OTTAWA, Nov 27 (Reuters) – Canada launched its long-awaited Indo-Pacific strategy on Sunday, vowing more resources to deal with a “disruptive” China while working with the world’s second-biggest economy on climate change and trade issues.
The 26-page document outlined C$2.3 billion ($1.7 billion) spending, including to boost Canada’s military presence and cyber security in the region and tighten foreign investment rules to protect intellectual property and prevent Chinese state-owned enterprises from snapping up critical mineral supplies.
The blueprint is to deepen ties with a fast-growing region of 40 countries accounting for almost C$50 trillion in economic activity. But the focus is on China, which is mentioned more than 50 times, at a moment when bilateral ties are frosty.
“China is an increasingly disruptive global power,” said the strategy. “China is looking to shape the international order into a more permissive environment for interests and values that increasingly depart from ours.”
Prime Minister Justin Trudeau’s Liberal government wants to diversify trade and economic ties that are overwhelmingly reliant on the United States. Official data for September show bilateral trade with China accounted for under 7% of the total, compared to 68% for the United States.
The strategy highlighted Beijing’s “foreign interference and increasingly coercive treatment of other countries.
“Our approach … is shaped by a realistic and clear-eyed assessment of today’s China. In areas of profound disagreement, we will challenge China,” it said.
Tensions soared in late 2018 after Canadian police detained a Huawei Technologies executive and Beijing subsequently arrested two Canadians on spying charges. All three were released last year, but relations remain sour.
Earlier this month Canada ordered three Chinese companies to divest their investments in Canadian critical minerals, citing national security.
The document, in a section mentioning China, said Ottawa would review and update legislation enabling it to act “decisively when investments from state-owned enterprises and other foreign entities threaten our national security, including our critical minerals supply chains.”
The document recognized the significant opportunities for Canadian exporters and said co-operation with Beijing was necessary to address some of the “world’s existential pressures,” including climate change, global health and nuclear proliferation.
Goldy Hyder, CEO of the Business Council of Canada, said it is important that the government converts “aspirations to actions and actions into accomplishments.”
The document said Canada would boost its naval presence in the region and “increase our military engagement and intelligence capacity as a means of mitigating coercive behavior and threats to regional security.”
Canada belongs to the Group of Seven major industrialized nations, which wants significant measures in response to North Korean missile launches.
The document said Ottawa was engaging in the region with partners such as the United States and the European Union.
Canada needed to keep talking to nations it had fundamental disagreements with, it said, but did not name them.
($1 = 1.3377 Canadian dollars)
(This story has been corrected to fix the amount to C$2.3 billion from C$2.6 billion in the second paragraph.)
Reporting by David Ljunggren; Editing by Denny Thomas, Leslie Adler and Daniel Wallis
Our Standards: The Thomson Reuters Trust Principles.
David Ljunggren
Thomson Reuters
Covers Canadian political, economic and general news as well as breaking news across North America, previously based in London and Moscow and a winner of Reuters’ Treasury scoop of the year.
Green, digital booms fuel demand for rare minerals
China is pre-eminent in critical minerals supply
GRAPHIC-S.Korea’s reliance on China:
SANGDONG, South Korea, May 9 (Reuters) – Blue tungsten winking from the walls of abandoned mine shafts, in a town that’s seen better days, could be a catalyst for South Korea’s bid to break China’s dominance of critical minerals and stake its claim to the raw materials of the future.
The mine in Sangdong, 180 km southeast of Seoul, is being brought back from the dead to extract the rare metal that’s found fresh value in the digital age in technologies ranging from phones and chips to electric vehicles and missiles.
“Why reopen it now after 30 years? Because it means sovereignty over natural resources,” said Lee Dong-seob, vice president of mine owner Almonty Korea Tungsten Corp.
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“Resources have become weapons and strategic assets.”
Sangdong is one of at least 30 critical mineral mines or processing plants globally that have been launched or reopened outside China over the last four years, according to a Reuters review of projects announced by governments and companies. These include projects developing lithium in Australia, rare earths in the United States and tungsten in Britain.
The scale of the plans illustrates the pressure felt by countries across the world to secure supplies of critical minerals regarded as essential for the green energy transition, from lithium in EV batteries to magnesium in laptops and neodymium found in wind turbines.
Overall demand for such rare minerals is expected to increase four-fold by 2040, the International Energy Agency said last year. For those used in electric vehicles and battery storage, demand is projected to grow 30-fold, it added.
Many countries view their minerals drive as a matter of national security because China controls the mining, processing or refining of many of these resources.
