Materials and Metals of the Future

Québec positions itself as an integral North American supply chain partner

When Henry Ford figured out how to make a car in 93 minutes, it triggered a phenomenon where he could sell as many Model T's as he could build. It was 1927’s version of a product gone viral. The rapid growth in demand triggered a booming oil industry, and John D. Rockefeller walked away the biggest winner of all.

Just under a century later, we see history rhyming, with breakthroughs in battery technology leading to skyrocketing demand for Tesla cars, which are paving the way for an electric vehicle boom that threatens to fundamentally alter the makeup of the automotive industry. According to research firm Wards Intelligence, plug-in vehicle sales more than doubled in the first half of 2021 compared with 2020, far outpacing the 29% rise for total vehicle sales.

As a consequence of this sea change toward battery powered EV’s and green energy technology in general, there are a plethora of elements in the periodic table that are going to be huge winners for decades to come. Those geologically endowed countries that have the scale and wherewithal to mine these materials profitably and sustainably will gain huge economic and geopolitical power, and their economies will be poised to prosper.

Conversely, countries lacking access to friendly sources of these minerals will handicap themselves, creating economic and national security vulnerabilities, while missing out on enormous opportunities for wealth creation and society enhancing innovation (Wood Mackenzie, estimates more than US$1 trillion will need to be invested globally in energy transition metals over the next 15 years to meet decarbonization targets).

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This is particularly relevant given China dominates the mining and processing of these materials. With the fraying of diplomatic relations between China and the West in recent years, Canada and the US are now waking up to the fact that some decoupling of supply chains is sensible. This is true not just of mining, but for several other industries as wide ranging as medical equipment and semiconductors.

This is why these materials and minerals are often referred to under the banner of being ‘Critical’ or ‘Strategic,’ and it is why on Oct. 29, 2020, the Québec government launched its ‘Québec Plan for the Development of Critical and Strategic Minerals (CSM).’ It is a five year initiative to promote the development of minerals used in daily use technologies such as cell phones and laptops, as well as green energy technologies such as solar panels and windmills. The plan lists eight critical minerals it deems essential for the economy including copper, tin and zinc, and 12 strategic minerals used in key sectors of the province’s policies, such as battery minerals like cobalt, nickel, graphite and lithium, that will be prioritized as part of the plan. The government will invest C$90 million through 2025 to advance geoscientific knowledge, provide financial support for exploration and R&D, and to support companies in their development projects.

Québec’s plan will cooperate and move in parallel with the Canada-US Joint Action Plan on Critical Minerals signed in January 2020, which aims to create North American supply chains for CSMs currently available primarily through overseas markets such as China.

Giving further credence to Québec’s strategy is the rare political consensus on the part of both sides of the American political aisle to develop a viable CSM supply chain. In a report released in June 2021 titled ‘Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-based Growth’ by President Biden’s White House, it goes as far as considering Canadian companies “the only non-U.S. entities and persons who are considered a domestic source.” The report also references Canada as a “global hub for mining project finance, including the risk finance that supports junior mining companies exploring for strategic and critical materials and developing the next generation of projects,” all the while noting that Canada’s substantial resources hold the potential through existing and planned projects to support US needs for over twenty strategic and critical materials.

Given Québec’s position within Canada, its abundance of skilled workers, large endowment of critical minerals coupled with government incentives to build clean ecologically friendly mines, it is well positioned to lead the way in supplying US markets with vertically integrated battery materials.

Images courtesy of Commerce Resources