Canada’s Critical Minerals Strategy: Building a Green Supply Chain for the Energy Transition

By Denis Koshelev

The global transition to clean energy hinges on a secure and sustainable supply of critical minerals. Canada is strategically positioning itself at the forefront of this shift, implementing a comprehensive national strategy to responsibly process the essential minerals required for technologies such as electric vehicles, solar panels, and wind turbines.

This involves a dedicated focus on domestic processing capabilities, fostering innovative and environmentally responsible projects. Through significant government investment, partnerships with Indigenous communities, and collaborative efforts with international allies, Canada is building a resilient value chain from mineral extraction to advanced manufacturing. In 2024, Canada achieved a significant milestone, surpassing China to be recognized as the country with the highest potential to establish a secure, reliable, and sustainable electric vehicle supply chain. [36]

Overview of the Strategy and its Goals

Core Objectives

Canada’s Critical Minerals Strategy, launched in December 2022, provides a comprehensive framework to guide the nation’s approach to developing its vast critical mineral resources. The strategy is built on five core objectives: supporting economic growth, competitiveness, and job creation; promoting climate action and environmental protection; advancing reconciliation with Indigenous peoples; fostering diverse and inclusive workforces and communities; and enhancing global security and partnerships with allies [1].

A key overarching goal is to position Canada as a leading global supplier of responsibly sourced critical minerals and processed materials, thereby contributing to global decarbonization efforts and strengthening domestic and allied supply chains.

The strategy identifies 31 minerals as critical for Canada, selected based on their strategic importance to Canada’s economic security, their necessity for transitioning to a low-carbon and digital economy, and their potential for supply chain disruptions. These minerals include those essential for electric vehicle (EV) batteries (lithium, cobalt, nickel, graphite), clean technology applications like wind turbines and solar panels (rare earth elements, tellurium, indium), and advanced manufacturing.

The government’s approach is not merely to extract and export raw materials but to build out the entire value chain within Canada, creating higher-value products and more skilled jobs [2].

“Fab Five” Minerals

While Canada’s Critical Minerals Strategy encompasses a list of 31 critical minerals, particular emphasis is placed on a subset often referred to as the “Fab Five” due to their crucial role in clean energy technologies and Canada’s potential to be a significant global supplier. These five minerals are lithium, nickel, cobalt, graphite, and copper [3].

From Strategy to Action

Federal Funding Programs

To achieve these ambitious goals, the Canadian government has backed its strategy with substantial financial commitments aimed at de-risking private sector investment and accelerating the development of critical mineral projects, particularly in processing and value-added manufacturing. As of June 2024, over $3.08 billion in grants and contributions were available for critical minerals projects through various federal programs. These include the Strategic Innovation Fund (SIF), which supports large-scale projects and has funded initiatives like the E3 Lithium and Nemaska Lithium projects. The Critical Minerals Infrastructure Fund (CMIF), with a budget of $1.5 billion, focuses on supporting the enabling infrastructure, such as roads, bridges, and clean energy access, necessary for critical mineral development, particularly in remote and Northern regions [1].

Additionally, the Critical Minerals Research, Development and Demonstration (CMRDD) program provides funding for innovation in processing technologies and the development of a circular economy for critical minerals. For instance, the CMRDD program provided $4.9 million to Cyclic Materials for a rare earth element recycling demonstration plant and $3.5 million to Green Graphite Technologies for graphite recycling technology [5].

A notable example of a successful Indigenous partnership in critical minerals development in Canada is the collaboration between mining companies and Indigenous communities through Impact Benefit Agreements (IBAs), such as those with the Cree Nation of Wemindji and First Nations in Northern Saskatchewan. [37] Additionally, Ontario’s government has committed nearly $3.1 billion in loans, grants, and scholarships to support Indigenous participation, partnership, and ownership in the province’s critical minerals supply chain. [38]

Private Sector Engagement

The Canadian critical minerals processing sector is attracting significant interest and investment from private companies, ranging from established mining giants to junior explorers and specialized technology firms. This private sector activity is crucial for translating Canada’s mineral wealth and government support into tangible processing capacity and economic benefits. Major mining companies like Vale Canada are investing in their existing nickel and copper processing operations to meet the growing demand for these metals in clean energy applications. Teck Resources, a leading copper producer, is also a key player, supplying copper essential for electrification and renewable energy infrastructure [3].

