One key point of contention was and is the global race for critical minerals, in the context of which the U.S. has taken steps to decouple from Beijing in the wake of pandemic-induced supply chain challenges, surging demand and rising trade and geopolitical tensions.  However, with China controlling much of the critical minerals supply chain, diversifying supply chains away from China is a daunting proposition given the complexity of value chains.

“The US attempt to pull away from China in the electric vehicle (EV) race is like navigating a road trip without a map, given the vast expanse of China’s routes through the critical minerals supply chain that is essential for EV battery production,” writes Sonja Cheung of the Asia Business Council in a new piece for the Hongkong-based South China Morning Post, adding that Washington’s efforts need to be more “assertive” to succeed.

Cheung points to the fact that while China owns most of the cobalt mines in the Democratic Republic of the Congo and has substantial lithium investments worldwide, the U.S. has so far  – while in talks with several other countries and the European Union “made just one trade deal, with Japan earlier this year.”  (A deal with nickel-rich Indonesia was inked after Cheung’s piece was released).

She argues that “to stand a realistic chance of countering China’s strong position in the EV market, Washington needs to double down on combining policy support, financial incentives and advances in technology, to reduce its reliance on imported materials.”

Concludes Cheung:

“The blueprint for accelerating the US EV industry is multifaceted – it involves not only extending tax credits but also installing a robust charging infrastructure across the nation and ensuring EVs are more competitively priced.

The US stands at a strategic juncture and investing in Canada’s abundant critical minerals supply could be a game-changer. As the world’s fifth-largest producer of graphite and nickel, Canada is not only a neighbour but also a natural ally with the potential to be a powerhouse in lithium, magnesium and rare earth elements – all vital in EV machinery. Strengthening this partnership could fortify North American supply chains and reduce reliance on China.”

To those of us used to asking Siri for directions, going on a road trip without a map sounds daunting, but this is one trip the U.S. cannot skip.  Thankfully, there are important pointers in the form of a comprehensive “all-of-the-above” approach the United States can use to navigate the road ahead, encompassing increased domestic production, permitting reform, recycling, R&D, and friend-shoring.  Of course, as is the case all too often, the biggest challenge ahead may be making it past the Washington, DC gridlock.

The post Navigating Without a Map? The Challenge of Decoupling from China appeared first on American Resources Policy Network.

Perhaps the most natural ally for the United States, is to our north – Canada.

Both countries have in recent years explored ways to partner up in their efforts to secure critical mineral supply chains, and have deepened and formalized their cooperation in this field in the context of the 2020 Canada-U.S. Joint Action Plan on Critical Minerals and various multilateral forums, including the Sustainable Critical Mineral Alliance launched at the end of last year, and the Minerals Security Partnership launched in June of 2022.

While many country-to-country communiques never make it past the bureaucratic boilerplate, the U.S.-Canadian relationship is “more than metaphorical” and “[u]nlike any of America’s other allies, Canada has long been part of a special relationship, linking the two country’s defense industrial bases as one” with the defense union dating back to the months preceding America’s entry into World War II, as ARPN’s Daniel McGroarty phrased it in a 2018 piece for Investors Business Daily. 

In a plea for greater bilateral critical minerals cooperation in the fall of 2021, former U.S. ambassador to Canada David Jacobson wrote in the Globe and Mail:

“We are in a race against time, and we cannot always count on the competition to play fair. Americans and Canadians have historically pulled together for the good of both nations in times of challenge. Such times are coming. Let’s once again plan for, face and beat this new challenge by together establishing our place in the global supply chain.” 

His call was echoed by U.S. Senator Joe Manchin (D-WV), who in the summer of 2022 suggested that the U.S.-Canadian energy and critical minerals partnership be strengthened “to ensure [the] free world’s energy security and address climate change.”

The bilateral partnership has been given a new boost with President Joe Biden’s visit to Ottawa last month, during which President Biden and Canada’s Prime Minister Justin Trudeau celebrated the two countries’ “progress under the Roadmap for a Renewed U.S.-Canada Partnership over the past two years and reaffirm our historic alliance, steadfast friendship, and commitment to overcome the daunting challenges of today and realize the full potential of the relationship in the future.”

