The Federal Government of Canada (the Government) released its 2023 Fall Economic Statement (the Fall Economic Statement) in November 2023[i], reiterating key pillars of the 2023 Federal Budget[ii], namely its ambitious plans to support and grow Canada’s electric vehicle (EV) battery supply chain and critical minerals industry, which are integral to the global transition to a low-carbon economy. The Fall Economic Statement outlines the Government’s achievements and commitments in securing major investments, cutting red tape and improving market access for these strategic sectors, with a view to create and protect middle-class jobs, spur innovation and enhance Canada’s competitiveness and leadership in the clean economy.
The Government’s formal push for growth in this area officially began in April 2022, with its 2022 Federal Budget[iii], where the Government committed to fund CA$3.8 billion over eight years to implement Canada’s first Critical Minerals Strategy (the Strategy), which was officially released in December 2022.[iv] The Strategy is comprehensive and proposes significant investment in priority critical minerals, to create thousands of jobs for Canadians and make critical mineral mining projects a less risky undertaking for companies and investors through new measures aimed at helping to facilitate financing. For additional information and insight regarding the Strategy and these new measures, please refer to a related Dentons insight.
A key part of the Strategy is to accelerate project development through budget commitments that include more than CA$1.5 billion to support advancing projects and support faster regulatory reviews and permitting decisions.[v] Even with this significant funding support, and new compelling tax incentives to stimulate investment into these projects, there are practical challenges that still need to be met. Although Canada has enormous potential for the discovery of critical minerals, there is a race to bring critical minerals to market and the lengthy time it takes to bring a mine into production in Canada can be prohibitive.
Developing a mine in Canada can take a very long time (in the range of 10-15 years on average), as compared to other jurisdictions that benefit from shorter timeframes.[vi] For example, with a legal system very similar to Canada’s, Australia has focussed on streamlining and consolidating its approval process over the last few years, a much-needed focus here in Canada. As a result – and since most Canadian projects are in the early stages of development – most of the minerals required for North America’s energy transition may ultimately need to come from other countries if Canada and its provinces are not aligned on improving our competitiveness within the global mining industry in bringing critical minerals to market.
In response to this issue, local government initiatives, like Ontario’s proposed changes to its mining regulation [vii], that are aimed at speeding up mine approvals, are starting to take place.The proposed changes would make it easier for companies to obtain permits and loosen some existing restrictions without compromising environmental standards.More recently, the Ontario Ministry of Mines (the Ministry) launched two public consultation initiatives seeking input on proposals to improve the mineral exploration assessment work regime and the exploration plans and permits regime. These initiatives aim to streamline regulatory processes, enhance Ontario’s geoscience database and ensure competitiveness in the global mining sector, but we think additional measures to accelerate exploration and development of Canadian critical minerals projects are necessary and should be expected as demand continues to grow.[viii]For additional information and insight regarding the Ministry’s consultation initiatives, please refer to a related Dentons insight.
Demand for critical minerals, which are essential to EV manufacturing, renewable energy and advanced technologies, has grown exponentially in recent years, significantly outpacing the rate of supply, which has become a pressing concern. By some estimates, global demand for critical minerals for clean energy technologies will double by 2030, driven largely by EVs and battery storage, as well as clean electricity generation and transmission.[ix] The Government’s most recent update to its zero-emissions schedule set out that, under the new Electric Vehicle Availability Standard, auto manufacturers and importers must meet annual zero-emission vehicle regulated sales targets. These ambitious targets begin with a requirement that at least 20% of all new cars, SUVs, crossovers and light-duty pickup trucks offered for sale in Canada that year emit zero emissions. The requirements increase annually towards 60% by 2030 and 100% by 2035.[x] For additional information and insight regarding the Government’s recent update to its zero-emissions schedule please refer to a related Dentons insight.
In response to growing demand, governments, miners and car manufacturers have started to come together to form partnerships in order to secure reliable and sustainable critical mineral supply chains. Since 2020, the government has secured more than CA$34 billion[xi] in investment in the batteries and automotive supply chain, including landmark battery manufacturing facilities by Volkswagen and Stellantis-LGES in Ontario during the first and second quarters of 2023. These projects will employ thousands of Canadians and anchor the future of Canada’s EV industry, while also creating new opportunities for workers and businesses across Canada’s critical minerals, clean manufacturing and clean technology industries. For additional information and insight regarding recent partnerships among governments, miners and car manufacturers please refer to a related Dentons insight.
