Question Period Note: Canadian Critical Minerals Development

How will developing Canada’s critical minerals benefit Canadians?

• Canada’s abundance of critical minerals provides the opportunity to grow global leadership in this space. Investments in critical minerals-based manufacturing value chains will support Canada’s transition towards a net-zero economy.

• The rising demand for critical minerals and the products made with them present a generational opportunity for industrial diversification, high-quality employment and sustainable development across Canada, especially in rural, remote and Indigenous communities.
• The Strategic Innovation Fund (SIF) continues to be an important tool for attracting investment in projects, which will drive Canada’s critical minerals goals through implementation of its $1.5 billion investment target.

As a trusted supplier of responsibly sourced minerals, Canada is working to leverage its resource endowment, and environmental, social, and governance (ESG) credentials to meet the rising global demand for critical minerals and their downstream value-added products. Through the creation of sustainable jobs, critical mineral value chains can support Canada’s transition toward a net-zero emissions economy.

Previously announced funding of $3.8 billion over eight years will be used to implement the Canadian Critical Minerals Strategy, growing the production of the critical minerals necessary to power the green and digital economy at home and around the world. This Strategy is now being delivered through new investments in Canada’s industrial capacity, policy levers, research and development initiatives, and other mechanisms to support industries along critical value chains.

The Strategic Innovation Fund (SIF) is an important tool for supporting industrial transformation, with advanced-stage projects across the transportation and energy sectors. These investments will advance the development of value chains, enabling the transition towards a green and digitalized economy.

Due to the capital intensive, high-risk nature of the industry, and market failures, many projects are facing challenges to raise the requisite private sector capital. Additionally, select projects are led by junior and pre-revenue firms and they are seeking government support to serve as an additional signal of validation for private capital markets.

Through the Critical Minerals Investment Framework (CMIF), SIF is being deployed as a tool to accelerate project development. Scale-up in this emerging sector requires considered project selection.

To date, two critical minerals projects have been announced through SIF:
• E3 Lithium in Alberta: $27 million to produce lithium from brines.
• Rio Tinto Fer et Titane in Quebec: $222 million for a multi-faceted critical minerals and blue smelting project.

Budget 2023 introduced a number of new investment tax credits (ITCs) to support greening the economy. SIF can be used to complement ITC support in sectors such as clean technologies, energy, clean technology manufacturing as well as carbon capture, utilization and storage (CCUS). The introduction of ITCs provides an enhanced level of support for proponents by ensuring sufficient backing required to reach financial investment decisions. However, in the case of pre-revenue firms, the ITCs are not suitable as construction capital as they are reimbursable after spending. In most cases a mix of ITCs and SIF funding will be required.

• Canada is well placed to take advantage of the rapidly growing demand for critical minerals. Twenty one (21) of the thirty one (31) critical minerals on Canada’s list are already produced domestically, including battery materials like graphite, copper, lithium and nickel.
• The Critical Minerals Strategy, and the Strategic Innovation Fund (SIF) investment target, are adding value to Canada’s domestic resources by supporting a supply chain approach, from mineral processing through to manufacturing and recycling.

• Additionally, projects can be supported through the Canada Growth Fund, a $15 billion arm’s length public investment vehicle that will encourage private investment in low carbon projects, technologies, businesses, and supply chains.