FROM MINERAL EXPLORATION TO ADVANCED MANUFACTURING: DEVELOPING VALUE CHAINS FOR CRITICAL MINERALS IN CANADA Report of the Standing Committee on Natural Resources James Maloney, Chair JUNE 2021 43rd PARLIAMENT, 2nd SESSION Published under the authority of the Speaker of the House of Commons SPEAKER’S PERMISSION The proceedings of the House of Commons and its Committees are hereby made available to provide greater public access. The parliamentary privilege of the House of Commons to control the publication and broadcast of the proceedings of the House of Commons and its Committees is nonetheless reserved. All copyrights therein are also reserved. Reproduction of the proceedings of the House of Commons and its Committees, in whole or in part and in any medium, is hereby permitted provided that the reproduction is accurate and is not presented as official. This permission does not extend to reproduction, distribution or use for commercial purpose of financial gain. 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Substantive reports on a subject-matter study usually contain a synopsis of the testimony heard, the recommendations made by the committee, as well as the reasons for those recommendations. STANDING COMMITTEE ON NATURAL RESOURCES CHAIR James Maloney VICE-CHAIRS Greg McLean Mario Simard MEMBERS Richard Cannings Yvonne Jones Paul Lefebvre Dane Lloyd Bryan May Jeremy Patzer Marc G. Serré Patrick Weiler Bob Zimmer OTHER MEMBERS OF PARLIAMENT WHO PARTICIPATED Vance Badawey Rosemarie Falk Hon. Ed Fast Kamal Khera Stéphane Lauzon Ken McDonald Raj Saini Maninder Sidhu Shannon Stubbs CLERK OF THE COMMITTEE Hilary Jane Powell iii LIBRARY OF PARLIAMENT Parliamentary Information, Education and Research Services Xavier Deschênes-Philion, Analyst Sophie Leduc, Analyst iv THE STANDING COMMITTEE ON NATURAL RESOURCES has the honour to present its SIXTH REPORT Pursuant to its mandate under Standing Order 108(2), the committee has studied critical minerals and associated value chains in Canada and has agreed to report the following: v TABLE OF CONTENTS SUMMARY .................................................................................................................................................. 1 LIST OF RECOMMENDATIONS .......................................................................................................... 3 FROM MINERAL EXPLORATION TO ADVANCED MANUFACTURING: DEVELOPING VALUE CHAINS FOR CRITICAL MINERALS IN CANADA .......................................................... 7 Introduction ....................................................................................................................................... 7 Critical Minerals: Resources for a Transforming Economy ............................................ 7 Strategic Importance of Critical Minerals ....................................................................... 8 Multiple Uses and Growing Global Demand ................................................................ 10 Unstable Supply Dominated by a Small Number of Countries ............................ 12 Developing a Canadian and Continental Supply Chain .................................... 14 Benefits and Growth Opportunities ............................................................................... 15 Significant Involvement of Indigenous Communities and Governments ........ 16 Challenges to Canada’s Mining Industry ...................................................................... 18 Identifying the Potential of Critical Minerals ...................................................... 18 Lack of Infrastructure in Remote and Northern Regions ............................... 19 Investment-Related Risks ........................................................................................... 20 Path Toward Sustainable and Responsible Development ..................................... 21 Increased Use of Renewable and Low-GHG Electricity ................................... 22 Increased Use of Mining Waste and Recycling .................................................... 23 From the Development of Critical Minerals to Value-Added Processing ............... 24 From Mines to Mobility: Battery Manufacturing ...................................................... 25 An Opportunity for Canada Despite Current Challenges ....................................... 27 A Weak Link in the Value Chain: Intermediate Processing ............................ 27 Potential Solutions for Developing Value Chains in Canada ................................. 29 Develop a Canadian Value-Added Critical Minerals Strategy ....................... 30 Support the Development of Intermediate Processing in Canada .............. 32 vii Focus on Industries that Decarbonize the Economy ........................................ 33 Develop Expertise and Train a Skilled Workforce ............................................ 34 Conclusion ....................................................................................................................................... 35 APPENDIX A LIST OF WITNESSES ................................................................................................ 37 APPENDIX B LIST OF BRIEFS .......................................................................................................... 41 REQUEST FOR GOVERNMENT RESPONSE ................................................................................ 43 DISSENTING OPINION OF THE CONSERVATIVE PARTY OF CANADA ............................ 45 DISSENTING OPINION OF THE BLOC QUÉBÉCOIS ................................................................. 53 SUPPLEMENTARY OPINION OF THE NEW DEMOCRATIC PARTY ................................... 57 viii SUMMARY Critical minerals are essential components of many new technologies, from low-greenhouse gas energy sources to electric vehicles to advances in cutting-edge sectors such as medicine, electronics, aerospace and defence. Canada possesses vast reserves of critical minerals. Some of these minerals, such as aluminum, cobalt, copper, graphite, nickel and uranium, are mined or produced in Canada today. Others, such as rare earth elements, lithium and vanadium, are currently being explored or projects are under development. Considering that the demand for critical minerals is growing strongly around the world, developing this mineral potential is an economic opportunity for Canada’s mining industry. Securing a supply of critical minerals is especially important because access to these resources is not entirely stable and production is concentrated in a few countries, notably China. To reduce this dependence on foreign markets and to position itself on global markets, the Canadian mining industry can leverage its high environmental, social and governance standards and significant involvement of Indigenous communities. Canada could also pursue a “continental” approach to guarantee a supply of critical minerals in cooperation with the provinces and territories, as well as the United States. While some challenges remain, including the exploration and evaluation of Canada’s critical mineral potential, infrastructure in remote and Northern regions and investment- related risks, Canada has the ability to sustainably and responsibly develop the critical minerals sector and take advantage of opportunities to reuse and recycle these resources. In addition to developing its domestic critical minerals production capacity and supply chains, Canada could also process critical minerals to turn them into value-added products and thus create its own value chains, in sectors such as renewable and low-greenhouse gas energy, batteries and computer chips for electric vehicles and batteries for energy storage. This report presents ways the federal government could support the development of the critical minerals industry and its associated value chains and identifies potential solutions. These solutions