Home » Canada can help cut reliance on China for critical metals
Canada Economy Featured News North America

Canada can help cut reliance on China for critical metals

Getty Images

Canada can play a “big role” in reducing reliance on China for vital industrial metals, Canadian Minister of Natural Resources Jonathan Wilkinson said Thursday, as the U.S. and its allies seek to decouple their supply chains from Asia’s largest economy.

Ottawa seeks to develop these resources and “also to look at processing those minerals in countries like Canada, in countries like Japan, countries like the United States, so that we’re not quite so dependent on the processing that happens in China,” Wilkinson told Nikkei in an interview here, explaining his country’s new strategy on critical minerals.

Metals such as lithium and nickel have grown in importance as materials for electric-vehicle batteries, magnets and other technologies. Canada’s share of the world’s lithium reserves is only 3%, according to the United States Geological Survey. Still, its reserves rank sixth in the world. Chile has the largest share with 44%.

Ottawa announced a new Critical Minerals Strategy in December, which includes policies to expand production and processing. Up to 3.8 billion Canadian dollars ($2.82 billion) from the federal budget for the fiscal year ending in March will go toward supporting private investment and other activities.

Canada has sought to join the U.S.-led Indo-Pacific Economic Framework, a group that includes Japan and Australia and has a goal of supply chain cooperation.

China possesses only 7% of the world’s lithium reserves, ranking fourth in the world, but the nation has expanded its influence in the global supply chain by importing, processing and exporting ore. Challenges that hamper the lithium industry’s growth in other countries, such as the environmental consequences of ore processing, can be avoided more easily in China.

The country is believed to account for about 60% of production of the world’s rare earths — crucial materials for magnets and other technologies.

“We don’t think it’s in anybody’s interest to have a large concentration of control of minerals and processing in any one country,” Wilkinson said. “It is very important … that [Canada, Australia and other democratic nations] work as like-minded countries that share common values and in ensuring that there will be access to those minerals for companies that exist within our countries.”

Canada has taken steps to block Chinese investment in such sectors. In November, it ordered three Chinese companies to sell their stakes in Canadian lithium mining operations.

“We trade with China in many other areas, but in areas that are strategic, we have to make decisions that are in the best interest of Canada and of our allies,” Wilkinson said.

Wilkinson also said Canada can contribute to the energy supply needs of friendly nations. Russia is under Western economic sanctions after its invasion of Ukraine, mostly cutting off Moscow’s supplies of crude oil and natural gas to advanced economies. Canada, the world’s fourth-largest oil producer, aims to fill that void.

“We’re in the process of building what’s called the Trans Mountain pipeline,” he said. “And that will be finished around 2024, and that will significantly expand the amount of oil that we are able to ship from the west coast of Canada to Asian markets.”

Canada is a major producer of natural gas, ranking sixth in the world. The country plans to begin exports of liquefied natural gas to Japan from the west coast by the mid-2020s, a project that includes trading house Mitsubishi Corp.

“There certainly are opportunities to expand LNG exports from Canada, but it would have to be done in a manner that’s consistent with Canada meeting its own climate objectives,” Wilkinson said.

The global supply of potassium chloride, an important component of the fertilizer potash, has also suffered due to economic sanctions on Russia and its ally Belarus. The two countries together account for 40% of the world’s supply, while Canada accounts for 30%.

“We will have a brand-new large [potash] mine coming on stream within the next couple of years, which, again, will help with global demand,” Wilkinson said.

Source : Nikkei Asia