. A total of $1.5 billion will be allocated over seven years starting in 2023-2024 for such infrastructure development, particularly for priority deposits.

In addition, the strategy says that since off-grid mining operations in remote areas depend heavily on GHG emitting power sources, strategic investments in green energy infrastructure would improve the environmental performance and sustainability of critical mineral projects by integrating them into the value chain. Such investments could spur competitiveness and cut energy costs.

“I met with both the Yukon and N.W.T. governments earlier this week [and] they’re hearing from mining companies who want to develop these deposits for access to clean energy,” Wilkinson said. “There’s a huge push for the government to think about infrastructure that is going to actually facilitate the development of some of these areas where there is a cluster of minerals.” 

The strategy doesn’t specify how the infrastructure funds would be disbursed or accessed.

In seeking to advance reconciliation, the strategy acknowledges that Indigenous peoples are the rights holders and in some cases the title holders to lands where mineral resources are located. Engaging Indigenous peoples in critical mineral development will seek to spur Indigenous participation in projects while respecting Aboriginal and treaty rights, advance economic reconciliation and support safe communities throughout the critical mineral project lifecycle.

Chief Sharleen Gale of Fort Nelson First Nation speaks at the Critical Minerals Strategy announcement on Friday. CPAC image

For this focus, at least $25 million will be allocated for Indigenous participation and early engagement in the strategy, out of $103.4 million over five years starting in 2022-2023 through the Indigenous Natural Resource Partnerships Program. That program is accessible to Communities, businesses and organizations.

Actions under the strategy will comply with the Canadian’s government’s implementation of the United Nations Declaration on the Rights of Indigenous Peoples Act, the document states.

Chief Sharleen Gale of Fort Nelson First Nation in northern B.C, who is also chair of the First Nations Major Projects Coalition, told the audience at the Pinnacle Hotel that she encourages the government to go even further in developing the strategy. 

“Ensure proponents of battery mineral projects approach First Nations as early as possible and ensure we’re part of development on our lands,” she said. “The key to success in this sector is free, prior and informed consent.”

The fifth focus of growing a diverse workforce and prosperous communities recognizes that up to 113,000 new workers will be needed in the mining sector by 2030 to meet demand and replace workers leaving the industry. And as the critical minerals industry further develops, demand will ramp up for a diverse set of skills needed for geoscience, AI, computer technology and automotive assembly.

Several federal training initiatives will help build up those skills, including through the Sectoral Workforce Solutions Program, the Indigenous Skills and Employment Training Program, the Skills and Partnership Fund and the Youth Employment and Skills Strategy.

Diversity and inclusion will be given priority in those efforts, with the federal government supporting the training and retention of women, youth, Indigenous peoples and other equity-seeking groups.

The sixth and final focus seeks to ensure international engagement on critical minerals aligns with the federal government’s strategic objectives and its Indo-Pacific Strategy.

It will also further integrate the government’s Responsible Business Conduct Strategy, launched in April 2022 with multilateral agreements; and leverage initiatives like Towards Sustainable Mining to encourage environmentally friendly mining practices and international collaboration to prevent products from conflict, child labour and “environmentally poor” operations from entering supply chains.

Budget 2022 allocates $70 million over eight years starting in 2022-2023 for international partnerships to promote Canadian mining leadership, including promoting ESG standards and supporting multilateral critical mineral commitments.

Asked what would stop a mining company in Canada from selling its lithium to China, Wilkinson responded that the government has a “carrot and stick” approach. 

“With the carrot, we’re interested in fostering development of processing industries…and we set aside money in the critical minerals strategy as well as in the Strategic Investment Fund to ensure those developments are happening in Canada. But there’s also the case that part of the strategy is about geopolitics. It’s about ensuring that not just Canada but democratic countries around the world have access to the resources they require, in a manner that doesn’t make them vulnerable. In the same way we saw Germany become vulnerable to pressures from Russia,” he said. 

Wilkinson then mentioned the divestments that Canada undertook in early November, forcing some Chinese companies to divest their holdings in critical minerals firms. 

“There is a broader review of investments in this country. We need to be consistent in how we do this. But we welcome investments from other countries in a way that promotes economic opportunities for Canada,” he said.