Canada Leads G7 with Strategic Critical Minerals Investment: Responding to China and Building International Partnerships

Canada is stepping onto the world stage as a linchpin in the global race for critical minerals. As the only G7 country endowed with all the minerals deemed essential for clean technology, advanced manufacturing, and defence systems, Canada has become central to Western efforts to break dependence on China-dominated supply chains. Against a backdrop of escalating geopolitical competition—marked most recently by China’s tightening grip on rare earths and battery materials—Canada’s unprecedented $6.4 billion investment package signals both economic ambition and strategic resolve.

This deep dive examines how Canada is leveraging its natural resource endowment, policy innovation, and international partnerships to build resilient supply chains for lithium, graphite, rare earths, nickel, cobalt, copper, and more. We’ll also explore gaps in the current strategy around environmental stewardship and Indigenous engagement while providing context on implications for North American industry and global security.

Canada’s G7 Critical Minerals Investment

In early 2025, Ottawa announced its first round of federal critical mineral investments: $6.4 billion allocated across 26 projects that span extraction sites, processing facilities, recycling plants—and crucially—new linkages to domestic battery manufacturing hubs. This effort reflects a deliberate move up the value chain: not only extracting raw materials but enabling Canadian-made cathodes/anodes for batteries assembled at home or exported abroad.

Scope and Scale

• Geographic Spread: Projects are distributed across Quebec (lithium/graphite), Ontario (nickel/cobalt/copper), Manitoba (lithium/nickel), Newfoundland & Labrador (rare earths).
• Value Chain Coverage: Funding supports upstream mining operations; midstream refining (hydrometallurgical/pyrometallurgical plants); downstream integration into battery cell production; R&D into recycling technologies.
• Notable Linkages: Several investments co-locate with emerging battery gigafactories in Ontario and Quebec—ensuring seamless feedstock supplies for EV assembly lines operated by Stellantis/LG Energy Solution and Northvolt.

Responding to China’s Export Controls

China currently controls over 80% of global rare earth processing capacity alongside dominant shares of graphite (~65%) and lithium refining (~60%). In late 2023–2024 alone:

• Beijing imposed quotas on gallium/germanium exports (key semiconductors/metals),
• Announced new licensing rules for REEs,
• Imposed periodic “inspection campaigns” disrupting output from Chinese-owned mines overseas.

Impact on Global Markets

These moves have sent spot prices soaring—upwards of 30% year-over-year for dysprosium/neodymium—and rattled Western manufacturers who rely on stable supplies for EV motors, wind turbines, and missile guidance systems.

Canada’s Strategic Rationale

Ottawa’s push is twofold:

1. “Friendshoring” Supply Chains: Prioritizing mineral flows among trusted allies—US/EU/Japan/Korea—to reduce exposure to coercive trade practices.
2. Public–Private Co-Investment: Mandating risk-sharing through joint ventures between Canadian firms (e.g., Nouveau Monde Graphite) and foreign automakers/energy giants under strict due diligence regimes.

Comparative Outlook

While Australia is also scaling up production of lithium/nickel—with lower political risk than many African/Latin American producers—Canada offers proximity advantages to US/EU markets plus robust environmental/social governance frameworks.

Major Canadian Projects Receiving Support

Rio Tinto Fer et Titane (Québec):

• Expanding titanium dioxide/scandium output; pioneering low-carbon hydrometallurgy.
• Output will support lightweight alloys used in aerospace/defence applications.

Nouveau Monde Graphite (Québec):

• Building North America’s first all-electric open-pit mine; integrated anode material facility adjacent to Bécancour Battery Valley cluster.
• Target capacity: ~100 ktonnes/year high-purity graphite by 2028; direct supply agreements with Northvolt/Tesla.

Torngat Metals (Nunavik):

• Kangiqsualujjuaq REE project targeting dysprosium/terbium concentrates essential for permanent magnets used in electric drivetrains/military hardware.