The Joint Statement by President Biden and Prime Minister Trudeau specifically affirmed both parties’ commitment to creating “a strong, environmentally responsible and resilient North American critical minerals supply chain,” and the mutual goal of “identifying, securing and developing critical minerals extraction, processing, manufacturing, and recycling opportunities in both countries to diversify supply chains essential to clean energy, electric vehicles, semiconductors, aerospace, and defense, among other sectors (…).”

It further announced that the recipients of the $250 million of Defense Production Act Title III funding to mine and process critical minerals for electric vehicle and stationary storage batteries would include both U.S. and Canadian companies to be announced this spring.

With geopolitical tensions on the rise, the trade dimension of critical mineral resource policy is coming more and more into focus and the importance of building an integrated North American supply chain is increasing.  However, as ARPN and others have consistently argued, the United States cannot just rely on partners to meet U.S, critical mineral needs, the United States “also needs to contribute our part to a North American minerals alliance”, as Sen. Manchin phrased it.

As ARPN previously argued:

“Let’s do it. Let’s build out an integrated North American supply chain for critical minerals where possible — but let’s also not forget that closer cooperation with our friends and allies AND strengthening domestic resource development should not be considered mutually exclusive strategies.”

The post As Global Tensions Rise, the Buildout of an Integrated North American Critical Minerals Supply Chain is Coming into Focus appeared first on American Resources Policy Network.

They are not only “the material basis for integrated circuits that are essential to modern day life” – the “‘DNA’ of technology” which has “transformed essentially all segments of the economy,” they are also essential to national security, where they enable the “development and fielding of advanced weapons systems and control toe operation of the nation’s critical infrastructure,” as the Department of Commerce-led chapter in the Biden Administration’s 100 Day Supply Chain Review report outlines.

As such, they sit at the heart of U.S.-Chinese tech competition, and have been dubbed “the next frontier in the tech battle between the U.S. and China” for good reason.

In his State of the Union address last month, U.S. President Joe Biden touted last fall’s passage of the CHIPS and Science Act allocating new funding for research, development and production of semiconductors, which has spurred private investment in the sector. Following on the heels of the new law, the Commerce Department in October applied new export controls to China’s access to advanced computing chips, its ability to develop and maintain super computers and manufacture semiconductors.

As Shubham Dwivedi and Gregory D. Wischer wrote last month for RealClearEnergy, “[t]he subsequent chip measures were clinically targeted at critical chokepoints in the global chip supply chain, and have since been backed by important partners, including Japan and the Netherlands, two key players in the advanced semiconductor ecosystem.” 

But the semiconductor space is just the tip of the proverbial iceberg.

Write Dwivedi and Wischer:

“Semiconductors require various minerals such as silicon, gallium, arsenic, cobalt, and more. Silicon is the most common foundational material for chips today, while gallium arsenide is the second most common. Cobalt is increasingly important for advanced chips too.”

As long as China controls critical mineral supply chains – and a look at the latest USGS Mineral Commodity Summaries leaves no doubt about that, semiconductor supply chains – and as such national security will still be jeopardized.

In their quest to alleviate “undue geopolitical leverage,” U.S. allies like Canada, and more recently Australia, have taken steps to reduce Chinese influence in their critical mineral industries.

A proposal to bolster the Investment Canada Act (ICA) to empower government ministers to block or unwind critical mineral investments if these are considered as a threat to national security, considered a defensive measure against China which has invested $7 billion in Canada’s base metals sector in the past two decades, is expected to be finalized this spring. Prior to the unveiling of the proposal, Canadian officials had ordered Chinese companies to sell their stakes in three Toronto Stock Exchange-listed companies last fall.

Australia’s Treasurer Jim Chalmers recently blocked a request by a Chinese company to boost its investment in Australian REE company Northern Minerals via a prevention order, the first move of this kind since the Treasurer had expressed concerns over the “concentrated nature of the China-dominated critical minerals supply chain” elevated by the Russia-Ukraine war.

When Dwivedi and Wischer published their piece in February, they lamented that the CHIPS and Science Act represents a missed opportunity to strengthen the U.S. domestic critical mineral industry, and urged Congress to take up legislation to not only provide funding for domestic critical mineral projects, but rather also reform the cumbersome permitting system.

Since then, House Republicans have put forth the  Transparency, Accountability, Permitting and Production of (TAPP) American Resources Act, H.R. 1 which seeks to bolster U.S. critical mineral supply chains by reducing red tape, entry barriers and redundancies, and reforming the National Environmental Policy Act (NEPA) to provide industry with clearer timelines and more certainty, and would emulate, to an extent Canada’s and Australia’s approach to curbing Chinese influence by seeking to limit Chinese and other “bad actors’”involvement in the U.S. critical minerals industry.

