‘Vulnerabilities obvious’ as US builds critical mineral supply chain

Breadcrumb Trail Links Mining Commodities U.S., Canada partner to reduce…

U.S., Canada partner to reduce dependence on China by supporting mining, processing and recycling projects

Get the latest from Gabriel Friedman straight to your inbox

Article content

The United States has “no better partner than Canada” as it seeks to build out a global critical minerals supply chain, says undersecretary of economic growth Jose Fernandez.

“Our partnership with Canada in this space is frankly second to none,” he said after speaking at the Prospectors & Developers Association of Canada convention in Toronto on March 4.

Article content

In June 2022 at the PDAC convention, Fernandez said the U.S. would lead a coalition of countries including Canada in a Minerals Security Partnership (MSP) to provide “targeted financial and diplomatic support for strategic (critical minerals) projects.”

Advertisement 2

Article content

Other countries in the coalition include Australia, Finland, France, Germany, India, Italy, Japan, Norway, the Republic of Korea, Sweden, the United Kingdom and the European Union. On March 4, the MSP welcomed Estonia as a member.

The MSP’s goal is to reduce countries’ dependence on China by supporting mining, processing and recycling projects in other countries, Fernandez said.

“Our vulnerabilities are obvious,” he said, adding that China has already placed export controls on gallium, germanium and graphite.

Gallium is critical for the semiconductor industry, graphite is an important material of battery anodes while germanium is used in a range of technologies, including telecommunications.

Some analysts believe China’s export controls — all announced in the past year — will drive up the price of the underlying commodities, and say it’s a response to moves by the U.S. and other western countries, including Canada, to limit technology transfers to the Asian giant.

So far, the MSP has not announced support for any Canadian projects, but Fernandez said the partnership is less than two years old.

Advertisement 3

Article content

“In the mining world, it’s a blip,” he said.

The MSP in February announced that the Japan Organization for Metals and Energy Security had signed a memorandum of understanding with La Générale des Carrières et des Mines, the Democratic Republic of Congo’s state-controlled mining company, to co-operate on mineral exploration, production and processing.

Many Canadian junior mining companies developing nickel, lithium and other critical mineral projects are struggling to raise capital on public markets. This has been particularly true as the price of those commodities and others have had double-digit declines in the past year.

“That’s a challenge that exists as a result of the system we pursue,” Fernandez said. “Capitalism means no one is going to guarantee anything. We don’t have a state-backed company that will finance us come hell or high water.”

The role of the MSP is to make introductions to potential investors, facilitate long-term financing and debt arrangements, find customers for minerals and help negotiate offtake agreements, he said.

Jeff Killeen, director of policy and programs for PDAC, said there is still optimism in the Canadian mining sector about the opportunity to receive support from the U.S. government.

Advertisement 4

Article content

“There hasn’t been real fanfare … from public investments coming from the U.S. government into Canadian projects, (but) that prospect is still there,” he said.

Recommended from Editorial

Fernandez estimated that he and his staff have received requests for support from hundreds of projects and had identified two-dozen projects, of which slightly less than a third are processing projects, that the MSP may be able to support.

“The MSP is about getting projects done,” he said in a speech at PDAC, “and our success or our failure will be based on the number of projects that we’re able to realize.”

• Email: gfriedman@postmedia.com

Article content

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *