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Go West – A Look at the Western World in the Context of the Post-Cold War Critical Mineral Realignment

As world leaders continue to deliberate on the new realities of the post-Cold War world order in Davos this week,  ARPN takes a second look at the realignment underway in the minerals sector.  In this post, we shift our focus to the West, where the “Three Amigos Summit,” as the trilateral North American Leaders’ Summit between the prime minister of Canada, the president of Mexico, and the president of the United States is sometimes called, made some headlines directly relevant to critical minerals issues.

Leading up to the event, the three countries announced fresh commitments to work together on key sectors, such as semiconductors and critical minerals, as well as on supply chains and advanced workforce training.   As ABC News reports“those agreements include a cabinet-level summit on semiconductors, mapping mineral resources across the North American continent and promoting educational investment.”

The United States lists a number of countries as strategic partners in its quest to achieve greater “supply chain resilience.”   However, the Three Amigos’ commitments must be viewed in the context of the overall U.S. goal of establishing a more integrated North American supply chain with Canada and Mexico being not only the largest trading partners, but also the only ones with whom the U.S. shares national borders.

Canada and the United States have already taken their own steps to advance critical mineral supply chain security and decouple from adversary nations, i.e. China, deepened their cooperation bilaterally over the past few years, with a flurry of activities occurring over the past twelve months. Followers of ARPN will recall the invocation of the Defense Production Act and the passage of the Inflation Reduction Act. (see our Year in Review post for more).

For Canada, 2022 culminated in the launch of the country’s Critical Minerals Strategy in December 2022, with a stated goal of speeding up the permitting process for new mines in Canada after Ottawa cracked down on Chinese investment into the country’s critical mineral sector in the wake of growing national security concerns.  In line with these policies, the Canadian federal government has just greenlighted Canadian miner Galaxy Lithium Inc.’s project to construct a new lithium mine in Quebec.

To our south, Mexico, home to significant copper and silver deposits, is also known to have significant rare earths and lithium deposits.  While observers point out that a confluence of technological, legal and political challenges will likely continue to hamper critical mineral resource development leaving Mexico to “continue to assemble electric cars but not provide the materials for many of the key components required for a greener future,” closer cooperation between the Three Amigos in this area is welcome and likely beneficial in the long run, if Mexico is able to address some of its domestic obstacles.

Leaving North America behind, another key U.S. partner, Australia, is forging ahead with its push to strengthen critical mineral supply chains for its own industries and for the benefit of its partners. Earlier this week, the federal government in Canberra released guidelines for “new grants to help develop Australia’s critical minerals sector, support downstream processing, create jobs across regional Australia and support global efforts to achieve net-zero.”

Across the Atlantic, the European Union in September of 2022 proposed European Critical Raw Material Act, which aims to boost domestic critical minerals production, diversify supply chains and ramp up recycling efforts and which is scheduled to be released in the first quarter of 2023.

In a broader global context, the United States, Australia, Canada, Finland, France, Germany, Japan, Korea, Sweden, the United Kingdom, and the European Union have banded together to form the Minerals Security Partnership, an initiative to bolster critical mineral supply chains while ensuring that “critical minerals are produced, processed and recycled in a manner that supports the ability of countries to realize the full economic development benefit of their geological endowments” (see our post on the launch here).

Formation of the MSP, in the words of Reuters’s Andy Home, may signify a “tectonic realignment with far-reaching implications” as it — against the backdrop of Russia’s war on Ukraine and mounting tension with China — is “defined as much as anything by who is not on the invite list — China and Russia,” and likened it to the creation of a “metallic NATO (…) though no-one [was] calling it that just yet.”

While “the shape of an alternative international system is unclear,” as the New York Times posited earlier this week in a piece on a newly emerging post-Cold War world order, it appears that the great realignment has begun, and we can expect to see more developments along these lines in the coming months.