H.R. 1 will only be an opening salvo in the discourse over securing the supply chains underpinning 21^stCentury technology, but it is becoming increasingly clear that the West has woken up to the seriousness of its over-reliance on Beijing, and the tech arms race is heating up.

The post Tech Arms Race to Heat Up as Western Nations Take Steps to Counter China on Semiconductors, Critical Minerals appeared first on American Resources Policy Network.

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.

The post Go West – A Look at the Western World in the Context of the Post-Cold War Critical Mineral Realignment appeared first on American Resources Policy Network.

While not explicitly naming China, observers see the 58-page strategy document as a “clear attempt to eat into Beijing’s market share” following on the heels of similar strategies launched by the United States and the European Union (…) that explicitly name ‘breaking dependence’ on China as a goal.

Wilkinson told reporters at the launch event that

“[p]art of the critical minerals strategy from an international perspective is about geopolitics. (…) It’s about ensuring that not just Canada but democratic countries around the world have access to the resources they require in a manner that does not make them vulnerable in the same way we saw Germany, for example, become vulnerable to pressures from Russia.”

Only a few weeks ago, Canada’s Deputy Prime Minister and Minister of Finance publicly embraced the concept of “friend-shoring,” the concept in which “democracies must make a conscious effort to build tour supply chains through each other’s economies” in remarks at a Brookings Foundation event in Washington, D.C..

In keeping with the new Critical Minerals Strategy, earlier this week, at the UN Biodiversity conference (COP15) in Montreal, Canada, Wilkinson was joined by representatives of Australia, France, Germany, Japan, the United Kingdom and the United States to announce the launch of the “Sustainable Critical Minerals Alliance to drive the global uptake of environmentally sustainable and socially inclusive and responsible development.”

According to the launch press release, “[m]embers of the Alliance welcome and encourage collaboration with Indigenous communities, non-governmental organizations, industry and other non-state actors, as well as actions taken domestically and globally to advance the objectives of the Sustainable Critical Minerals Alliance and call on others to join.”

The United States and Canada share a long special relationship which is “more than metaphorical” as ARPN’s Daniel McGroarty phrased it in a 2018 piece for Investors Business Daily. More recently, in 2020, the Canada-U.S. Joint Action Plan on Critical Minerals was announced on 9 January 2020 to

“advance bilateral interest in securing supply chains for the critical minerals needed for strategic manufacturing sectors, including communication technology, aerospace and defense, and clean technology. The Action Plan is guiding cooperation between officials in areas such as industry engagement, innovation, defense supply chains, improving information sharing on mineral resources and potential, and cooperation in multilateral forums.” 

Both countries are also close partners within the context of several multilateral frameworks for allied cooperation such as the National Technology Industrial Base (NTIB), which, originally established to strengthen technology links between the U.S. and Canada in 1993, was expanded in 2016 to include the United Kingdom and Australia.

From a U.S. perspective, Canada’s new Critical Minerals Strategy and the launch of the Sustainable Critical Minerals Alliance are positive developments, but as ARPN previously noted in a similar context:

“[T]empting as it may be – particularly in light of the pervasive nature of the ‘paradox of the green revolution’, as Reuters columnist Andy Home called the paradox that ‘public opinion is firmly in favour of decarbonisation but not the mines and smelters needed to get there’ – we must not be complacent and rely too much on friend-shoring.”

The balancing act to reconcile green credentials with the acknowledged need for domestic resource development will not get any easier for the Biden Administration and other policy stakeholders.  “Friend-shoring” is a crucial piece of the resource security puzzle, but — in light of mounting demand and ever higher stakes of continued resource dependency — the only viable path to success in the long run lies in a comprehensive “all-of-the-above” policy approach from mine to manufacturing which encompasses fostering cooperation with allies and scaling up research and development while at the same time building out domestic production and processing capabilities along with recycling and closed-loop technology.

The post Canada Releases Critical Minerals Strategy Embedded in Geopolitical “Friend-Shoring” Context appeared first on American Resources Policy Network.