These established companies bring extensive operational experience and capital to develop and expand processing facilities. Alongside these majors, numerous junior and mid-tier companies are driving innovation and project development in specific critical mineral value chains.

For lithium, companies such as Frontier Lithium, E3 Lithium, and Nemaska Lithium are at the forefront of developing lithium extraction and refining projects, often forming strategic partnerships to secure funding and market access. Mangrove Lithium secured a $50.4 million investment for its BC plant from a consortium including Mitsubishi Corporation and Asahi Kasei [8].

In the cobalt sector, Electra Battery Materials is a prominent example of a company securing substantial private and public investment to build a dedicated cobalt sulphate refinery [26].

Northern Graphite is leading the charge in developing domestic graphite production and processing capabilities, aiming to supply anode material for lithium-ion batteries [18]. In the rare earth elements space, Ucore Rare Metals is advancing its separation technology and plans for a strategic metals complex. At the same time, the Saskatchewan Research Council, a provincial crown corporation, has successfully commissioned a commercial-scale rare earth processing facility [15]. Vital Metals’ Nechalacho project in the Northwest Territories is focused on developing the tardiff deposit, which is considered one of the highest-grade rare earth deposits globally. [33]

Commerce Resources Corp.’s Ashram rare earth deposit in Quebec is pivotal to Canada’s ambition of becoming a leading global supplier of critical minerals. This project is strategically positioned to meet the escalating demand for neodymium, praseodymium, and other rare earth elements essential for clean energy technologies. [34]

The involvement of international partners, such as Mitsubishi Corporation’s joint venture with Frontier Lithium, highlights the global interest in Canada’s critical minerals potential [6]. The Canadian Climate Institute report notes that tens of billions in investment could be unlocked by 2030 with the right policy environment, indicating significant further potential for private sector-led project development. However, the report also cautions that regulatory delays and uncertain timelines can hinder private investment [3].

Planned and Ongoing Processing Projects

Innovations in Processing Technologies

Canadian companies and research institutions are at the forefront of developing and implementing innovative technologies for the processing of critical minerals, with a strong emphasis on sustainability, efficiency, and circularity. Mangrove Lithium is pioneering an electrochemical process for lithium refining that is designed to be both cost-effective and environmentally sustainable [28].

St-Georges Eco-Mining Corp., in partnership with LiOH Corp and COALIA, is developing a laboratory-validated process for lithium extraction from spodumene concentrate that uses nitric acid as a leaching agent. This method claims to recover over 90% of lithium and also produces high-purity aluminum concentrate and nitrogen-based fertilizer as by-products, showcasing a move towards zero-waste processing [29].

In the nickel sector, FPX Nickel Corp. is leveraging the unique properties of awaruite, a nickel-iron mineral found at its Baptiste Project in British Columbia. The innovation lies in the mineral’s low sulphur content, which allows for concentration at the mine site and direct shipping to refineries, bypassing the energy-intensive smelting step typically required for nickel sulphide ores. This, combined with the use of clean hydroelectric power and electric mining equipment, positions the project for exceptionally low carbon emissions. [30]

Weber Manufacturing Technologies Inc. is developing a vapometallurgical process, specifically the carbonyl process, to extract nickel from a variety of non-pure, nickel-containing feedstocks, including recycled batteries [31]. This technology aims to produce nickel powder suitable for advanced battery manufacturing, offering a pathway for recovering nickel from secondary sources.

For rare earth elements, Cyclic Materials has developed a patented process to recover REEs from shredded electronic waste, producing a material called Mag-Xtract. This innovation is crucial for establishing a circular supply chain for these critical materials. [32]

Innova Hydrogen Corp. is working on catalytic methane pyrolysis technology to convert natural gas into emission-free graphite and hydrogen, a novel approach to producing graphite with a low environmental impact [19]. These technological advancements are critical for Canada to establish a competitive and sustainable critical minerals processing industry.

