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In a new piece for Canada’s Globe and Mail, Niall Mcgee discusses China’s quiet but systematic campaign to corner the critical minerals segment in Canada and stakeholder reactions in Ottawa, or more precisely, the lack thereof.

Citing the 2019 acquisition of the Tanco Mine in Manitoba, known as one of the world’s few sources of cesium as well as highest-grade lithium, by the Chinese Sinomine Resource Group, which earlier this year began shipping lithium produced at Tanco back to China to feed the country’s expansive EV industry, Mcgee laments that there has been little reaction from Ottawa:

“Although Ottawa has made clear that it does not want to be beholden to a hostile foreign power for critical minerals such as lithium, so far there has been little in the way of action from the federal government to prevent that from happening.”

Mcgee cites mining investor and activist shareholder Peter Clausi, who goes as far as calling the Canadian federal government, which could have initiated a review of the acquisition on national security grounds, “morons” for failing to do so:

“It’s [i.e. the Tanco Mine is] known for having the world’s highest grade lithium. The grade is so high that nobody had the technology to process it. And the morons let it go,” Clausi said.

As ARPN outlined in our discussion of the approval of the sale of Canadian lithium developer Neo Lithium Corp to Chinese state-owned Zijin Mining Group Ltd., in the process of which the Canadian government decided not to review the takeover on national security grounds:

“Foreign takeovers of Canadian companies are subject to an initial security screening by the government.  If the initial screening concludes that the takeover constituted a threat to Canada’s national security, it would trigger a more formal review under Section 25.3 of the Investment Canada Act, and the deal could be blocked.”

In the case of Neo Lithium’s project – the 3Q Mine – the Canadian Government argued that “Canada was unlikely to benefit from lithium produced from Neo’s project, because it was located far away, in Argentina.” However, the project could have played an important role in supplying Canada’s lithium needs at a time when the country is not extracting the material within its own borders.

The same could be said for the Tanco deposit.  As Mcgee elaborates, similar scenarios unfold for other metals and minerals:

“Canada has similar also-ran status when it comes to cobalt. This country produces only small amounts of the vital battery metal input, while China controls about 70 per cent of the market. China is even more dominant in graphite, with an 80-per-cent lock on the market. 

And while Canada is a major miner of nickel, another battery metal, it has no refineries that can process it for the battery industry.”

He cites Jeffrey Kucharski, adjunct professor at Royal Roads University and former assistant deputy minister of Alberta’s Department of Energy, who asked during parliamentary proceedings on the Neo Lithium deal:

“How can Canada build a lithium supply chain, or any other critical mineral for that matter, when it allows the assets of Canadian companies to be acquired by a country that seeks to cement its dominance in this sector?” 

As ARPN previously outlined,

“the development ties into the broader North American context of the United States and Canada having formalized a joint action plan on critical minerals in 2020 which included commitments by both governments to strengthen North American battery material supply chains against the backdrop of China’s ever-tightening grip on global supplies.

A stronger focus on critical mineral resource security through the prism of national security is certainly warranted, not just for our Canadian friends, but also from a U.S. perspective.

As Tsvetana Paraskova notes in a piece for Oilprice.com, ‘while the Administration was reviewing supply chain issues and vulnerabilities to its demand for critical minerals, China is moving in on Africa and South America to strike alliances and lend money to mineral resource-rich African countries, while Russia is thought to be providing shadow ‘security services’ in some African nations with a mercenary organization with links to the Kremlin.’

 Followers of ARPN know all too well that as the green energy transition accelerates, we will be facing significant critical mineral resource shortfalls.  For the United States (and for our close allies), the time to act is now. As Paraskova concludes, ‘(…) otherwise, America’s clean energy goals and hi-tech and automotive supply chains could depend on China.’

The energy provisions in the just passed Inflation Reduction Act, coupled with a prior invocation of the Defense Production Act for the “Battery Criticals” – lithium, cobalt, graphite, nickel and manganese — are indications that the urgency of the situation has begun to resonate with U.S. policymakers.

Of course, as we cautioned in our latest piece on the Inflation Reduction Act, “any new law this wide-ranging will require federal guidance on the way to implementation – and spark follow-on efforts by resource development opponents to roll-back some elements even as resource development proponents look to build on this new legislative initiative.”

However, there is good reason to hope that “the bill’s requirements will help jumpstart a more comprehensive push towards domestic sourcing and processing, onshoring, friend-shoring, and harnessing the materials science revolution,” all of which would represent a “critically important leap forward to build the secure, responsible industrial base our economy and national security needs,” in the words of General John Adams, U.S. Army brigadier general (ret.).

