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Can Ottawa get out of its own way to deliver on high-tech metals?

Think tank analysts weigh in on federal critical minerals strategy
Clean Air Metals core shack
(Photo by Ethan Beardy, Clean Air Metals)

With the release of its Critical Minerals Strategy, Ottawa has officially jumped on the bandwagon in acknowledging that Canada can provide the world with the natural resources needed to make the transition to cleaner technologies and create net-zero economies.

Now the federal government must come up with a way to untangle the regulatory impediments to put new Canadian mines into production faster, according to a panel of experts in a MacDonald-Laurier Institute (MLI) webcast this week.

Ottawa and Natural Resources Minister Jonathan Wilkinson concede there’s much work to do on the regulatory side to get on the same page with the provinces and territories to advance mining projects and avoid duplicating assessment processes through better coordination and harmonization.

In Northern Ontario’s Ring of Fire mineral belt, there are six individual federal and provincial assessment processes currently underway.

The panellists called the strategy a "good first step" in government documenting a vision and providing a clear signal with well-defined initiatives, all backed by $3.8 billion in funding. 

But they don’t think it goes far enough to attract investment, build technology partnerships in processing, and provide a plan on how to expedite the approvals of new mines to shorten a widening minerals supply gap.

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Jeff Kucharski, a senior fellow with MLI, summed up the strategy as "hopeful rhetoric over pragmatic reality." 

The former Alberta assistant deputy minister in energy wants to see some "meat on the bone" starting with a results-oriented implementation plan showing goals and timelines to determine if progress is being made on various elements of the strategy. 

“Strategy is one thing, executing on it is quite another,” he said.

Politicians and pundits have applauded major investments in Canada by Ford, GM, Honda and Stellantis in battery plants and electric vehicle production. 

These are good news stories on the downstream manufacturing end of the strategy, said Kucharski. "The mining is another issue, of course."

Critical minerals, also known as high-tech metals, is a grouping of metals that includes nickel, lithium, graphite, cobalt, and platinum group elements. They’re used in manufacturing batteries for electric vehicles, and in various defence, aerospace, digital, electronics, stainless steel, energy, health and life sciences applications.

With Russia, a major global energy and mineral producer, and China, with its stranglehold on mineral processing, emerging as adversarial nations, OEDC (Organisation for Economic Co-operation and Development) countries are looking to shorten supply chains by securing key minerals from friendly nations.

According to the International Energy Agency, electric vehicles require six times more mineral inputs to build than their fossil-fuelled counterparts. 

It means putting more mines into production that don’t yet exist, said Heather Exner-Pirot, also a senior fellow at the MLI.

In a best-case scenario, she said, it takes 10 years to permit and bring a mine into production in Canada.

Slow permitting times can delay projects for years, hinders investment, and provides uncertainty for an already high-risk, high-reward sector. It also hurts Canada’s reputation as a globally competitive mining jurisdiction.
Exner-Pirot had hoped to see a commitment in the strategy toward reforming the permitting system, a chronic issue with many mining companies. 

She heaped blame on the Liberal government for spending years adding to the regulatory burden through the Impact Assessment Act, “and now they have to start to unwind all this.”

There are overlap and redundancies between federal and provincial regulatory processes, she said, and the act has only “aggravated that.”

Exner-Pirot said she can’t envision Canada becoming a critical minerals superpower because the pace of new mine approvals isn’t moving fast enough to make the total switch to 100 per cent electric vehicle sales by 2040 and meet the needs of the digital economy.

"We are so far off from where we need to be."

She pointed out one only has to look at the number of mine projects submitted to the federal Impact Assessment Agency that have yet to be approved since the passage of the Impact Assessment Act in 2019. Those that have been greenlit, she contends, were under the former Canadian Environmental Assessment Act regime.

“You don’t need a crystal ball to know what’s going to happen in mining in the next decade,” Exner-Pirot said.

“They’re (Ottawa) saying most of the right things… but what is actually happening on the ground is nowhere near enough.”

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Kucharski said there are “structural impediments” in Canada to execute on any major projects, not just in mining. 

Environmental reviews, geological and economic studies, First Nation consultations, and compliance work all combine to slow things down and allow other global competitors in the mineral space to move ahead more quickly, he said.

“Systems are fragmented, they’re very time consuming in Canada,” Kucharski said.

“There are things we can do to speed up these processes without watering them down, and it’s been done in other jurisdictions." If it can be done in Alberta’s oil and gas sector, with Indigenous participation and equity ownership, he said, it can done in the mining of critical minerals.

If done right, Kucharski said the environment shouldn’t have to take a back seat in expediting the regulatory processes.

“Smart regulations” can be put in place with reasonable timelines for the permitting processes while meeting all the legislative and regulatory requirements for the various reviews and studies.

What often prolongs the environmental review process, he said, is extensive consultation with people who aren't directly impacted by these projects.

Kucharski said what’s “absolutely necessary" to move projects forward are better federal and provincial relations. Good intergovernmental coordination can streamline and make the regulatory processes go faster.

Both levels of government need to put their regional, jurisdictional, and political differences aside and work together on joint projects in a true "pan-Canadian way."  

He also questioned the government's wisdom in weaving social justice goals into the strategy. It only heightens ESG (environmental, social, and governance) expectations and implies the document will solve Indigenous reconciliation problems.

"Yes, we need to do that, but it doesn't send the right message to investors," implying that the process will take longer and be more complex.

Kucharski suggested there should be a comprehensive Indigenous economic framework — developed by the feds —  that should be separate and apart from the critical minerals strategy and can be linked as a guiding document.

Exner-Pirot added Ottawa should provide guaranteed loans to Indigenous communities. It’s the easiest way to inject government money to projects, she said, in covering the Reconciliation aspect and in attracting investment.

Japan, a natural resource-poor country, can “guarantee a market” for Canadian critical minerals, added Andrew DeWit, professor at Rikkyo University in Japan.

DeWit said the “seismic movement” in geopolitics has spurred the Japanese government to rethink of its security of supply in response to China’s influence in the region. Canada is an attractive trade partner for its ability to provide both the minerals and for the ESG principles practiced by Canadian mining companies.

That message was delivered by Prime Minister Fumio Kishida on his recent visit to Ottawa on his tour of G7 capitals. At the same time, Canada is seeking foreign investment in mining and processing technologies used in electric vehicle batteries. 

But getting to net zero will require massive quantities of minerals to make the transition to cleaner energy technologies, DeWit said, something that’s understood by the Japanese government. Introducing more wind and solar technologies requires plenty of copper to generate one megawatt of power. And there’s increasing demand for this mineral from India.

DeWit cautioned that further difficulties in developing Canadian mine projects could sway Japanese policymakers to consider harvesting resources from the sea floor. Surveys in the large territorial zone around the islands of Japan have revealed enormous mineral deposits. Though technically difficult to access, it could pose an option.

“You may not have this opportunity forever,” he said.