Canada officially kicks off first batch of projects under new G7 critical minerals production alliance. This initiative is to help ensure that Canada remains a dominant supplier of responsibly sourced global minerals essential. This proposal is a good start to rebalance against China’s crushing hegemony in the sector. At the moment, China dominates an even more astounding 91 percent of global refining production of rare earth elements.
At a recent news conference, Canada’s Secretary of State for Economic Development, Chris Wright, emphasized the urgency of the situation by stating, “China, frankly, just used non-market practices to squish the rest of the industry, the rest of the world out of manufacturing those products with strategic leverage. Everybody sees that now.” This sentiment is at the heart of Canada’s commitment to create a more competitive and diversified critical minerals supply chain.
Perhaps one of the most surprising projects announced first was a conditional approval for a Canadian company. Combined, they are eligible for more than $36 million in federal funding. This investment will facilitate the scaling up of processing capabilities for two rare earth elements: samarium and gadolinium. Samarium is critical in making heat-resistant magnets, important in nuclear reactors. At the same time, gadolinium is indispensable for nuclear reactors as well as MRI machines.
Minister of Natural Resources Tim Hodgson remarked on the necessity of this initiative, stating, “As we move swiftly to reduce dependence on concentrated supply chains, our collective commitment is clear. Every delay is a concession of economic and national security interests. We will no longer accept that.”
The G7 alliance has done significant work to prepare for future expected demand for critical minerals. These minerals are key to enabling a successful decarbonization of our economy over the coming decades. Perhaps most impressively, Canada has used the momentum of last year’s G7 discussions to put itself at the leading edge of this emerging minerals conversation.
The new announcement provides a great window into that potential with 25 new, innovative initiatives. Among them are purchase agreements for a graphite mine in Quebec and investments to scale up a rare earth elements refinery in Ontario. Canada’s government is supporting a Norwegian company’s ambitious plan to construct a synthetic graphite facility in St. Thomas, Ontario. This project stands to get up to $500 million in support from Export Development Canada.
Yet, China has recently committed to a one-year pause on export controls on specific rare earth minerals. This decision forms one of many fronts in an emerging battle with the United States, one that could have lasting consequences. This recent announcement underscores the trend calling for Canada and our allies to catch up. They need to protect their supply chains and reduce their reliance on Chinese outputs.
According to the International Energy Agency, China maintains an average market share of 70 percent for 19 out of 20 key minerals. This sobering reality is what has compelled Canada to act boldly. It seeks to protect its own industrial base while creating a closed-loop, G7-only supply chain.
