Canada and other G7 countries have formed a new alliance to compel mining companies to adopt more environmentally sustainable and socially responsible standards as they ramp up critical mineral supply chains.
Natural Resources Minister Jonathan Wilkinson announced the agreement among countries that are trying to reduce China’s dominance in the critical mineral field on Monday at the COP15 biodiversity talks in Montreal.
Critical minerals refer to about three dozen metals and minerals needed for most modern technology, including laptops and cellphones. But they are also essential to rechargeable batteries used in electric vehicles, as well as energy storage, and renewable energy production in solar panels and wind turbines.
The World Bank predicted in 2020 that demand for critical minerals, including lithium, copper, nickel, graphite and rare earth elements, will rise 500 per cent by 2050.
Wilkinson has said many times the transition to net-zero emissions and a 100 per cent clean energy electricity grid, will not happen without expanding critical mineral mining.
The announcement came three days after Wilkinson published Canada’s critical mineral strategy, which aims to expand Canada’s critical mineral production in a way that is environmentally sustainable, ensures Indigenous equity and improves global security.
Canada and the United States are among the western democracies that have made clear China cannot be allowed to dominate critical minerals in a way that gives it political influence similar to Russia’s leverage over oil and gas exports to Europe.
China is the clear dominant player in critical minerals, particularly in the refining and processing and manufacturing uses.
All G7 countries but Italy have joined the alliance, as has Australia.
The Canadian strategy is focused only on domestic mining, and Wilkinson acknowledged it is silent on the sustainability of raw materials that are mined elsewhere and brought to Canada for further processing or used in the manufacturing of batteries.
The alliance is an attempt to extend the Canadian strategy globally, though it is not clear how heavy-handed Canada or any of the others will be about ensuring imported critical minerals follow the same environmental and social standards as those mined at home.
It also does not specify what role the alliance will play in ensuring their own companies follow the standards when operating on foreign soil. Canada’s mining companies have a good reputation for sustainable mining practices at home, but internationally it is a different story. There have been several lawsuits filed against Canadian companies for environmental damage, health impacts and human rights violations in other countries.
The alliance members are also not clear on whether they will limit exports of raw materials mined in their territories to China. Canada has already begun enforcing a new policy to limit the role state-owned enterprises in non-democratic countries play in Canadian critical minerals, forcing three Chinese companies to sell their ownership stakes in some small Canadian mining developments.
But there are many more, including the only currently producing lithium mine in Canada, which is in Manitoba.
Wilkinson told The Canadian Press in an interview Friday that the Liberal government is “very live” to concerns about exporting too much raw material to China for refining, processing and use in manufacturing, and that the issue is being discussed.
The COP15 nature talks are an effort by most countries in the world to agree to policies that will both halt and repair the destruction that human activities, including mining, have brought on global ecosystems and wild species. Some environmental advocates aren’t pleased the Canadian government is announcing in the middle of the event a strategy that expands mining.
Caroline Brouillette, national policy director at the Climate Action Network Canada, said the strategy is disconnected from conversations happening at COP15 and reinforces “our dependence on destructive business models that exhaust resources and harm communities.”
— Mia Rabson in Ottawa and Jacob Serebrin in Montreal.
This report by The Canadian Press was first published Dec. 12, 2022.
Inflation in Canada: Finance ministers meet
TORONTO – The two big spending pressures on the federal government right now are health care and the global transition to a clean economy, Deputy Prime Minister and Finance Minister Chrystia Freeland said Friday.
After hosting an in-person meeting with the provincial and territorial finance ministers, Freeland said U.S. President Joe Biden’s Inflation Reduction Act, which includes electric-vehicle incentives that favour manufacturers in Canada and Mexico as well as the U.S., has changed the playing field when it comes to the global competition for capital.
“I cannot emphasize too strongly how much I believe that we need to seize the moment and build the clean economy of the 21st century,” Freeland said during a news conference held at the University of Toronto’s Munk School of Global Affairs and Public Policy.
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“This is a huge economic opportunity.”
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Canada needs to invest in the transition in order to potentially have an outsized share in the economy of the future, she said, or it risks being left behind.
This year in particular will be an important year for attracting capital to Canada, she said, calling for the provinces and territories to chip in.
“This is a truly historic, once-in-a-generation economic moment and it will take a team Canada effort to seize it.”
At the same time, Freeland spoke of the need for fiscal restraint amid economic uncertainty.
“We know that one of the most important things the federal government can do to help Canadians today is to be mindful of our responsibility not to pour fuel on the fire of inflation,” she said.
Freeland said these two major spending pressures, which were among the topics prioritized at Friday’s meeting, come at a time of a global economic slowdown which poses restraint on government spending.
Prime Minister Justin Trudeau is set to meet with the premiers Feb. 7 to discuss a long-awaited deal on health-care spending. The provinces have been asking for increases to the health transfer to the tune of billions of dollars.
Freeland said it’s clear that the federal government needs to invest in health care and reiterated the government’s commitment to doing so but would not say whether she thinks the amount the provinces are asking for in increased health transfers is feasible.
“It’s time to see the numbers,” Quebec Finance Minister Eric Girard said Friday afternoon, in anticipation of the Feb. 7 meeting.
The meeting of the finance ministers comes at a tense time for many Canadian consumers, with inflation still running hot and interest rates much higher than they were a year ago.
The ministers also spoke with Bank of Canada governor Tiff Macklem Friday and discussed the economic outlook for Canada and the world, said Freeland.
“We’re very aware of the uncertainty in the global economy right now,” said Freeland. “Inflation is high and interest rates are high.”
“Things are tough for a lot of Canadians and a lot of Canadian families today and at the federal level, this is a time of real fiscal constraint.”
The Bank of Canada raised its key interest rate again last week, bringing it to 4.5 per cent, but signalled it’s taking a pause to let the impact of its aggressive hiking cycle sink in.
The economy is showing signs of slowing, but inflation was still high at 6.3 per cent in December, with food prices in particular remaining elevated year over year.
Interest rates have put a damper on the housing market, sending prices and sales downward for months on end even as the cost of renting went up in 2022.
Meanwhile, the labour market has remained strong, with the unemployment rate nearing record lows in December at five per cent.
This report by The Canadian Press was first published Feb. 3, 2023.
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