Canada pushing critical minerals investment

Speaking from the UK where he participated in the Canada-UK Critical Minerals Investment Forum, Minister Wilkinson said Canada is looking to facilitate funding for Canadian projects through bilateral initiatives, such as the Critical Minerals Supply Chain Dialogue it signed with the UK in March, and similar agreements with Japan and France.The UK is the second-largest destination of Canadian mineral exports, totalling C$13.1 billion in 2022, of which $848 million comprised critical minerals. Critical minerals represented nearly 40% of Canada's total mineral exports in 2022, some $62.6 billion of $157.8 billion.The minister highlighted last week's announcement that Nano One Materials obtained C$16.9 million in financing from Japan's Sumitomo Metal Mining to collaborate on manufacturing technology lithium-ion battery cathode materials as a result of a similar initiative with Japan."There is a need for investment in the earlier stages of development. … There are a number of earlier-stage technology and mining project development companies looking for capital or strategic investors. Even down the chain, when you're talking about batteries, companies like Toyota and Honda are still interested in how they play in the battery space, particularly as it relates to North America, and how they secure access to critical minerals for their fabrication plants.""Our expectation is that we will continue to look to find ways to partner with countries that are going to need these critical minerals," said Minister Wilkinson. Minister Wilkinson (left) at the Canada-UK Critical Minerals Investment Forum The Minister said the government is using various mechanisms to stimulate the development of the different parts of its critical minerals industry so the country forms an entire supply chain."This is focused on accelerating the development of the critical mineral space as part of the overall effort to successfully prosecute the energy transition.""The first measure of success is getting all the various measures we have brought into place. ... What we will be doing going forward is to establish a baseline of what we have seen over the last number of years and at progress relative to that baseline in terms of the number of mines, the number of processing facilities, the amount of specific minerals being mined. While we are interested in a range of critical minerals, it's probably the top six that are most strategic to us: cobalt, graphite, copper, rare earths, lithium and nickel," said Minister Wilkinson.FundingWhile helping to find project partners is essential, Canada's efforts to develop its critical minerals industry include financial incentives through various mechanisms.In 2022, the federal budget introduced a 30% Critical Mineral Exploration Tax Credit (CMETC) for eligible exploration expenses for battery minerals: copper, nickel, lithium, cobalt, graphite, rare earth elements, scandium titanium gallium, vanadium, tellurium, magnesium, zinc, platinum group metals and uranium.Other initiatives include the $15 billion Canada Growth Fund to accelerate the deployment of decarbonisation technologies and catalyse private sector investment, the Strategic Innovation Fund, which provides investment for innovative projects to help grow Canada's economy, and flow-through financing mechanisms for exploration expenditures.In addition to flow-through funding, the government is looking at other incentives through the tax code, such as investment tax credits, a new concept that hasn't existed in Canada before. The government is looking to add to these. "Investment tax credits, for example. We're still defining exactly what they relate to and how they will apply. We hope we'll be in a position quite soon that people can leverage and utilise those. ... "These provide a significant chunk of the capital for projects, which means the capital raises are less and also create greater certainty on a go-forward basis," said Minister Wilkinson."The financial instruments are about creating incentives that incentivise more private capital to come to early-stage companies. There certainly are cases, and we are looking at a number of them now, where there are companies that are early- to mid-development of projects that are looking to have the government partner as part of a broader capital raise to get them to where they want to get to," said Minister Wilkinson. In addition to funding mechanisms, Minister Wilkinson is working to accelerate project permitting times through better coordination among federal and provincial agencies and ensuring regulators have the funding and capacity to fulfil their function."We have done a few things and will be doing more. We brought in a new environmental assessment regime about three years ago and are seeing some of the impacts. We just saw the approval of a relatively small LNG project which went through the entire process in 2.5 years, so that process looks to be working as we hoped it would.""We have also looked at how we can optimise federal processes. We just announced investments of a little over C$1 billion in capacity money to ensure the agencies that do this work have sufficient staff and funding so projects aren't waiting in a queue to get going. We're looking at how we can do things concurrently that we used to do consecutively, and we are working bilaterally with most of the provinces and territories to figure out how we better align federal and provincial permitting processes. We will have more to say in terms of additional things we will do by the end of this year," said Minister Wilkinson.PowerWith many new mines coming into the development pipeline, in addition to battery cathode and anode plants and the general electrification of everything, Minister Wilkinson said Canada's main provinces can handle the increased power demand."It is incumbent on provincial and federal governments to think about these issues now because it takes some time before mines move through and into production. There is time to address the issues associated with the generation and transmission of energy, when and where it is required.""We will have to move with great haste with respect to the electrical capacity and the transmission issues, irrespective of critical minerals. There are various industrial processes people are looking to electrify, there is transportation we're looking to electrify. Ontario and Quebec are reasonably well-positioned, with largely fully decarbonised grids, and they both have views about how they are going to grow. Ontario's is investing in additional nuclear capacity to be able to build that out, and Quebec is very actively looking at that. We're looking to ensure that the generating capacity keeps up with demand," said Minister Wilkinson.

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