Question Period Note: CANADIAN CRITICAL MINERALS DEVELOPMENT

What is being done to support the critical minerals sector in Canada?

• With the Canadian Critical Minerals Strategy as its guide, the Government of Canada has been investing to develop the entire critical minerals value chain, by expanding its manufacturing, processing and recycling capacities.

• Through the Strategic Innovation Fund, the government has made available $1.5 billion for critical minerals projects.

• These investments will help build resiliency along the minerals supply chain, bolster Canada’s global economic competitiveness, and demonstrate its reliability for its allies.

• Budget 2024 proposes several new measures in support of Canada’s critical minerals sector by expanding and clarifying the scope of activities eligible under the Clean Technology Manufacturing Investment Tax Credit and setting targets aimed at accelerating Impact Assessment and permitting processes.

The quantity and quality of critical minerals needed to support the world’s ambitious low-carbon transition continues to bring to light bottlenecks in critical minerals supply chains. Non-market economies currently control and supply approximately 74 percent of the world’s cobalt, 90 percent of global nickel, and 70 percent of graphite, which are all minerals that are vital for battery technology. In response, governments are diversifying their supply chains to decrease dependence on non-market entities, while securing their value chains. Canada is achieving this by investing in, and implementing policies, to support and secure the development of our domestic critical minerals value chains and those of our allies.

In Budget 2022, the Government committed up to $3.8 billion over eight years to support work announced in the Canadian Critical Minerals Strategy, which is being co-led by the Departments of Innovation, Science and Economic Development and Natural Resources Canada.

This funding is being used to drive industrial capabilities, contribute to the economic development of rural, remote and Indigenous communities, and help build a sustainable economy.

Through the Strategic Innovation Fund, $286 million has been allocated to date to support three major projects:
• E3 Lithium received $27 million to demonstrate the viability of the extraction of lithium from brines in Alberta. This facility will be the first step toward a full-scale lithium production plant that will produce up to 20,000 tonnes of battery-grade lithium;
• Rio Tinto Fer et Titane received $222 million for a critical minerals project in Sorel-Tracy, Quebec to produce several critical minerals; and
• Vale in Becancour, Quebec, received $37 million towards a battery grade nickel sulfate plant to process nickel pellets and rounds. [*note that this project was not announced through a ministerial event but was posted on Proactive Disclosure in 2023]

Budget 2023 introduced a number of new investment tax credits (ITCs) to provide an enhanced level of support for project proponents, and encourage investment in sectors such as clean technologies, energy, clean technology manufacturing, as well as carbon capture, utilization and storage. Draft legislative proposals to implement the Clean Technology Manufacturing ITC, which includes certain minerals extraction and processing activities, were released in December 2023. This incentive would provide a 30 percent tax credit on the cost of eligible activities related to producing all or substantially all of the six target minerals outlined in the Critical Minerals Strategy, i.e., copper, nickel, cobalt, lithium, graphite, and rare earth elements.

Budget 2024 builds on this by: (i) providing support and clarity to businesses with projects covering multiple metals; (ii) providing further clarification on using the value of the qualifying materials as the output metric to assess property usage; and, (iii) modifying eligible investments to include eligible property used in qualifying minerals activities.

Canada’s riches in the resources necessary for battery manufacturing, coupled with its strong automotive sector, gives it a competitive advantage over many countries. To leverage this advantage, Canada is working towards developing a world-class, domestic battery ecosystem, while maintaining its leadership in sustainability. In support of this work, Budget 2024 provides further funding to drive investment opportunities in the clean economy through the previously announced ITCs, along with a newly announced Electric Vehicle (EV) Supply Chains ITC. This EV Supply Chain ITC would provide a 10 percent tax credit on building costs for businesses investing in Canada across the following supply chain segments:
• Electric vehicle assembly;
• Electric vehicle battery production; and,
• Cathode active material production.

This new ITC would help to attract private investments, strengthen the EV supply chain and secure the future of Canada’s automotive industry.

Globally, Canada is regarded as a strategic partner and a provider of reliably sourced high-quality critical minerals inputs that will contribute to the net-zero economy. As Canada assumes presidency for the G7 group in 2025, it will seize this opportunity to further Canada’s goals by reinforcing supply chain security, sustainability and responsible critical minerals sourcing.

• Critical minerals are needed to power clean technologies such as solar panels, wind turbines, semiconductors and battery-operated vehicles.

• Canada is uniquely placed to play an important role in the global energy transition – having both an abundance of critical minerals reserves, a skilled workforce, and high environmental, social and governance standards.

• Globally, Canada is regarded as a strategic partner and a provider of reliably sourced high-quality critical minerals inputs that will contribute to the net-zero economy.

• Government of Canada funding is stimulating industrial growth, attracting investments and furthering Canada’s economic prominence in global markets.

• The government is committed to working together with the provinces, territories and industry partners to ensure Canada’s success.