Basing the decision on “facts and evidence and on the advice of critical minerals subject matter experts, Canada’s security and intelligence community, and other government partners,” Canada’s Minister of Innovation, Science and Industry declared in a statement:

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad. In accordance with the [Investment Canada Act], foreign investments are subject to review for national security concerns, and certain types of investment—such as those in the critical minerals sectors—receive enhanced scrutiny.

Therefore, we reviewed a number of investments in Canadian companies engaged in the critical minerals sector, including lithium. These companies were reviewed via the multi-step national security review process, which involves rigorous scrutiny by Canada’s national security and intelligence community. As a result of that process, the Government of Canada has ordered the divestiture of the following investments by foreign investors in Canadian critical mineral companies: 

• Sinomine (Hong Kong) Rare Metals Resources Co., Limited is required to divest itself of its investment in Power Metals Corp.
• Chengze Lithium International Limited is required to divest itself of its investment in Lithium Chile Inc.
• Zangge Mining Investment (Chengdu) Co., Ltd. is required to divest itself of its investment in Ultra Lithium Inc.”

As Reuters columnist Andy Home observes, the new policy on critical mineral investment is both “wide ranging and far-reaching:”

“It’s not just China’s state-owned players that will come in for extra scrutiny, but also any private investors ‘assessed as being closely tied to, subject to influence from, or who could be compelled to comply with extrajudicial direction from foreign governments.’”

What’s more, he argues, “the policy covers not just mining but all stages of the minerals processing chain.”

The ramifications of Canada’s move will stretch beyond our neighbors’ borders. For one, it hardens the already drawn “geopolitical battle-lines in the metals sector” between the West and adversary nations, i.e. China.

It also places additional pressure on all segments of the already strained  U.S. critical minerals supply chain.

The recently passed congressional Inflation Reduction Act contained sourcing requirements for EV credits.  Observers have outlined that, while sending an appropriate message, the requirements also represent an “almost insurmountable challenge” as “considering it takes seven years to build a mine and refining plant but only 24 months to build a battery plant, the best part of this decade is needed to establish an entirely new industry in the United States.”  

The global push towards net zero carbon emissions, which has received fresh impetus with the COP 27 climate summit commencing today in Sharm El Sheik, will further up the ante.

While we are still days and maybe weeks away from leaving the Congressional midterm election with all its theatrics in the rear view mirror, policymakers and other stakeholders would be well-advised to shift focus from politics to policy, and act swiftly and decisively to bolster North American supply chains.

The post Canada’s New Critical Mineral Investment Rules for State-Owned Entities Harden Already-Drawn “Geopolitical Battle-Lines in the Metals Sector” appeared first on American Resources Policy Network.

In what effectively amounted to a “coronation,” as the Wall Street Journal editorial board phrased it, the CCP’s move has effectively “confirm[ed] China’s combination of aggressive nationalism and Communist ideology that is the single biggest threat to world freedom.” 

Mr. Xi’s confirmation to another term was hardly a surprise, but in his landmark speech addressing the CCP Congress, he emphasized the the need to increase China’s self-sufficiency in technology and supply chains, and reaffirmed China’s commitment to attaining control over Taiwan — a key point of contention in the country’s relations with the United States, which have already starkly deteriorated in recent years.  According to the Wall Street Journal, the “coronation” “all but guarantees an era of confrontation between China and the U.S.”

Aware that “China has big footed a lot of the technology and supply chains that could end up making us vulnerable if we don’t develop our own supply chains,” as U.S. Secretary of Energy Jennifer Granholm phrased it earlier this summer, the United States and its partners have stepped up efforts to decouple from China.

These may become all the more pressing in light of current fears, as Damon Kitney reports for The Australian, that China may seek to retaliate after the U.S. Department of Commerce announced sweeping limitations to semiconductor and chip-making equipment sales to Chinese customers this fall.

Speaking to a private forum in Melbourne, earlier this month, Australia’s former Ambassador to the U.S. and federal Treasurer Joe Hockey told attendees:

“In terms of critical minerals, my concern is – and there has started to be a few reports in the US suggesting this – is that after the midterm elections, and with a re-empowered (Chinese President) Xi Jinping, as of next year China will start to turn down the tap on the supply of critical minerals to the US and other places.”

Followers of ARPN have long known that China is no stranger to playing politics with its near-total rare earths supply monopoly, and just last year, we saw the country threatening to limit rare earth shipments to U.S. defense contractors over U.S. arms sales to Taiwan.