The Asian powerhouse is the largest supplier of critical minerals to the United States and Europe, according to a study by the China Geological Survey in 2019. Of the 35 minerals the United States has classified as critical, China is the largest supplier of 13, including rare earth elements essential for clean-energy technologies, the study found. China is the largest source of 21 key minerals for the European Union, such as antimony used in batteries, it said.
“In the critical raw material restaurant, China is sitting eating its dessert, and the rest of the world is in the taxi reading the menu,” said Julian Kettle, senior vice president for metals and mining at consultancy Wood MacKenzie.
The stakes are particularly high for South Korea, home of major chipmakers like Samsung Electronics. The country is the world’s largest consumer of tungsten per capita and relies on China for 95% of its imports of the metal, which is prized for its unrivalled strength and its resistance to heat.
China controls over 80% of global tungsten supplies, according to CRU Group, London-based commodity analysts.
The mine at Sangdong, a once bustling town of 30,000 residents that’s now home to just 1,000, holds one of the world’s largest tungsten deposits and could produce 10% of global supply when it opens next year, according to its owner.
Lewis Black, CEO of Almonty Korea’s Canadian-based parent Almonty Industries, told Reuters that it planned to offer about half of the operation’s processed output to the domestic market in South Korea as an alternative to Chinese supply.
“It’s easy to buy from China and China is the largest trading partner of South Korea but they know they’re over-dependent,” Black said. “You have to have a plan B right now.”
Sangdong’s tungsten, discovered in 1916 during the Japanese colonial era, was once a backbone of the South Korean economy, accounting for 70% of the country’s export earnings in the 1960s when it was largely used in metal-cutting tools.
The mine was closed in 1994 due to cheaper supply of the mineral from China, which made it commercially unviable, but now Almonty is betting that demand, and prices will continue to rise driven by the digital and green revolutions as well as a growing desire by countries to diversify their supply sources.
European prices of 88.5% minimum paratungstate – the key raw material ingredient in tungsten products – are trading around $346 per tonne, up more than 25% from a year ago and close to their highest levels in five years, according to pricing agency Asian Metal.
The Sangdong mine is being modernised, with vast tunnels being dug underground, while work has also started on a tungsten crushing and grinding plant.
“We should keep running this kind of mine so that new technologies can be handed over to the next generations,” said Kang Dong-hoon, a manager in Sangdong, where a “Pride of Korea” sign is displayed on a wall of the mine office.
“We have been lost in the mining industry for 30 years. If we lose this chance, then there will be no more.”
Almonty Industries has signed a 15-year deal to sell tungsten to Pennsylvania-based Global Tungsten & Powders, a supplier to the U.S. military, which variously uses the metal in artillery shell tips, rockets and satellite antennae.
Yet there are no guarantees of long-term success for the mining group, which is investing about $100 million in the Sangdong project. Such ventures may still struggle to compete with China and there are concerns among some industry experts that developed countries will not follow through on commitments to diversify supply chains for critical minerals.
Seoul set up an Economic Security Key Items Taskforce after a supply crisis last November when Beijing tightened exports of urea solution, which many South Korean diesel vehicles are required by law to use to cut emissions. Nearly 97% of South Korea’s urea came from China at the time and shortages prompted panic-buying at filling stations across the country.
The Korean Mine Rehabilitation and Resources Corporation (KOMIR), a government agency responsible for national resource security, told Reuters it had committed to subsidise about 37% of Sangdong’s tunnelling costs and would consider further support to mitigate any potential environmental damage.
Incoming President Yoon Seok-yeol pledged in January to reduce mineral dependence on “a certain country”, and last month announced a new resource strategy that will allow the government to share stockpiling information with the private sector.
South Korea is not alone.
The United States, European Union and Japan have all launched or updated national critical mineral supply strategies over the last two years, laying out broad plans to invest in more diversified supply lines to reduce their reliance on China.
Mineral supply chains have also become a feature of diplomatic missions.
Last year, Canada and the European Union launched a strategic partnership on raw materials to reduce dependence on China, while South Korea recently signed collaboration deals with Australia and Indonesia on mineral supply chains.
“Supply-chain diplomacy will be prioritised by many governments in the coming years as accessing critical raw materials for the green and digital transition has become a top priority,” said Henning Gloystein, director of energy and climate resources at the Eurasia Group consultancy.
In November, China’s top economic planner said it would step up exploration of strategic mineral resources including rare earths, tungsten and copper.
Investment globally of $200 billion in additional mining and smelter capacity is needed to meet critical mineral supply demand by 2030, 10 times what is being committed currently, Kettle said.
Yet projects have faced resistance from communities who don’t want a mine or smelter near their homes.
