Mining industry warns critical minerals stockpiles useless without processing plants

Government-backed strategic reserves of lithium, nickel, copper and other minerals and metals seen as key to Canada’s national security and its energy transition would be a non-starter without a cross-country network of processing facilities, mining sector executives said Tuesday. 

Calls for an emergency stockpile of 34 critical minerals in Canada have grown in recent weeks as a way to reduce investment risk for mine developers and leverage against U.S. President Donald Trump's threat to annex the country for its wealth of natural resources.

Canada’s energy minister last week controversially proposed “joint investments” with the U.S. to strengthen Canada as an alternative supplier to geopolitical rivals China and Russia, but that has raised concerns about loss of sovereign control over lithium, zinc, copper and other critical minerals.

Kristan Straub, CEO of the Toronto-based subsidiary of Australian mining giant Wyloo, is among those in industry who believe strategic reserves of critical minerals would not be a solution unless processing facilities were built across the country. 

This would make sure Canadian minerals and metals are kept in Canada, for use in everything from wind turbines and solar panels to EV batteries as part of a new industrial ecosystem, he said.

"Developing a strategic reserve, without the capacity to transform that mineral or metal so we can utilize it, would not be productive," Straub told Canada’s National Observer at the GlobeXchange conference in Toronto on Tuesday.  

Missing links in a value chain

He contrasted the U.S.'s strategic petroleum reserves — huge volumes of crude oil stored in caverns on the coast of the Gulf of Mexico as a hedge against international market price fluctuations — that "can be turned into energy or other byproducts, such as plastics," with a value chain that doesn’t yet exist in Canada for critical minerals. 

Francisca Quinn, chair of the ESG committee at Canada Nickel Co, said during a panel discussion with Straub and Matt McCulloch, head of decarbonization at mining engineers Norda Stelo, that critical minerals strategic reserves would be only one link in a much longer Canadian supply chain.

"Currently, we have to send our nickel abroad for processing in Asia and then ship it back to put it in a battery plant in Ontario. That doesn’t make a lot of sense," Quinn said. And the same goes for other minerals.

"A strategic reserve of gallium, for instance, would today need to be exported for use elsewhere,” Straub said, referring to a rare earth metal used in semiconductors that is currently at the crux of a U.S.-China trade dispute. 

“Nickel? We need to have the processing capacity to transform it from a refined product into the right chemicals for an EV battery,” he said. “The same holds true for lithium or any of the rare earth elements." 

Wyloo took a first step on the long road to developing that processing capacity when it signed a deal to construct Canada's first facility to refine low-carbon nickel in northern Ontario.

"Our country has not yet done that, but the opportunity is there," said Straub.

‘Build low, sell high’

McCulloch adapted the market truism “buy low, sell high” to describe the challenge of building out Canada’s refining capacity for critical minerals.

"It's 'build low, sell high' too," he said, underlining the coming boom in critical minerals means investment today would pay off by creating industrial facilities and jobs ahead of forecast market growth.

"Mines and refineries are big capital projects, so timing is everything. Build when costs are lower — time, labour, materials. As the market comes up, you'll be ready. But of course that means absorbing [capital] risk,” he said.

Quinn and Straub pointed to other countries where governments have made it easier to extract and refine critical minerals such as nickel and lithium.

"China has made it very straightforward by providing support to create and build the sector and its supply chain — and look at how they are dominating the international markets," Quinn said. 

Straub highlighted contrasting situations in Canada and Australia, which have similar lithium resources along with high environmental standards and requirements to consult with Indigenous communities. 

"Canada has a phenomenal resource of hard-rock lithium and so does Australia,” he said. 

Yet, while Australia has grown into a global lithium leader with output of 86,000 tonnes in 2023 — more than Chile and China — Canada "has yet to produce a gram of lithium outside the lab," Straub said.

Only a handful of critical minerals projects have gained traction in the past year in Canada, but projects in B.C., Manitoba, Ontario and Quebec have recently received a financial boost from the $1.5 billion Canadian Critical Minerals Infrastructure Fund. 

A typical Canadian mine can take 27 years to go from discovery to production, according to a study by S&P Global, due in part to slow permitting and regulatory processes. 

That is slightly faster than the United States (29 years) but longer than Australia’s 20 years. 

Ottawa has not set firm targets for new mines under its critical minerals strategy, which, apart from the $1.5 billion in infrastructure over seven years, is investing $192 million in research to support the “sustainable development of responsibly sourced critical minerals.”

"An OPEC-type" market

Globally, the critical mineral sector is forecast by the International Energy Agency to double in market value to US$770 billion by 2040.

The panellists said global production of critical minerals could eventually fall under the control of an "OPEC-type organization," referring to the Organization of the Petroleum Exporting Countries, a cartel of the world's largest oil-producing countries that collectively influences the global oil market.

"Countries such as China, Russia, and others are going to want to control consenting and production [of critical minerals] to try and price out other countries," Quinn said, adding governments like Canada must provide support to overcome infrastructure barriers to mineral development.

"Critical minerals in the energy transition is an opportunity — especially now with the tariff situation — to take a challenge and turn it into something that we as Canadians can get behind and unite around,” Straub said.