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Canada's critical minerals push raising mining sector profile

Canada's Trudeau government is putting more focus on the importance of the mining sector as it seeks to bolster the critical minerals supply chain amid a broader push by the U.S. and other countries to reduce their dependency on Chinese rare earths, according to Pierre Gratton, president and CEO of the Mining Association of Canada.

"Mining hasn't featured this prominently in as long as I can remember, so it's quite exciting," Gratton said in an interview.

As evidence, Gratton noted that critical minerals featured in Prime Minister Justin Trudeau's December 2019 ministerial mandate letter to Natural Resources Minister Seamus O'Regan, in which Trudeau outlined policy priorities. While the Trudeau government has pushed for more scrutiny of the resource industry, launching a new permitting process in 2019, it has also called on Canada to become a leader in the critical minerals sector, acknowledging the importance of metals to a lower-carbon economy.

In the mandate letter, Trudeau called on O'Regan to work with other ministers "to position Canada as a global leader in clean technology, including in critical minerals."

The increased policy focus on critical minerals in Canada comes as the U.S. and other countries push to lessen their reliance on China for critical minerals and rare earth metals in particular. China produced over two-thirds of the world's rare earth metals in 2018, and while the sector is by value relatively minor in the overall mining industry, the metals are used in key high-tech sectors such as aerospace, manufacturing and defense.

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The issue has driven an important policy push in the U.S., where the White House wants to boost domestic production and processing capacity using the lever of national security policy while partnering with allies to support the critical minerals supply chain. The U.S. has signed memorandums of understandings with Australia and Canada as the countries look for ways to cooperate bilaterally to support the production of metals they see as critical to national security.

While the U.S. produces some rare earths, notably at MP Materials' Mountain Pass mine in California, Canada does not produce any, according to Natural Resources Canada. Beyond rare earths, Canada is a significant producer of a number of other metals the U.S. has deemed critical, including uranium and niobium.

Industry players and experts have long argued that the U.S. and its allies should curb their reliance on Chinese supply for critical minerals, and they said the Trump administration's push to boost domestic supply is the most policy attention the issue has received in years.

"North America is finally waking up about critical minerals," Corby Anderson, a professor at the Colorado School of Mines and an expert on mineral processing, said in an interview.

Michael Schrider, COO of Ucore Rare Metals Inc., a company looking to develop rare earth projects in the U.S., echoed Anderson's view and said the Trump administration's policies were significant for the sector. "From a rare earth perspective, this is a very hard policy push," Schrider said. In partnership with Materion Corp., Ucore responded to a U.S. government solicitation for bids late in 2019 to assess the potential for the separation of heavy rare earth elements in the U.S. A decision on a bid winner has yet to be made, Schrider said.

Some uncertainty remains around where the U.S. policy push and international partnerships will lead, experts said. Gratton echoed U.S. and Australian experts who have noted that the MOUs are tentative first steps. "Who knows where it goes. It's very early days," Gratton said.

Gratton also pointed to several areas the Canadian government could target if it wants to boost the critical minerals sector, including more geoscience funding to drive discoveries, new tax incentives, and commitments to buy certain minerals from key partners even if they are more expensive.

"I think there's real opportunities here to tackle some of the issues that have been growing over time rather insidiously as China has sort of cornered the market on a number of commodities," Gratton said.

A spokesperson with Canada's Department of Natural Resources told S&P Global Market Intelligence that international partnerships would be needed to build secure supply chains in the critical minerals sector. "To seize these opportunities, Natural Resources Canada is advancing international cooperation and convening federal departments to develop options to strengthen the competitiveness of Canada's critical minerals industry," the spokesperson said in an email.

Gratton said the Mining Association of Canada launched a critical minerals task force to tackle potential policy measures and liaise with the Canadian government.