Thankfully, U.S. domestic efforts to bolster supply chains can be complemented with leveraging close cooperation with allied nations including Canada and Australia.

Australia is ready to step up its rare earths game and challenge China in this segment.  As Phil Mercer writes for BBC News, Sydney, “Australia, a superpower exporter of iron ore and coal with rich mining traditions believes it is well-placed to join the race to exploit minerals that provide critical parts for electric vehicles and wind turbines.” He cites John Coyne of the Australian Strategic Policy Institute, who — while warning that China will not easily surrender its dominance of the sector — says:

“Australia has the world’s sixth-largest reserves of rare earth minerals. However, they remain largely untapped with only two mines producing them.  There is significant potential in the establishment of multi-ore mineral-processing hubs in Australia. After all, there is no point in creating supply chain resilience for [rare earth] ores if miners must still send them to China for processing.”

Mercer points to the U.S. Defense Department’s deal with Australian miner Lynas Rare Earths, which has been contracted to construct a REE processing facility in the U.S..

In the same vein,  the Canadian government has inked an agreement with Rio Tinto to jointly invest $737 million to modernize the company’s Sorel-Tracy, Quebec metals processing plant, with  Rio Tinto’ chief executive Jakob Stausholm warning of the “excesses of globalization” in critical mineral supply chains. The move is said to strengthen “North America’s first production capacity for titanium metal, a lightweight but strong material important to aerospace and defense groups such as Boeing and Lockheed Martin.” 

Stateside, the U.S. Department of Energy has just announced the first round of funding under the 2021 bipartisan infrastructure act for projects aimed at “supercharging” U.S. manufacturing of batteries for electric vehicles and electric grid — another important step in the decoupling from adversaries like China.

With a newly-emboldened Mr. Xi reportedly seeing the possibility of a showdown with the West as “increasingly likely”in the context of his goal to “restore China to what he believes is its rightful place as a global player and a peer of the U.S,” as the Wall Street Journal writes, these efforts could not be more urgent.

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With socio economic pressures and geopolitical tensions rising, nations are increasingly embracing comprehensive approaches to mineral resource policy, as piecemeal, ad-hoc policy making is fading into the background.

One large piece of the all-of-the-above comprehensive approach to mineral resource security ARPN has long been touting along with many other policy experts is cooperation with allies.

The latest case in point is the Canadian-South Korean partnership announced after a meeting between Canada’s Prime Minister Justin Trudeau and South Korean President Yoon Suk-yeol last month.

In a joint statement, both countries agreed to work towards launching a high-level dialogue on economic security, which will, among other things, focus on deepening their “strategic partnership on supply chain resiliency,”  and positioning “both countries as globally competitive players in the critical minerals supply chain and battery and EV (Electric Vehicles) value chains in ways that support our collective prosperity and security, while raising labour and environmental standards.”

A memorandum of understanding “to enable the building of value chains in Canada and Korea to support clean energy transition and energy security, including with respect to critical minerals,” is in the works.

While high-level bilateral agreements on critical minerals are becoming more commonplace – we’ve featured a few the U.S. has entered into —multilateral frameworks are also being built out.

The Mineral Security Partnership (MSP) between the United States and currently ten other allies launched in June of 2022 is an initiative to bolster supply chains that aims “to ensure that critical minerals are produced, processed, and recycled in a manner that supports countries in realizing the full economic development potential of their mineral resources.”

During a meeting in September convened on the margins of the United Nations General Assembly High-Level Week partners discussed “priorities, challenges, and opportunities in responsible mining, processing, and recycling of critical minerals.”

Aside from the MSP partners Australia, Canada, Finland, France, Japan, the Republic and Korea, Norway, Sweden, the United Kingdom, the United States and the European Union, additional minerals-rich countries were in attendance, which included Argentina, Brazil, the Democratic Republic of the Congo, Mongolia, Mozambique, Namibia, Tanzania and Zambia.

According to the U.S. State Department, “the MSP is currently considering promising critical minerals projects that could be of interest to one or more MSP partners, promoting innovation, developing a joint approach on ESG standards, and engaging both project operators and minerals-producing countries.”

As the push towards net zero carbon emissions and away from China as a lead supplier/processor intensifies, cooperative efforts — in the context of a comprehensive approach to resource security as outlined above — will only increase, and ARPN will continue to track them.