The Government has placed a strong emphasis on developing domestic supply chains to reduce dependence on foreign sources and ensure a stable supply of these critical minerals. However, the success of these supply chains will ultimately depend on the rate at which critical minerals can be extracted from the ground and supplied up the chain.
Canada has long been seen as a global mining leader, with an abundance of many of the world’s essential critical minerals, including lithium, graphite, cobalt and nickel, with a reputation of being a leader in getting these projects done right—with strong environmental protections, robust labour standards and engagements with Indigenous partners. However, in this current global race to bring critical minerals to market, the Government has recognized that for Canada to build a thriving economy, investments in clean projects (from critical minerals, to clean electricity, to clean energy and beyond) must be able to move forward more quickly and effectively than has been the case in the past.
While Canada’s mining sector ranks second among BloombergNEF’s scoring of 10 leading critical mineral producers[xii], all while meeting world-leading sustainability requirements, it is essential that Canadian projects are able to move at a faster pace if we are to capitalize on what has been said to be a generational opportunity for Canada to become a leader and global supplier of choice in the clean energy transition. Put simply, in order to compete in this race, we must pick up the pace. For additional information and insight on why Canada has the potential to be among the EV battery supply chain leaders of the future, please refer to a related Dentons insight.
The Fall Economic Statement demonstrates the Government’s commitment to supporting and growing Canada’s EV battery supply chain and critical minerals industry, which are foundational to the clean economy. By leveraging Canada’s competitive advantages, attracting major investments, streamlining regulatory processes, and improving market access, the Government plans to position Canada as a global leader in the low-carbon transition and create opportunities for workers and businesses across the country. However, more still needs to be done to ensure major projects get built in a timely manner.
To that end, the Government had announced that, by the end of 2023, it will outline a concrete plan to further improve the efficiency of the permitting and impact assessment processes for major projects, which will include clarifying and reducing timelines, mitigating inefficiencies and improving engagement and partnerships.[xiii] As mentioned above, the Ministry began a similar process in October intended to improve the local regime in order to boost Ontario’s competitiveness. We already have the strategy and the budget and are now eagerly awaiting details of the plan that may help propel Canada towards becoming a leader in the global race to bring critical minerals to market. Our ability to implement at this stage will be critical in light of the targets and impending deadlines that have been set. Time is of the essence.
For more information on this topic, please contact the authors, Greg McNab, Michael Sabusco and Jaskaran Grewal.
[i] https://www.budget.canada.ca/Fall Economic Statement-eea/2023/home-accueil-en.html
[ii] https://www.budget.canada.ca/Fall Economic Statement-eea/2023/report-rapport/FALL ECONOMIC STATEMENT-EEA-2023-en.pdf
[iii] https://www.budget.canada.ca/2022/home-accueil-en.html
[iv] https://www.canada.ca/en/campaign/critical-minerals-in-canada/canadas-critical-minerals-strategy.html
[v] https://www.canada.ca/content/dam/nrcan-rncan/site/critical-minerals/Critical-minerals-strategyDec09.pdf
[vi] https://mining.ca/resources/reports/project-permitting-in-canada-and-the-mining-industry/
[vii] Bill 71, Building More Mines Act, 2023, Comment period: March 2, 2023 – April 16, 2023; Decision: June 16, 2023; https://www.ola.org/en/legislative-business/bills/parliament-43/session-1/bill-7
[viii] https://ero.ontario.ca/notice/019-7762; and https://ero.ontario.ca/notice/019-7761
[ix] https://www.budget.canada.ca/Fall Economic Statement-eea/2023/report-rapport/chap3-en.html ;
[x] https://www.canada.ca/en/environment-climate-change/news/2023/12/canadas-electric-vehicle-availability-standard-regulated-targets-for-zero-emission-vehicles.html
[xi] https://www.budget.canada.ca/Fall Economic Statement-eea/2023/report-rapport/FALL ECONOMIC STATEMENT-EEA-2023-en.pdf; page 69.
[xii] https://www.budget.canada.ca/Fall Economic Statement-eea/2023/report-rapport/FALL ECONOMIC STATEMENT-EEA-2023-en.pdf; page 70.
[xiii] https://www.budget.canada.ca/Fall Economic Statement-eea/2023/report-rapport/FALL ECONOMIC STATEMENT-EEA-2023-en.pdf; page 69.