In January, for example, pressure from environmentalists prompted Serbia to revoke Rio Tinto’s lithium exploration licence while U.S. President Joe Biden’s administration cancelled two leases for Antofagasta’s copper and nickel mines in Minnesota. read more
In Sangdong, some residents are doubtful that the mine will improve their lives.
“Many of us in this town didn’t believe the mine would really come back,” said Kim Kwang-gil, 75, who for decades lived off the tungsten he panned from a stream flowing down from the mine when it operated.
“The mine doesn’t need as many people as before, because everything is done by machines.”
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Reporting by Ju-min Park and Joe Brock; Additional reporting by Beijing Newsroom and Gavin Maguire; Editing by Kevin Krolicki and Pravin Char
Our Standards: The Thomson Reuters Trust Principles.
OTTAWA, April 4 (Reuters) – Canada’s federal budget will include an investment of at least C$2 billion ($1.6 billion) for a strategy to accelerate the production and processing of critical minerals needed for the electric vehicle (EV) battery supply chain, two senior government sources said.
Prime Minister Justin Trudeau’s government, which is due to release its budget on Thursday, will make the investment to ramp up the extraction of processing of critical minerals including nickel, lithium, cobalt and magnesium, said the sources who are familiar with the matter but were not authorized to speak on the record.
The investment could be spread over more than one year, but the sources declined to comment on the time frame.
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Canada last month announced financial support for building two facilities that will make battery materials for electric vehicles, and one battery gigafactory, but no agreements have yet been announced for mineral extraction or refining. read more
“There are some particular projects that we are looking at and working on at the present time,” Natural Resources Minister Jonathan Wilkinson said in a recent telephone interview with Reuters.
All the potential projects, “whether they’re extraction or processing, need to be accelerated significantly, and that’s what the critical mineral strategy will be about,” he added.
Canada’s finance ministry declined to confirm whether the investment would be in the budget that will be presented by Finance Minister Chrystia Freeland in the House of Commons.
“Canada has an abundance of valuable critical mineral deposits, and with the right investments, this sector can create thousands of new good jobs, grow our economy, and make Canada a vital part of the growing global critical minerals industry,” said Adrienne Vaupshas, press secretary for Freeland.
There are “many active conversations” between the Canadian government and companies “on the need to accelerate and scale up the production of raw materials used in EV batteries,” one of the sources said.
Canada, which is home to a large mining sector, has a multi-billion-dollar fund set up to invest in green technologies and is trying to woo companies involved in all levels of the EV supply chain to safeguard the future of its manufacturing heartland in Ontario as the world seeks to cut carbon emissions.
Ontario is geographically close to U.S.-based automakers in Michigan and Ohio, and General Motors Co (GM.N), Ford Motor Co (F.N) and Stellantis NV (STLA.MI) have all announced plans to make electric vehicles at factories in the Canadian province.
MINERALS FROM MINING WASTE
Since it can take many years – even a decade or more – to open new mines, Wilkinson said some of the projects being considered involve “tailings from existing mines from which you could extract critical minerals.”
“We’re looking at brines and oil sands, tailings ponds, and all of those things,” he said.
Brendan Marshall, the vice president of economic and northern affairs for the Mining Association of Canada, said this kind of project would require research.
“There needs to be research and development” to develop technologies that can identify and separate critical minerals “from the general waste stream,” Marshall said.
Canada’s critical mineral strategy will focus on, among other things, driving research, innovation and exploration, one of the sources said.
GM said on Monday that it was investing C$2 billion on two plants, including one that will produce an electric vehicle for commercial use in Canada. Last month, GM said it had partnered with South Korea’s POSCO Chemical (005490.KS) to build a facility to make battery materials in Quebec. read more
Scott Bell, the president and managing director of GM Canada, said last month that Canada’s abundance of nickel and other raw materials would be used to make cathode active material in the Canadian province, without elaborating.
“These companies are going to need those critical minerals that our country has, so we need to start aggressively ramping up the mining and processing required,” Canadian Industry Minister Francois-Philippe Champagne said in Vancouver last week.
Demand for minerals needed for batteries, including lithium and cobalt, could increase by almost 500% by 2050, the World Bank estimates. Currently Asia, and in particular China, dominates global production and processing of critical minerals, rare earths and rare metals used to make EVs.
Constantine Karayannopoulos, president and chief executive officer of Neo Performance Materials Inc(NEO.TO), a rare earths and rare metals processing company based in Toronto, said Canada and North America have a lot of catching up to do.
“We are behind the eight ball collectively in the West, behind China,” Karayannopoulos said in a telephone interview. “China is dominating this space … We need a lot of money (to build the supply chain) because we’re playing catch-up.”
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Reporting by Steve Scherer
Editing by Paul Simao
Our Standards: The Thomson Reuters Trust Principles.