The mainstream media and parts of the political establishment may just now have begun to realize it — but followers of ARPN have long known that our nation’s critical mineral woes are real, and go beyond the often discussed battery criticals (lithium, cobalt, nickel, graphite, and manganese) and include one of the key mainstay metals: Copper.

Less flashy and headline-grabbing than some of its tech metal peers, copper deserves far more credit and attention than it is currently receiving. ARPN has long touted copper’s versatility stemming from its traditional uses, new applications and Gateway Metal status.

A quick look at a 2018 Visual Capitalist chart also makes unmistakably clear that copper is also an irreplaceable component for advanced energy technology, ranging from EVs over wind turbines and solar panels to the electric grid, and as such an indispensable building block of the green energy transition:

Copper — and its mainstay metal peer aluminum — are to be found in all four categories, hardware, electric motors, distribution & fuel and energy storage. The average EV requires four times more copper than gas powered vehicles, and the expansion of electricity networks will lead to more than doubled copper demand for grid lines, according to the IEA.

Consequently, it should not come as a surprise that a new report has taken a closer look at the copper supply picture in the context of the global push toward net zero carbon.

As reported by Bloomberg, a new S&P Global study “warns of ‘unprecedented and untenable’ copper shortfalls in the coming decade as suppliers grapple with a near doubling of demand by 2035. Prices that fell below $7,500 this week are seat to soar back above their $10,845 peak later this decade, driven by the metal’s key role in the clean-energy and transport industries.”

Current market slowdowns notwithstanding, forecasts see long term demand reaching around 50 million tons by 2035 from 25 million today, and an annual supply shortfall of almost 10 million tons could open up in 2035 according to the study — which would amount to the “equivalent to 20% of demand projected to be required for a 2050 net-zero world.”

The “burgeoning supply gap would increase the US’s reliance on copper imports from 44% to as much as 67% by 2035,” writes Bloomberg. Ultimately, supply shortages could become “so severe and prices so high in coming years that they risk delaying the global shift away from fossil fuels.”

As the Wall Street Journal pointed out earlier this year, there is no easy way out of the critical mineral resource challenge, as “years of underinvestment in new mines means they don’t have additional production that can be brought on quickly. After a decadelong focus on productivity, existing operations are mostly running at full tilt. Difficulties in getting permits to build pits and community opposition have slowed developments in some countries, and scuttled projects in others.”

And, as Laura Skaer, a member of the board of directors of the Women’s Mining Coalition and former director of the American Exploration & Mining Association, outlined in a piece for Morning Consult last summer, the challenge is not just mining, but also processing:

“Last year, the United States imported 37 percent of the copper we used. China already refines 50 percent of the world’s copper and the United States only refines about 3 percent. National security experts have warned that relying on China for critical supply-chain materials like refined copper poses a serious threat to America’s national security interests.”

However, as we previously argued,

“from a U.S. supply perspective, there is reason to be optimistic. While snubbing the material again for its updated Critical Minerals List, the Biden Administration has recognized copper as an integral component of Lithium-ion battery technology, in the context of being what we have called a ‘gateway metal‘ to other critical materials, and for its ‘use across many end-use applications aside from lithium-ion cells, including building construction, electrical and electronic products, transportation equipment, consumer and general products, and industrial machinery and equipment’ in its 100-Day Supply Chain Review report.

Coupled with new reports that ‘US regulators are warming to approving new domestic sources of electric vehicle battery metals, as Washington bids to avoid a reliance on strategic minerals imports similar to that on crude oil,’ this is an encouraging development.”

Thankfully, the private sector is ready to step up to the plate, harnessing advances in materials science and technology to help develop critical mineral resource supplies while maintaining and advancing sustainable mining practices. With the stakes ever-increasing, now is the time to unleash our nation’s mineral potential.

As the U.S. House of Representatives has passed its version of the FY 2023 National Defense Authorization Act (NDAA), another piece of legislation enacted earlier is beginning to bear fruit in the context of strengthening our nation’s critical mineral supply chains. Earlier this summer, the U.S. Department of the Interior announced it had set aside [...]

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While critical mineral resource policy is finally receiving the attention it deserves against the backdrop of increasing supply chain challenges, a look at the materials stealing the spotlight would have you believe the list of metals and minerals deemed critical from a U.S. national and economic security perspective is much shorter than it is. The [...]

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They say a picture is worth a thousand words. This Visual Capitalist graphic may not exactly qualify as a picture – but is certainly reveals a lot about the complexity and urgency of the West’s critical mineral woes, and underscores how China has managed to corner the strategic and clean energy materials supply chain especially when [...]

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