For half a century, oil production has been a major #economic engine for Canada.
But just as the internal combustion engine is starting to give way to the battery-powered electric vehicle (EV), so too does Canada need to develop a new industrial engine, says a new report by Clean Energy Canada and Trillum Network for Advanced Manufacturing.
Minerals like copper, nickel, lithium, cobalt, manganese, graphite and rare earths promise to become the new oil.
Canada’s New Economic Engine argues the case for Canada to act quickly to leverage the country’s vast mineral resources, clean electricity and Eastern Canadian manufacturing capacity to become an EV battery-producing powerhouse.
“If Canada plays its cards right, it has the potential to build a domestic EV battery supply chain that could support up to 250,000 jobs by 2030 and add $48 billion to the Canadian economy annually,” the report estimates.
“It confirms what is a very genuine and enormous opportunity for British Columbia and the rest of Canada, if we develop a battery supply chain,” Michael Goehring, president of the Mining Association of BC (MABC) said of the report. But developing a full spectrum battery industry – from mining and refining to battery cell manufacturing and recycling – would mean competing with China, which dominates 80 per cent of the world’s battery cell manufacturing.
While Canada can’t compete with China’s low labour costs, it does have some advantages, the report notes.
“Canada is the only country in the Western Hemisphere with known reserves of all the minerals necessary to manufacture EV batteries. Proximity to these reserves is a big advantage for the country, as EV and battery companies move to localize supply chains, decreasing the distance heavy batteries need to travel.”
Canada also has an established auto manufacturing industry in Eastern Canada, which the report notes has already helped attract some significant investments in the EV and battery space.
In March, General Motors (NYSE:GM) and BASF (ETR:BAS) each announced plans to spend hundreds of millions to build EV battery component manufacturing plants in Quebec, and Stellantis (BIT:STLA) and LG Energy Solutions (KRX:373220) announced they would invest up to $5 billion in Canada’s first large battery manufacturing plant in Windsor.
In addition to mineral wealth, Canada also has abundant clean electricity, which is attractive to manufacturers looking to minimize their own emissions profiles.
“The No. 1 thing we need in Canada is a public-facing battery strategy that identifies our competitive adva ntages a nd names the areas where we have the greatest opportunity and that focuses the policies and investments in those spaces,” said Evan Pivnik, senior policy adviser for Clean Energy Canada.
The report identifies three key areas of focus:
battery cell manufacturing; and
integrated battery materials.
The latter includes all the smelting, refining and processing needed to turn raw minerals into battery-grade materials.
Rare earths, for example, require some very complex refining and processing – something the Government of Saskatchewan has been developing with Canada’s first rare earths processing facility.
To capitalize on Canada’s advantages, federal and provincial governments will need to accelerate critical minerals projects in Canada, the report says.
Canada does not have a good track record in that regard. Ottawa and Victoria have each killed major copper mine projects in recent years in B.C.: New Prosperity and Ajax. And mines that do get approved can take several years just getting through environmental review processes.
“Nowhere in North America is realistically going to meet battery material demand if we continue to approve mines at seven-year intervals to get a mine up and running,” Pivnik said. “That’s not feasible.”
A sclerotic regulatory process remains the top concern of the exploration and mining sectors. In Canada, that is increasingly complicated by Indigenous rights and title, and reconciliation issues.
Recent polling finds the majority of Canadians understand the importance of mining to the green energy transition and support it. And even federal cabinet ministers have acknowledged the process for getting new mines approved and built is too slow.
But it’s by no means clear whether the new Impact Assessment Act streamlines the regulatory process, as promised, and some mining companies are no longer sure who is in charge: Senior governments or First Nations.
Pierre Gratton, president of the Mining Association of Canada, last week told a Greater Vancouver Board of Trade (GVBOT) forum that, while there is a lot of exuberance in the sector, there are also concerns.
Mining was worth $125 billion in 2021 nationally – five per cent of GDP – and $12.9 billion in B.C., and directly employed 400,000 workers, Gratton said. The Trudeau government has recently shown support for mining through a $3.8 billion critical minerals strategy. Gratton described it as an end-to-end strategy that addresses the need for critical minerals for things like renewable energy and EV batteries.
“The one weak link of that was federal permitting,” Gratton said. “There was placeholder – ‘more to come’ was basically the message.”
So far, the sector has not seen much streamlining under the new Impact Assessment Act. So while a critical minerals strategy is welcome, something has to be done to address timelines if mining is to provide all the minerals and metals needed for a clean energy transition.
Provincial and federal regulatory processes are increasingly seeing essentially a third level of government added: First Nations. In B.C., in particular, the “landlord is changing,” said Carleigh Whitman, director of environment for( .B) and moderator at least week’s GVBOT forum, which begs the question: “Who is making the decisions?”
Gratton said there is no clear answer to that. He said the mining industry pioneered impact benefits agreements, which gives First Nations more say and more economic benefits from project development in their territories.
“I think we’re at a point now, at least in certain parts of the country, where that doesn‘t seem to be enough,” Gratton said.
While there is a move towards co-decision making with First Nations, Gratton said “governments aren’t sure how to enable that.”
To expedite critical minerals mine development, Goehring said the MABC has formally submitted a proposal to the federal government under the critical metals strategy that would fast-track certain projects.
“We’re calling on the Government of Canada and provincial governments to designate critical mineral projects as nationally significant, and to support their development with additional resources to expedite the regulatory review.” ■
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