Critical minerals have once again become a chess piece in broader global trade negotiations. Most recently, China has tightened export controls on rare earth elements (REEs), minerals that are essential to advanced manufacturing, clean technologies, and defense systems. China supplies 60% of REEs and processes 90% of REEs and 60-70% of lithium and cobalt. Therefore, the U.S. finds itself heavily reliant on China for inputs that power key industries. In response, President Donald Trump threatened to impose 100% tariffs on Chinese imports last week. 

Amid this standoff, the U.S. government announced equity stakes in two Canadian critical minerals companies: Trilogy Metals and Lithium Americas. The race for supply chain security has seemingly gone cross-border, underscoring how these minerals are now a lever of strategic power.

What makes a mineral critical? 

In the Canadian context, it reflects a combination of threatened supply chains, a reasonable chance of being produced domestically, and at least one of the following criteria: it is essential for economic or national security, it is required to transition to a low-carbon and digital economy, and/or positions Canada as a sustainable and strategic partner within global supply chains.

By that definition, Canada has identified six priority minerals/metals: lithium, copper, cobalt, nickel, graphite, and rare earth elements. These materials are the backbone of modern technologies - from semiconductors, to electric vehicles, medical devices, wind turbines, and defense applications. The shift towards sustainability and modern infrastructure has caused unprecedented demand for these resources. Yet beyond their industrial applications, critical minerals have also become a tool of geopolitical leverage.

Critical minerals are essential for modern domestic applications, yet the supply chain in Canada is hampered by significant barriers. The Mining Association of Canada has identified a complex and lengthy regulatory system as one challenge, reporting that the timeline from initial discovery to a mine’s first production is an average of 17 years. Other challenges identified include private funding for junior companies, lack of infrastructure, and labour shortages. To speed up the regulatory process, the federal government has placed two critical mineral projects on its major projects list.

The broader mining and minerals sector directly supports ~400,000 jobs in Canada and contributes 4% towards Canada’s nominal gross domestic product. Looking specifically at  critical minerals, Canada is one of the top ten global producers of cobalt, graphite, lithium, and nickel, but it accounts for no more than 5% of global mine production of each of these minerals and metals. However, alongside Canada’s resource abundance, it is uniquely positioned to de-risk supply chains for itself and trusted allies. 

The International Energy Agency (IEA) expects global demand for these minerals to more than double by 2040, and a 2024 BloombergNEF analysis ranked Canada as the country with the greatest potential to develop a secure, reliable, and sustainable battery supply chain. Note that BNEF’s 2024 ranking highlights Canada’s strong integration with the U.S. auto sector as a strength, but that pillar faces fresh headwinds as the industry faces tariffs. 

Critical minerals aren’t currently produced at a commercial scale in Alberta, but the province is carving out a role in the sector. One of its strongest opportunities is lithium, thanks to large reserves of lithium dissolved in deep-formation brines associated with oil and gas reservoirs.  The Alberta Energy Regulator (AER) is forecasting production to grow steadily as projects in the province start commercial production. 

Calgary-based E3 Lithium, is testing a particular method for extracting lithium, their Clearwater project is testing direct lithium extraction (DLE) technology that extracts lithium found in brine, a waste product from the oil and gas industry and turns it into battery-grade lithium carbonate. In September, E3 reached an important milestone: it commissioned and then produced battery-grade lithium carbonate at its demo facility and received approvals for phase two. LithiumBank, another Alberta-based company, secured $3.9 million from Emissions Reduction Alberta to advance its Boardwalk brine project. 

Gaining a foothold in the critical minerals landscape is both an opportunity and a responsibility for Canada. As geopolitical tensions reshape global trade flows, these resources have become instruments of strategic importance, and Alberta is well positioned to play a role in that story.

Answer to the previous trivia question: Peter Howitt, Joel Mokyr and Philippe Aghion won the Nobel Prize in economic sciences this year.

Today’s trivia question: How was the term “rare earth” coined?