Technology Applications

These projects power advanced defense electronics (guided missiles/radar arrays), clean energy transitions (EVs/wind turbines/hydrogen fuel cells), medical imaging devices—and more.

ESG & Indigenous Engagement

All major beneficiaries are subject to rigorous Environmental Assessment Act reviews; several have signed Impact Benefit Agreements with local Indigenous communities covering revenue sharing/training/employment guarantees—a step toward responsible resource development but still facing scrutiny from advocacy groups over meaningful consultation standards.

Defence Stockpiling and Policy Shifts

In light of mounting security risks—including cyberattacks targeting mining infrastructure—the federal government has modernized its Defence Production Act:

1. Strategic Mineral Reserve: Modeled after US DLA stockpiles; initial inventory targets include neodymium oxide/lithium hydroxide/cobalt sulfate sufficient for six months’ defence/aerospace production needs.
2. Rapid Procurement Powers: Streamlined permitting/procurement processes for urgent military requirements during crises or trade blockades.
3. Inventory Management Innovation: Adoption of blockchain-based traceability systems ensures anti-counterfeiting compliance while AI-driven analytics optimize just-in-time stockpile releases.

Collaboration is intensifying with NORAD/NATO partners on pooled reserves/logistics exercises—a unified front against common supply threats.

International Partnerships and New Opportunities

Canada is leveraging alliances not just within the G7 but also across transatlantic corridors:

1. Italy’s Eni – Investing $200 million into Sudbury Basin nickel/cobalt refining JV with local First Nations equity participation;
2. Norway’s Vianode – Constructing a synthetic graphite plant near Montreal aimed at supplying European battery makers;
3. US DOE Grants – Supporting cross-border research into next-generation solvent-extraction techniques reducing tailings waste;

Offtake Deals

Major OEMs like Tesla/Panasonic have inked multi-year purchase agreements tied directly to new Canadian mines/refineries—a sign buyers want assured provenance outside China-controlled chains.

Multilateral Financing

European Investment Bank green bonds are underwriting Arctic corridor rail upgrades while Export Development Canada provides loan guarantees encouraging private downstream processors to scale rapidly.

Foreign Direct Investment Screening

All inbound deals undergo rigorous review under an updated Investment Canada Act, aligning with OECD Responsible Mineral Sourcing Guidelines—helping mitigate corruption/human rights/environmental risks inherent in global mining finance.

Implications for Western Industry

Decoupling from Chinese Supplies

With every new project brought online or deal struck under friendshoring rules:

• Non-Chinese spot market prices increase as buyers pay premiums for “clean” origin,
• Tech sovereignty improves as North America/EU gain localized access to key inputs,
• The spectre of supply blackmail diminishes—but isn’t eliminated until full value-chain redundancy is achieved.

Demand/Supply Forecasts

According to IEA projections through 2035:

• Global demand will triple or quadruple across most critical minerals,
• Bottlenecks remain likely if permitting delays/environmental opposition slow mine startups,
• Water/carbon intensity concerns could hinder social license unless addressed proactively.

Recycling & Urban Mining

A vital gap now being filled by companies like Li-Cycle (Ontario)—which recovers lithium/cobalt/nickel from spent batteries using closed-loop hydrometallurgy. These initiatives are essential complements—not substitutes—for primary extraction but offer significant emissions reductions per tonne recovered.

Conclusion

Canada's historic pivot toward critical minerals independence marks a watershed moment—not just domestically but globally—in securing clean tech futures amid rising geopolitical uncertainty. By strategically investing across the value chain, enforcing ESG/accountability norms, engaging Indigenous partners meaningfully where possible—and building robust alliances—it sets a template others may follow as they seek resilience against the leverage of extractive autocracies.

The stakes could not be higher—as EV adoption surges alongside rearmament trends worldwide—but so too is Canada's capacity to lead responsibly if it sustains this momentum through technological innovation/policy agility/community partnership.