U.S. Looks to Canada as ‘51st State’ for Supplies of Electric Vehicle Minerals

Less than two weeks before U.S. President Joe Biden unveiled a US$2-trillion infrastructure plan with heavy emphasis on electric cars and clean electricity, U.S. Department of Commerce officials were touching base with Canadian mining companies and battery producers to look at amping up production of electric vehicle components.

“A source who attended the meeting said there was no indication that the Commerce Department would offer financial incentives for new mines or other supply chain components in Canada,” Reuters reported last month. “But department officials did stress the need to act now to build a U.S.-Canada EV supply chain, much like Europe has been doing and Asia has already done, according to a second source who attended the meeting.”

The U.S. sees Canada as a source of 13 of the 35 minerals it deems critical for its national defence, particularly with conservationists fighting hard against several large U.S. mining projects, the news agency wrote. The story said representatives of Tesla Inc., Talon Metals Corp., and Livent Corp. were among the more than 30 participants looking at ways to help U.S. companies “overcome logistical challenges” and expand in Canada.

The Department of Commerce virtual event took place after Biden and Prime Minister Justin Trudeau “committed [in February] to building an EV supply chain between the two countries,” Reuters says. “Since Biden’s election, three U.S. mining companies have invested in Canada, where mining accounts for 5% of the country’s gross domestic product, versus roughly 0.9% in the United States.”

Canada also has a geographic advantage, with the opportunity to locate battery manufacturing plants in Ontario (where companies have made three recent investment announcements) and Quebec (where Lion Electric is setting up a $185-million battery manufacturing plant). “Lithium-ion batteries are dangerous to transport over long distances, so automakers prefer to have them built near assembly plants,” Reuters explains, in this case in Michigan and Ohio.

“The United States is really taking this seriously,” said Robin Goad, CEO of Fortune Metals, a company currently developing a cobalt mine in the Northwest Territories.

“The border between Canada and the U.S. is inconsequential with respect to EVs and EV minerals,” added Arne Frandsen, CEO of mining investment group Pallinghurst, the biggest shareholder in a company now building a graphite mine and anode plant in Quebec.

Reuters said Pallinghurst and Livent are partners in the Nemaska lithium project in Cree Nation territory in Quebec, adding that Livent has supply deals with both Tesla and BMW. “We do see Canada as a natural fit for expansion as the whole battery supply chain is going through a huge self-reckoning about sourcing,” said Livent CEO Paul Graves.

Already, “Canada’s First Cobalt Corp. is building the continent’s only cobalt refinery, part of an effort to wean the EV industry off supplies from the Democratic Republic of Congo, where child labour has been used,” Reuters added. “Adding to the appeal of Canada, some of the country’s mines bill themselves as environmentally friendly and promise to use hydroelectric power to reduce their carbon emissions.”

That’s got the U.S. looking at Canada increasingly as a kind of “51st state” for mineral supplies, a U.S. government source told the news agency.

“You’re beginning to see Canada become an important part of the North American EV supply chain,” said Keith Phillips, CEO of Piedmont Lithium Ltd., a part-owner of Quebec lithium developer Sayona Mining Ltd.

The U.S. knows “that we are the most-secure and most-resilient source of metal imports for them,” added Natural Resources Minister Seamus O’Regan.

In an analysis published last month, management consultants at KPMG point to the circular economy practices of reuse, recycling, and repurposing metals and materials as a way to ensure a supply of minerals to drive the energy transition.

“A net-zero world is dependent upon renewable energies to replace traditional power sources. But there is a threat to supplies of the mined mineral and metals that drive these green technologies,” the company writes on the landing page for the report. “Access to these crucial resources has become highly politicized, with geopolitical power anticipated to shift from oil-dominated to metal-dominated countries. With a relatively small number of nations holding deposits, competition for these vital resources will be high as governments seek energy security.”