Canada has the potential to be a player in lithium, which is essential to the batteries in electric vehicles.Guglielmo Mangiapane/Reuters
Canada has big ambitions in clean technology – to become “a world leader” in critical minerals and batteries, Prime Minister Justin Trudeau said in December.
The goal, however, exists mostly on paper. Canada is barely out of the starting blocks. There’s ambition, but it doesn’t always jibe with actions.
An important agreement was struck between Canada and the United States in early 2020. The U.S. had a list of 35 minerals it deemed “critical to economic and national security.” Canada is an important supplier of 13, notably potash and aluminum. It also provides a quarter of U.S. uranium. And it has the potential to be a player in lithium, which is essential to the batteries in electric vehicles, and may hold the key to power storage in an overhauled electrical grid.
Among the things the two allies agreed to work on were “efforts to secure critical minerals supply chains for strategic industries.” Left unmentioned in the official press release was the cause of concern in Washington and Ottawa: China. It is already dominant in much of clean tech, including in the global lithium and battery businesses. And while Canada is a major supplier of 13 of 35 critical minerals to the U.S., China is the top supplier of 10 and an important supplier of 10 more.
Lithium is abundant but deposits are concentrated in a few countries, led by Chile, Argentina and China. Canada has prospects but, at present, zero lithium mines, zero lithium processing plants and zero battery factories. All those zeroes do not add up to Canada becoming a world leader in the field.
With all the talk of global ambitions and strategic challenges from China, there was widespread surprise when Ottawa did not review a $960-million takeover of Neo Lithium, a Canadian startup, by China’s state-owned Zijin Mining. Ottawa could have reviewed the deal on national security grounds. However, Neo Lithium’s connection to Canada is somewhat nominal – it trades on the TSX Venture Exchange, but the company’s management is based in Argentina, where its as-yet undeveloped lithium assets are located. Ottawa cited these reasons in declining to review the deal.
And even if the company remained Canadian-owned, and it one day became, as it advertises, “the next major lithium producer,” it would be under no obligation to ship its Argentinian output to Canada. But in a global race for critical minerals, Ottawa closed its eyes by ceding a Canadian-incorporated company to the Chinese government.
The opposition has questions, and Innovation Minister François-Philippe Champagne is expected to soon face a House of Commons committee. The grilling will be retrospective, the window for a review having passed, but the government must explain why its promise to secure critical minerals supply chains didn’t apply here.
Watching China buy a Canadian domiciled company with a possibly major overseas lithium deposit is one thing. The bigger and more challenging issue is the building of a domestic lithium industry. There are contenders dreaming on the future, but today, no lithium miner is about to open.
A Globe and Mail feature this month enumerated the problems. One is the gap between words and actions. Ontario Premier Doug Ford envisions three battery plants in the province within eight years but a recent provincial plan contained a whopping zero dollars in new government support. The new U.S. infrastructure bill includes US$6-billion for batteries and US$50-billion for the EV supply chain. Then there are out of date regulations. Because Canada can’t process lithium bulk samples, small miners often try to get that done in Europe. Yet to do that, exporters in Ontario need to seek exemption from a First World War-era rule aimed at preventing Canadian metals from becoming German weapons.
One idea is Canada could propel the domestic lithium industry by regulating it as advanced manufacturing rather than old-school mining. One advantage Canada does have is an abundance of clean hydropower. It’s no surprise that many believe Quebec could emerge as a lithium-processing leader. Consider the contrast with lithium processed in China, using coal power.
Clean tech will help the world beat climate heating but that will require doubling down on a not-always-clean industry, mining. The mineral content of EVs and wind turbines are much higher than fossil predecessors. Batteries don’t come from nowhere, and neither does the energy they store.
Canada’s ambitions are the right ones, at least on paper. The trick is moving beyond blueprints.
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