When discussing Canadian clout over critical minerals we're talking potential, not reality
There's this emerging notion of Canada as an impending superpower in mining the critical minerals that will run defining technologies of this century, from electric vehicles to smartphones and solar panels.
It was a recurring theme of Prime Minister Justin Trudeau's recent Washington visit.
We've even heard one attention-grabbing suggestion (new window) from union leader Jerry Dias: that Canada should cut the U.S. off from these minerals if it won't cave in a dispute over electric vehicles.
This conjures improbable images of Canada wielding some sort of modern-day version of Saudi Arabia's notorious oil sword (new window) of the 1970s.
Okay, now it's time for a reality check.
Basic statistics offer something of a cold shower: Canada's position is not remotely comparable to the Arab oil powerhouses of 1973 (new window).
In fact, global surveys suggest Canada holds a tiny percentage of mineable worldwide reserves of critical minerals and is not only way behind world-dominating China but lots of other countries too.
We've been asleep for years and years and years and have chosen not to act, said Eric Miller, a Canadian-born trade consultant based in Washington, D.C.
And the Chinese have had a deliberate strategy for 25 years to consolidate ownership in all critical minerals.
So now that the rest of planet Earth has woken up to the economic importance of several dozen industrial minerals like cobalt and lithium, here's the outlook.
Electric vehicle purchases are expected (new window) to grow tenfold this decade, stoking an insatiable appetite for lithium batteries and the cobalt that prevents them from melting.
Here's the current math
The U.S. Geological Survey runs a detailed inventory each year and the 2021 version (new window) offers sobering context about our position.
For cobalt, Canada has three per cent of extractable reserves worldwide — one-seventh of what Australia has, behind Russia and the Philippines, and not even comparable to Congo which has over half the known supply, mostly owned by China.
For lithium, Canada has 2.5 per cent of reserves worldwide, a microscopic share behind Australia, Chile, Argentina, and of course China.
It's similar with nickel, and copper, manganese, graphite, and rare earths — where Canada has 0.7 per cent of known reserves, 53 times less than China.
For context: Canada's single major customer, the U.S., needs way more of this stuff than we can provide, with 20 per cent (new window) of the global economy and 10 per cent of electric vehicle (new window) sales.
Now let's talk potential
The Canadian government says the USGS reports don't tell the whole story, because they define reserves (new window) as currently economically viable mining sites, failing to capture the vast potential lying in the ground.
To help tap that potential the latest federal budget (new window) spent $9.6 million to start a critical minerals office and $47.7 million for research on processing and refining.
The challenges for Canada are spelled out in a recent Commons committee study (new window): remote, hard-to-reach sites, cold weather, environmental considerations, and necessary Indigenous-Crown consultations.
Another challenge? Chinese state-backed entities have been buying Canadian-owned assets for years — and they haven't stopped.
China is buying our assets. Ask Hunter Biden
The New York Times has reported (new window) that President Joe Biden's son Hunter founded a company that helped China Molybdenum gain control in 2016 of a Congolese cobalt and copper mine owned by American and Canadian (new window) firms.
Just last month, China's Zijin Mining Group Co. made a nearly $1 billion offer (new window) to buy Canada's Neo Lithium Corp. Chinese battery-maker CATL also announced plans (new window) this fall to buy Canada's Millennial Lithium Corp.
These offers face new regulatory scrutiny.
Some were rejected even before the rules change: federal officials shut down a Chinese offer for a goldmine (new window) in the Arctic and for a Toronto-based construction-and-mining giant (new window).
'People have woken up'
A former federal cabinet minister says people are finally aware of the importance of critical minerals; he compared that to a decade ago when he ran Industry Canada and people spoke of them primarily for their role in fighter jets.
People have woken up, said Tony Clement, a onetime Conservative minister.
I think there's an increased understanding of what's at stake. … I don't think the public wants to see [those Chinese takeovers] anymore.
He says Canada needs better control (new window) over its supply chains and that might require public funding to get mining sites open.
So past isn't necessarily prologue.
Trudeau spoke during his trip to Washington of the potential, and the need for North American trading partners to lean on each other — not fight each other. (new window)
At a time when supply chains are disrupted around the world, when people are rethinking, 'Where are we getting things from,' … the U.S. could do worse than rely on its closest friend, its oldest friend, its most reliable friend, Trudeau said during an event at Washington's Wilson Center.
There are things happening in Canada.
It's projected to reach a peak annual production of 2,000 tonnes (new window) of cobalt per year, which would single-handedly add more than one per cent to total global output.
In Quebec, a lithium site facing bankruptcy and plagued by cost overruns related to the complexity of mining in remote James Bay was just bought (new window) by foreign companies including Tesla supplier Livent.
Quebec's Nemaska Lithium (new window) now promises to open the largest lithium mine in North America with an annual production worth more than one per cent of the global total.
In Ontario, one case serves as a reminder that Canada's mining assets aren't limited to our own territory.
A company that hoped to mine cobalt in Canada has shifted strategy (new window) after coming up empty at home; First Cobalt is now changing its name (new window) and, after signing a deal with global mining giant Glencore (new window), will refine various materials including cobalt mined in Congo.
Still, there's skepticism that the world, let alone Canada, should expend much effort trying to usurp China's dominance here.
Former White House official: Do we even need this?
Those skeptics include someone who was director (new window) for China policy at the White House National Security Council under Donald Trump.
Matt Turpin says he's been part of studies on this issue several times over the years and the ultimate conclusion was: Let China do this.
He said these metals aren't actually that rare, are dirty and expensive to process, and if China wants to subsidize it all and sell minerals to the world for cheap, so be it.
It's always kind of hard to understand how we would create — and why we would create — alternative, more expensive, dirty production processes if Beijing is going to produce it, Turpin said in a recent CBC interview.
What about the national-security argument?
Isn't the whole point to diversify from China and make us less reliant on Beijing? Especially at a time of rising tensions. After all, look at the troubling example of what China did to Japan in 2010: it cut off exports of (new window) these minerals.
Just two years ago China's President Xi Jinping made a not-too-subtle threat (new window) by visiting a rare-earths production hub at the height of a trade dispute with the U.S.
Turpin isn't too stressed about that either.
He doubts China would engage in a long-term standoff over these minerals because, he said, other countries have leverage too.
It's called food.
China can't produce the food it needs. It needs to import it. So their dependency is very different than our dependency on rare earths, Turpin said.
We could produce rare earths. We choose not to. … They can't produce the food they need.
It just so happens that Canada is a powerhouse in potash, used in agriculture, unlike its position with lithium and cobalt.
WATCH | How Biden's EV tax incentive could shut out Canada automakers:
Dominance wasn't built in a day
Turpin said it might make sense, at most, for U.S. allies to build a strategic stockpile to draw from if China ever temporarily suspended supply.
Yet diversifying and expanding supplies will be a global priority for the foreseeable future. It'll just take a while, Miller says.
Chinese dominance has been built piece by piece, over time. And that's been our choice to not actually choose to push back, he said.
It took the Chinese a generation to achieve dominance over critical minerals. And it's going to take probably two generations for the West to rebalance the equation.
Alexander Panetta (new window) · CBC News