Canada Eyes Mining And Rare Earths Equity Stakes To Combat China

Canada plans to buy stakes in projects that will produce and process key minerals, the country's natural resources minister said, as part of a broader effort to secure supplies of materials that are controlled by China.

Tim Hodgson said the government has already started studying projects that will receive these equity investments, including mining operations and processing facilities. Those entities would be "deemed in the national interest, but for some reason they aren't able to find the equity," he said in an interview with Bloomberg News.

"For example, some of the rare-earths processing facilities that are being talked about — unless they receive equity-like support, given the stranglehold that certain countries have on those markets, they're unlikely to happen."

Critical minerals like lithium and graphite, along with rare earth metals like terbium and dysprosium, are essential to motor engines, consumer electronics and weapons manufacturing. But the bulk of the mining and processing of these materials is controlled by China.

It's an unusual move for the Canadian government to make equity investments, but it follows the Trump administration's decision to buy stakes in miners including MP Materials Corp., Lithium Americas Corp. and Trilogy Metals Inc. this year to expand production of rare earth minerals and other metals on domestic soil. The latter two of those companies are headquartered in Canadian mining hub of Vancouver.

Canada has unveiled a suite of measures to shore up access to critical minerals, including fast-tracking mining projects deemed to have national importance. The government said Thursday it will try to accelerate the approval of projects including the Nouveau Monde Graphite Inc. phase 2 project in Quebec, Canada Nickel Co.'s Crawford project in Ontario and a tungsten and molybdenum mine in New Brunswick.

Shares of Nouveau Monde jumped nearly 12% on Wednesday after a report of the government's plan, while Canada Nickel has surged 48% this week.

Prime Minister Mark Carney's government also introduced a C$2 billion ($1.4 billion) "critical minerals sovereign fund" in its latest budget that will provide the money for equity investments, loan guarantees and offtake agreements to support mining projects. Hodgson said the Canada Growth Fund, a separate investment vehicle, has started studying projects eligible for equity investments.

The minister said the government will look to expand stockpiling of minerals to support producers of niche metals dominated by China. Canada has already begun stockpiling scandium and graphite, he said, and is now looking at other minerals. Group of Seven allies last month announced measures aimed at securing mineral supplies outside of China.

"We're doing a whole mapping exercise, looking at what Canada's needs are relative to what Canada's production and sourcing capability is," Hodgson said. "Where we see a significant deficit, we will absolutely look at stockpiling as a way to protect Canadian industries and the economy."

Source: Bloomberg Europe