The post As Global Environmental and Geopolitical Pressures Intensify, So Do Cooperative Efforts — A Look at the Canadian-South Korean Critical Minerals Partnership and the MSP appeared first on American Resources Policy Network.

The new Great Game, according to Muggah, foreshadowed by the 2010 rare earths dispute between China and Japan, gained momentum with the adoption of the Paris Agreement in 2015 which committed countries to significantly reduce greenhouse gases and transition to renewables.

Writes Muggah:

“In order to achieve the agreement’s targets by 2050, more than 60 per cent of installed power capacity will need to come from a combination of solar plants, wind farms, hydropower, bioenergy, geothermal reservoirs and batteries to power electric vehicles. But scaling these climate-friendly technologies comes with a catch: a sixfold increase in the sourcing of so-called critical minerals such as nickel, copper, lithium and cobalt as well as rare earths, by some estimates.

And so while the effort to move away from oil, gas and coal to low-carbon energy sources is essential, it has also unleashed powerful destabilizing forces. Countries are scrambling to secure the minerals needed to power the green transition; competition among major powers to control supply chains could trigger new global security risks.”

Muggah points to China as the undisputed dominant player “when it comes to refining those critical minerals and rare earths, effectively leveraging its state-backed firms, low-cost work force and lax environmental standards to gain a stranglehold on global markets.” Despite its omnipresence in global critical mineral supply chains, he says, China “does not yet dominate the exploration and extraction of critical minerals such as cobalt, lithium or nickel.” As a result, companies with backing from Beijing are “busily scouring international markets for raw materials, from Argentina, Bolivia and Chile to the Democratic Republic of Congo, South Africa and Zambia, but the competition is fierce.”

While Russia is another key player as one of the top producers of palladium, scandium, titanium and nickel, Russia’s war on Ukraine and subsequent sanctions against Russia have slowed down Moscow-backed domestic critical minerals production and processing and external pursuits, further consolidating China’s pole position in the global race for resources.

Muggah laments North American and Western European lack of expediency to build out their own critical mineral supply chains, not least due to most Western countries facing “major hurdles when it comes to accelerating domestic and international production and processing of critical minerals and rare earths, including the high costs of capital investments, long lead times to build out mines and refineries, and stronger environmental and labour standards compared to countries such as China and Russia.”  However, he says, “supply chain disruptions during the COVID-19 pandemic, the war in Ukraine and rising tensions with China – including Chinese threats to curb rare-earth exports to the U.S. – have all served as a wake-up call,” and a new Great Game is on.

He goes on to detail recent steps taken by the U.S. and European Union to diversify its supply chains away from adversaries in general, and China in particular, which both appear to embrace a comprehensive “all-of-the-above” strategic approach, ranging from strengthening domestic production, over strengthening closed-loop concepts to increased “friend shoring.” 

In this context, Muggah believes Canada “will have a consequential role to play in what is shaping up to be one of the defining struggles of our era,” and goes on to discuss Canada’s latest policy initiatives to strengthen critical mineral supply chains.

Muggah says there is reason for “cautious optimism that Canada can achieve its goals,” but that “Canada and its partners still face major obstacles to meet their ambitions, including from China.”   He points to Chinese firms having acquired several key Canadian mines (see ARPN’s recent post on the issue here) and calls for greater scrutiny for mining deals with state-owned mining companies from authoritarian countries, arguing that “Canada will need to broaden its conception of what constitutes national security in relation to critical minerals and rare earths.”

He closes:

“To achieve more strategic autonomy amid the new Great Game, Canada must build more predictable and sustainable supply chains and take a more pro-active global role in driving the global shift to renewable energy. (…) Notwithstanding China’s firm grip on global supply chains of critical minerals and especially rare earths, Canada and its allies can support a more predictable green transition.

This is one game that Canada can and must help the whole world win.”

The question for the United States, where the midterm elections — and with that intensified partisan politics — are just around the corner, is whether policy makers will maintain their newly gained bipartisan focus on the importance of critical mineral supply chains and continue to work towards achieving greater mineral resource independence.

The post A New “Great Game” is Afoot – Are We Able to Keep the Focus on Diversifying Critical Mineral Supply Chains Away from Adversaries appeared first on American Resources Policy Network.

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 post A Look North – A Canadian Perspective on China’s “Encroachment” on the Critical Minerals Industry appeared first on American Resources Policy Network.