In a recent announcement made during the G7 Energy and Environmental Ministers Meeting, the Canadian government unveiled a significant and comprehensive strategic plan regarding critical minerals. Canada’s Minister of Energy and Natural Resources, Tim Hodgson, revealed 26 new investments and partnerships aimed at accelerating the development of critical mineral projects valued at up to 6.4 billion Canadian dollars (approximately 4.6 billion US dollars).
Canada, as the rotating chair of the G7, highlighted the core of this strategy as ensuring the supply of critical minerals reaches national security levels. This involves collaborating with trusted international partners to strengthen supply chains, reduce dependence on China, and secure essential resources for clean energy, advanced manufacturing, and defense purposes.
The Canadian government announced its intention to designate critical minerals as a national security priority under the Defence Production Act. This move allows the government to support the mining industry through guaranteed procurement and setting minimum prices.
Hodgson emphasized that this action enables Canada to activate its strategic reserve mechanism and support multilateral stockpiling initiatives. The government plans to reserve three different types of critical minerals (specific items undisclosed) to ensure the supply for the defense industry and support NATO’s deterrence and defense goals.
Speaking on the designation of critical minerals under the Defence Production Act, Secretary of Defense Procurement Stephen Fuhr described it as a “decisive step to protect our strategic resource sovereignty” and enhance Canada’s strategic alliance with NATO.
This major investment is the inaugural strategic project initiated under the Critical Minerals Production Alliance, aimed at reducing reliance on China. The alliance, led by Canada and jointly initiated with G7 partners, seeks to assist Western countries in establishing critical mineral production systems through signing price floor agreements or long-term procurement contracts.
Presently, apart from Japan, G7 countries heavily rely on China for a range of materials such as rare earth magnets and battery metals, with Beijing controlling a significant portion of the global supply chain for strategic minerals.
Hodgson stressed that these actions are taken to secure supplies beyond China, as accessing critical minerals is “becoming a tool of political and geopolitical coercion.”
Canada is collaborating with nine allied countries and industry partners, including France, Germany, Italy, Japan, Luxembourg, Norway, the United States, Australia, and Ukraine, to mobilize public and private capital to expedite the production of graphite, rare earth elements, and scandium.
The Canadian government has signed purchase agreements with specific companies to acquire the products of producers at predetermined prices in the future. This provides mining companies with demand and price certainty, ensuring minimum prices to prevent being outcompeted by Chinese suppliers offering lower prices.
Canada has entered into a graphite off-take agreement with Nouveau Monde Graphite based in Quebec, and a scandium off-take agreement with Australian miner Rio Tinto.
Rio Tinto secured a $25 million Canadian investment for its scandium production facility in Sorel-Tracy, Quebec, a metal used in aerospace and defense manufacturing.
Ucore Rare Metals received a conditional $36.3 million Canadian funding to expand its rare earth processing plant in Ontario.
Norwegian company Vianode AS received a letter of intent for potential financing of up to $500 million from Canada and $300 million from the German government to construct a synthetic graphite facility in Ontario.
Other beneficiaries include Northern Graphite, Focus Graphite, and Torngat Metals companies.
During a conference in Toronto, Canada furthered its cooperation with major resource nations. Australian Resources Minister Madeleine King and Hodgson signed a Joint Declaration of Intent for critical minerals cooperation.
King expressed, “I look forward to working with Canada to establish resilient supply chains that support innovation and economic growth.”
This Australia-Canada agreement follows last month’s critical minerals agreement between Australia and the United States, another crucial alliance action against Chinese rare earth dominance.
The financial support and purchase guarantees provided for specific critical mineral projects immediately boosted the stock prices of related companies.
Following the announcement of purchase agreements, Nouveau Monde Graphite saw a 24% surge in its stock price. Northern Graphite, operating North America’s sole producing graphite mine, also experienced a 29% increase in its stock price.
In conclusion, Hodgson remarked, “These investments form the cornerstone of Canada’s efforts to safeguard sovereignty, enhance competitiveness, and take on a leadership role in the global economy.”