Even as U.S. President Donald Trump labelled Canada a national security threat based on its aluminum exports, his administration is taking steps to strengthen the two countries’ collaboration on critical minerals, possibly including aluminum.
On Wednesday, one night after the first debate with former vice-president Joe Biden, his rival in the run-up to the presidential election in November, Trump signed an executive order that opens the door for potential U.S. government investment in projects related to 35 so-called “critical minerals,” and even projects located outside its borders, in an effort to decrease its dependence on China.
The latest executive order describes its reliance on China as “particularly concerning” and accuses the country of using “aggressive economic practices” to dominate the minerals sector. It also points at a trend toward increasing government intervention in a North American supply chain for electric vehicles, as many of the critical elements are needed as raw materials for the batteries and other parts of that nascent sector. China is the world’s dominant supplier for many of these minerals.
The executive order directs the U.S. Secretary of State, the U.S. Trade Representative and other relevant U.S. agencies to submit a report within 45 days that details opportunities to “help allies build reliable critical mineral supply chains within their own territories.”
In January, the two countries announced the finalization of the “Canada–U.S. Joint Action Plan on Critical Minerals Collaboration” to guide co-operation on developing a North American supply chain for the 35 critical minerals.
The critical minerals include well-known metals such as aluminum and tin, but also far lesser known elements such as rubidium, strontium and others. Such alloys are used in electronics or for military and industrial purposes.
Natural Resources Canada declined to make anyone available for comment.
In February, Natural Resources Canada made a presentation to the Saskatchewan Mining Association that noted, “China has become the leading producer of minerals critical to the modern economy,” including 80 per cent of all rare earths, 95 per cent of gallium, a critical metal for semiconductors and a large share of several other minerals.
It stated that Canada is an important supplier of 13 of the 35 minerals listed as critical by the U.S. and sized up potential opportunities, showing a map of where various potential critical deposits may exist in Canada.
But some of its projections may miss the mark. For example, the presentation suggested Canada could supply 100 per cent of the U.S. aluminum by 2030.
Yet, in August, weeks after a U.S.-Canada free trade agreement took effect, and despite an agreement for the two countries to collaborate on critical minerals such as aluminum, President Trump accused Canadian aluminum producers of flooding the U.S. market, calling it a national security threat and imposing a 10 per cent tariff.
In a partial reversal earlier this month, Trump announced he would temporarily remove the tariffs, but imposed new thresholds on Canadian aluminum imports. Pending a review in mid-November of whether the thresholds are exceeded, he may re-impose tariffs.
Lynette Ong, a professor of political science at the University of Toronto, said the problem for Canada is that the U.S. could once be counted on to protect both countries’ mutual interests, but not anymore.
“Under President Trump, the U.S. has veered off from its traditional position as an ally,” said Ong. “There’s a great deal of uncertainty.”
China has advanced its control of the mineral supply chain through its Belt and Road Initiative, a multi-billion dollar plan that dates back to 2013, which aims to invest in critical infrastructure, commodities and logistics in at least 70 mostly emerging markets bankrolled and developed by its state-owned enterprises.
Ong said that while it makes sense for the U.S. and Canada to collaborate on critical minerals supply chains, there is a new element of uncertainty in the relationship which is likely making Ottawa “wary.”
Paul Evans, a public policy professor at the University of British Columbia, said via email that as a general rule, “there’s a compelling logic to greater North American co-operation.”
But he added, increasing Canada’s dependence on the U.S. in order to “thwart China” carries its own risks.
One mining industry executive, who asked for anonymity, said overall the executive order was a positive step as it raises awareness about the importance of many minerals, particularly those which investors are not necessarily interested in. But he doubted that it would have a major impact on Canadian companies unless they built a project in the U.S.
“My feeling is with everything happening in the U.S., they will prioritize projects in the U.S. and if they don’t have enough projects in the U.S, then they will look at Canadian projects,” he said.
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