Canadian miners are grappling with the imminent return of Donald Trump to the U.S. presidency, raising new questions for a sector decarbonizing in the face of rising emissions, soaring costs and volatile commodity markets.
Canada has the potential to mine more than the $75 billion in minerals and metals extracted last year as demand for lithium, cobalt, nickel and graphite and other critical minerals surges with the energy transition, industry leaders agreed at a major conference in Toronto, Ont. this week.
But opinions differed on how Trump’s energy and industrial policies might influence efforts to decarbonize the Canadian mining sector, which saw its CO2 emissions rise to 11 megatonnes in 2022, up almost 30 per cent from 20 years ago.
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“We know from Trump’s first administration that he muses a lot, but that this doesn’t necessarily translate into public policy. But it creates anxiety in markets and in businesses,” said Rebecca Thompson, vice president of public affairs at Alamos Gold, a Toronto-based gold mine developer.
The U.S. will continue to see Canada as a “trusted partner” in capitalizing on North America’s mineral wealth over potential rivals such as China, she added. “So, there is a huge opportunity here.”
During the U.S. election campaign, Trump called the country’s $370 billion clean energy investment scheme — known as the Inflation Reduction Act — the “green new scam” and denounced President Joe Biden’s policies to build renewable energy projects as a “plan to make China rich”.
Nevertheless, Trump has not yet “expressed a view” on decarbonizing industries, including mining, said Belinda Labatte, CEO of Lomiko Metals, a lithium and graphite miner, adding that “electrification is here to stay and requires critical minerals.”
“This is the new geopolitical reality,” she said. Labatte said the U.S. Strategic Petroleum Reserve, an emergency reserve created after the oil crisis in 1975 to ensure stability of the domestic economy, was losing relevance with the shift toward clean energy.
“Does it matter anymore? What really matters is the stockpile of critical minerals a country has. And Canada has a wealth of critical minerals,” Labatte said.
Canada should make the most of lucrative opportunities to export #criticalminerals to the U.S. but it was crucial that “we didn’t become #Trump’s cookie jar.” Rebecca Thompson, VP public affairs @AlamosGoldInc Underground maintenance facility at Glencore’s Nickel Rim South Mine in northern Ont. (Handout: Glencore)
Canada’s critical minerals exports to the U.S. grew by 31 per cent in 2022 compared to the previous year to reach $61.3 billion, an increase largely due to price rises for potash, aluminum and nickel. China was Canada’s second-largest trading partner ($7.5 billion), followed by Brazil ($5.0 billion) and Norway ($3.0 billion).
‘Language Trump understands’
Sourcing critical minerals from greener mines on either side of the US-Canada border will be driven by efficiencies and economic fundamentals rather than environmental stewardship, said Bliss Baker, vice chair at Sussex Strategy, an industry strategic consultancy.
“The challenge to Canada is that we are used to discussing these topics around the idea of ‘values’ and that isn’t necessarily going to work with the incoming U.S. administration,” Baker said.
“We need to be talking in terms of [decarbonization] being better for investment, better for business, better for the U.S. in a global context.”
Dimitri Pantazopoulos, president of Yorkville Strategies, a Vancouver-based research firm, said, “Decarbonization speaks to the bottom line. That is language Trump understands.”
Trump’s pick to lead the Environmental Protection Agency (EPA), former Republican congressman Lee Zeldin, a vocal opponent of U.S. climate change laws, was revealing, said Pantazopoulos.
Zeldin said on X, the social media platform, that he would work to “unleash U.S. energy dominance, make America the AI capital of the world, and bring American autoworker jobs back home.”
The international context to Zeldin’s remarks will be important to Canada’s mining sector, said Pantazopoulos.
“China is already flooding world markets with cheap graphite and nickel, using production techniques that are challenging competing regimes that are trying to maintain higher environmental standards,” he said.
Trump, he said, would be forced to understand that building critical mineral stores for use in American industry could not just be a “nativist” project but would require engagement with Canada’s mining sector.
A container of lithium carbonate sits in a shipping warehouse at a lithium facility, in Silver Peak, Nev., on Thursday, Oct. 6, 2022. (File photo by The Associated Press/John Locher)
Baker agreed that a Trump administration would ultimately see mining as part of a wider energy and national security agenda. “For the first time in a long time, the U.S. is starting to see the mining of critical minerals through the lens of national security,” she said.
Permitting bottlenecks
Canada aims to accelerate construction of new mines to extract critical minerals needed for a range of the energy transition technologies as well as in the domestic electric vehicle (EV) supply chain.
Ottawa earlier this year drafted a list of 34 critical minerals used in everything from wind turbines to cell phones, solar panels to EV batteries. But that list needs refining, many in industry say.
“Canada faces similar permitting and regulatory problems as the U.S. in tapping our natural resource wealth,” said Thompson. “So we need to focus on a shorter list and one that determines how much we produce a year.”
“If we are going to work with this new U.S. administration we should think seriously about this. We can’t mine everything,” she added. “We need to continue competing on the world stage.”
Critical minerals map of Canada (source: Natural Resources Canada)
Canada’s mining industry faced an array of challenges before the U.S. election last week.
Decarbonizing mining itself is an expensive business, from electrifying mines with renewable energy to buying electric trucks to move material from open-pit operations.
Transitioning the sector is placing upward pressure on capital investments, which climbed to $4.1 billion in 2022, up from $3.8 billion the year before.
Add to this a turbulent global market for critical minerals, where the price of lithium dropped 75 per cent last year after a long stretch of steady growth, while cobalt, nickel and graphite prices fell 30-40 per cent in the same period.
Many in industry believe Ottawa should create conditions to accelerate the development of critical mineral deposits, starting with talking to industrial stakeholders on infrastructure needs, said Tim Murphy, chief strategic affairs officer at AECON, a Toronto-based infrastructure contractor.
“That conversation is not happening yet. It still takes 3,000 permits to build a road in the Ring of Fire,” he said, referring to the mineral-rich region in northern Ontario where environmental activists and First Nations have raised concerns over the potential environmental damage from the scale of mining and transportation being proposed.
America first…and Canada?
Thompson warned against Ottawa being too docile in dealing with the Trump administration. Canada should make the most of lucrative opportunities to export critical minerals to its southern neighbour, she said, but it was crucial that “we didn’t become Trump’s cookie jar.”
“Our country must maintain sovereignty over our resources. And we should be able to do this because, for the U.S., the alternative is to do deals with countries like China,” she added.
Murphy was clear about who he felt had the upper hand as the U.S.-Canada relationship on critical mineral mining evolved in the coming four years.
“There are risks to it, but I don’t think we have a choice, given the rise of a protectionist agenda under Trump,” said Murphy.
“We have to find a way to make sure that an ‘America First’ agenda includes Canada.”
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Publish date : 2024-11-13 21:14:00
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