Issues and Criticism

Mining and processing critical minerals can have significant environmental impacts. For example, mining in northern Canada, where many critical minerals are located, could lead to the destruction of carbon-rich peatlands, pollution of wild rivers, and other ecological damages. The extraction process may also disrupt habitats and biodiversity in these fragile regions. [35] In regions where carbon-rich peatlands are at risk, provinces such as Alberta and Manitoba have implemented specific regulations. For example, Alberta requires peat operations to obtain approvals under the Environmental Protection and Enhancement Act, the Water Act, and the Public Lands Act, with mandatory conservation and reclamation plans [39]. Manitoba’s Peatlands Stewardship Act mandates comprehensive management and recovery plans for peat harvesters and restricts commercial peat development in protected areas. [40]

The federal government has also committed to Indigenous-led conservation initiatives and recognizes the need for robust governance and risk management to achieve its environmental and reconciliation objectives. [41] Still, Indigenous communities often face internal divisions over resource development, exemplified by the Nemaska Lithium project in northern Quebec. While the Nemaska Cree band council supports the mine for jobs and royalties, critics like former chief Thomas Jolly fear Rupert River contamination and reject the climate change justification. [35]

Canada’s regulatory framework, while designed to protect the environment, can be a barrier to timely project development. The lengthy timelines for permitting new mines and processing facilities, often 10 to 15 years, can deter investment and slow down the development of critical mineral supply chains. [3] Ongoing concerns persist regarding the adequacy of current policy frameworks, particularly concerning the cumulative impacts on biodiversity and carbon sinks. Canada’s commitments under international agreements, such as the Kunming-Montreal Global Biodiversity Framework, require the country to conserve and restore significant portions of its land and waters by 2030. Achieving these goals while expanding critical mineral mining remains a complex challenge. [42]

Verdict

Canada stands at a pivotal moment in the global race for critical minerals. While the federal Critical Minerals Strategy lays a vital cornerstone, truly seizing this opportunity demands more than a static plan – it requires a dynamic, living strategy, constantly sharpened and refined.

The current landscape is fraught with hurdles. Key areas for continuous improvement include streamlining regulatory and permitting processes to reduce timelines and uncertainty, which are currently cited as major impediments to investment and project development. A primary concern is the environmental footprint, as critics question whether Canadian mineral extraction and processing can genuinely achieve responsible practices given current greenhouse gas emissions and ecological harm. Compounding this, the industry grapples with regulatory instability. Investors and stakeholders are often reluctant to commit substantial capital due to Canada’s frequently shifting environmental regulations and intricate frameworks, particularly those on Indigenous land rights. This unpredictable regulatory landscape undermines the long-term stability essential for major mining investments.

Government initiatives aimed at accelerating mining projects also draw scrutiny. Critics argue that these “fast-tracking” efforts often lack transparency, adequate resources, and effective communication with mining companies, leading to operational inefficiencies and eroded trust. Furthermore, Canada struggles to compete economically with nations like China, which have established vast mining and processing infrastructure abroad. This raises serious questions about Canada’s ability to maintain its prominent role in the global minerals market without compromising its high environmental and social standards. Finally, local opposition, often termed “Not in My Back Yard” or NIMBYism, presents a significant hurdle. Despite the escalating global demand for critical minerals, such community resistance impedes Canada’s capacity to expand its essential mineral processing industry.

Canada has the resources, regulatory frameworks, and industry commitment to become a leader in critical minerals for EVs and solar panels, and to do so more responsibly and cleanly than most global competitors. To accelerate the global energy transition, expanding production at the necessary speed and scale demands sustained investment in green mining technologies and processing infrastructure. This growth also requires streamlined permitting and regulatory frameworks, along with genuine, early, and continuous collaboration with Indigenous communities. As well as the enforcement of environmental regulations and transparent public disclosure. Canada’s leadership will depend on its ability to balance rapid growth with uncompromising environmental and social responsibility.

References