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Not a day seems to go by in 2022 without a report of another catastrophic climate event. From monsoons that left a third of Pakistan underwater, to extreme drought and wildfires in Spain, to hurricanes Fiona and Ian that devastated coastal communities in Canada and the United States, few countries have been spared the effects of climate change. If scientific predictions are accurate, the situation will only worsen in coming years.
As the world works to reduce carbon dioxide emissions to mitigate this threat, one technological change looms large: electrification. All manner of vehicles, from cars to trucks to planes, are being designed to run on electricity. Apart from preserving the planet, this shift presents vast opportunities for business in the form of new technologies, energy savings and cost reductions.
This shift also demands something else: a large and reliable supply of critical minerals. Electric batteries require cobalt, lithium and nickel; the demand for these minerals is growing insatiably. McKinsey & Company projects that the global market for battery cells will grow about 20 per cent every year to $360 billion (U.S.) in 2030. Consequently, the World Bank estimates global demand for critical minerals could expand by 500 per cent within the next
30 years. For lithium and graphite, demand could increase by as much as 4,000 per cent.
Unless the demand for these minerals can be satisfied, the electrification boom will turn to bust. This is where Canada comes in.
With 200 active mines across the country, Canada is already a major producer of critical minerals, including nickel, potash, aluminum, indium, niobium, platinum group metals, titanium concentrate and uranium. Canada has the further potential to supply significant quantities of lithium, cobalt, graphite, copper and rare-earth elements to an energy-hungry world. Spread across multiple jurisdictions, including British Columbia, the Northwest Territories, Québec and Ontario’s so-called “Ring of Fire,” these mineral reserves also represent an important economic development tool, particularly for First Nations communities that stand to benefit from their extraction.
Canada also has another advantage to leverage: its relationship with the United States. In January 2020, Canada and the U.S. announced a joint action plan on critical minerals to advance bilateral interests. The U.S. had begun investing in critical mineral exploration under the Trump administration, but has now gone one step further under Biden, announcing it will fund overseas mining projects to obtain more critical minerals necessary to build renewable technology. Driving this new agenda is geopolitics — specifically, the dominance of political and economic rival China in the critical minerals market.
In June 2022, the U.S. established a Minerals Security Partnership with a host of countries, including Argentina, Brazil, the Congo, Tanzania and Canada. As part of its engagement, the U.S. is open to “providing a loan guarantee or debt financing” to countries with plentiful supplies. Other nations, including Australia, France and the United Kingdom, are also involved as strategic partners. Congress additionally linked half of a consumer electric vehicle tax credit to a requirement that cars be made with minerals that were mined or processed in the U.S., or any nation that signed a U.S. free-trade agreement, placing Canada at the front of the line.
This opportunity is not lost on the Canadian government, which published a critical minerals consultation paper this summer and will be releasing its full strategy this fall. The last federal budget committed up to $3.8 billion to launch this strategy, which includes up to $1.5 billion on supply chain infrastructure, $144 million for technology research and development, and a 30 per cent critical mineral exploration tax credit. These efforts also have the potential to advance Indigenous reconciliation in local communities.
In a world buffeted by the uncertainties of climate and geopolitics, Canada can provide a stable and secure source of the building blocks necessary for a net-zero world. Governments at home and abroad are willing to support industrial development that will benefit not only Canada, but all nations on earth. This represents tremendous opportunities for businesses on both ends and on all links of the supply chain. It’s now up to investors and industry to step up and make Canada into the energy superpower the world needs it to be.