Peter Cashin
President & CEO - Imperial Mining Group
Part of the Spotlight on Mining

Focusing on the Value Potential of Technology Metals in Canada

Takeaways

  1. The Canadian mining industry has a strong record of finding conventional metals in its exploration activity, but lacks market intelligence data on technology metals that are essential for the high tech, manufacturing and renewable energy industries.
  2. Canada’s robust mining and environmental regulation framework should be pitched directly to downstream industries that seek to establish long-term and reliable supply chains of technology metals.
  3. To develop infrastructure in Canada’s North, governments should have the full input of the Canadian mining industry in order to prioritize access to the most valuable mineral deposits.

Action

Our federal government must improve its communications plan to ensure that cohesive and consistent key messages are promoted to increase investor confidence, both for Canadian and foreign mining investors.


What are some of the most significant challenges for Canadian mining exploration companies today?

Canadian mining companies do not receive enough financial support to move forward on the exploration of technology metals. These are generally rare metals that are essential for the production of high-tech devices and engineered systems. These include electric vehicle (EV) batteries, solar panels, wind turbines – all of which are designed to advance renewable energy. Consequently, Canada’s geological database – a valuable asset for any mining company that contains the evidence required to make many strategic decisions – lacks important market intelligence data on technology metals. This is because conventional metals are traded transparently on stock exchanges, providing trading patterns and supply-demand fundamentals; all of which increase investor confidence. Technology metals are not traded the same way, so they have opaque pricing. This makes it difficult for exploration companies to secure funds and advance their operations that would support Canada’s high-tech market.

The Canadian mining sector is falling behind on this global opportunity. Right now, most of the material flow for the production of EV batteries – cobalt, nickel and lithium – goes into China. The level of investment that China is willing to put in to discovery of technology metals is proportionally higher because they understand that if they can secure the necessary commodities for battery technology, they will dominate that space.

“Our governments have to increase their support to pursue technology metal mining projects because that is the future of value creation for Canada’s mineral industry.”

Our governments have to increase their support to pursue technology metal mining projects because that is the future of value creation for Canada’s mineral industry. Financial assistance programs already exist to de-risk commodity projects for conventional metals and their respective downstream industries; Japan Oil Gas and Metals National Corporation (JOGMEC), Korea Resources Corporation (KORES), and SOQUEM in Quebec receive government support for their exploration activity. These kinds of programs, as well as offtake agreements, are important steps our federal and provincial governments should take to secure Canada’s top spot in mining.


With the rise in demand for renewable energy and electric vehicles, why is the government not investing more in the exploration of technology metals and rare earths?

The challenge is partly due to supply. We are working on developing a scandium supply chain in Canada and the US, which is considered a critical mineral used by the EV and aerospace industries. Even with the knowledge that scandium has a fairly broad manufacturing consumption base, a new supply chain is not something that you turn on overnight. Technology metals tend to have complex applications, complicated consumption dynamics and have opaque pricing. The federal government must understand this, so we’re looking at a chicken and egg scenario. And the lack of investment it leads to poses a risk for the availability of technology metals from Canada to international markets.

As for rare earths, today, almost 100% of rare earth supplies comes from China. And a big concern downstream industries have is the lack of diversity in their supply chains. Downstream industries working on R&D for new platforms and applications with new materials have significant costs. Evidently, they want to have their investment repaid by securing a long-term, reliable supply chain of a brand-new material. And this could be an opportunity for Canada if it were to support and invest in exploration in this sector.


How would you rate Canada’s mining regulations? What are we doing right and what should we be doing differently?

Canada holds a leadership role in mining regulations. Our mining sector is viewed as a reliable supplier that ensures the security of tenure and has a stable government. The geopolitical issue is one of the primary deciding factors for any mining company to enter a specific jurisdiction.We hear many stories about less stable governments nationalizing their mineral resource sector, pushing companies out of the country at a great loss in terms of the value that they created from their exploration activity and usually with no financial compensation.

But strict regulation also increases the timeline for project approvals. As it stands, the time to production from a discovery in mining is 5 to 10 years. Ideally, investors prefer to get a return on their investment sooner than later, and that is becoming expensive with the current regulatory environment in Canada.Unfortunately, this places Canada in the same class as some of the less desirable jurisdictions. So, the flight of money is going to go where investors will see a return on their investment on a shorter timeline.

“Investors prefer to get a return on their investment sooner than later, and that is becoming expensive with the current regulatory environment in Canada.”

One way to counter this is to have our governments be more vocal about the benefits of operating in an environmentally responsible manner to downstream industries looking to invest and develop responsible supplies of technology metals. Downstream industries avoid being associated with mining development projects directly because they don’t want to have environmental and social liabilities. It should be understood by the international community that no Canadian mining company could develop and operate a mine in the same lack of constraint that we see happening in China, Russia and other less developed jurisdictions. Our strong regulations oblige Canadian mining companies to be a more sustainable and responsible leader in the space. This is a key message that needs to be directly delivered to downstream industriesin order to engage them and have them support Canadian development projects.


How can we best bridge the infrastructure gap to generate the most opportunities for our mining sector?

There needs to be a much fuller mineral development policy for projects north of the 49th parallel. Very little exploration has occurred in Canada’s North and those are the areas that have greater infrastructure challenges. When I worked for the Ontario provincial government, we had studied the return on infrastructure investment which showed that every $1 invested in infrastructure upgrades generates $3 of economic activity, and that is a very, very important statistic to take into consideration. Building the infrastructure required in the North would better position Canadian mining companies for what’s coming in the future, and what is in many ways already here.But before jump-starting infrastructure, an investment plan should be developed on the basis of a broad consultation with the Canadian mining industry in order to get a full understanding of where the various mineral resource opportunities are located to identify the most strategic routes to deploy.

“Building the infrastructure required in the North would better position Canadian mining companies for what’s coming in the future, and what is in many ways already here.”

The Quebec provincial government attempted to deploy infrastructure with Le Plan Nord. The plan was to stimulate economic development with the construction of roads, airstrips, powerlines and rail lines, which focused on accessing iron ore. That was a mistake. Not only is this a conventional, bulk material that disappeared with the collapse of the iron ore markets, but we were in direct competition with some of the major iron ore mining jurisdictions; namely Australia and Brazil. From the beginning, we would not have been able to compete with their projects in terms of ore grade, infrastructure development and sheer size. Moving forward, there should be a much more concerted effort focused on trying to understand where true value can be created and I suggest that this value can be created in technology metal project development.


How can we attract more foreign direct investment into Canada’s mining industry?

The federal government needs to develop a better communications plan when approaching foreign direct investment opportunities to clearly showcase the high value of the Canadian mining sector. We already have the resources, regulations and processes in place. Corporations and foreign investors will always look to a country’s leader to assess whether or not they should invest in mining activity in that jurisdiction. The communications plan needs to be applied across the board; not solely promoted by the Prime Minister himself, but all of the institutions that have an involvement with mining development. This includes the commerce industry, Natural Resources Canada, and the Department of Foreign Affairs, Trade and Development. If our “Why Mine in Canada” message is not consistent, Canada won’t be perceived as a strategic place to invest in mining. It’s that simple.

“If our “Why Mine in Canada” message is not consistent, Canada won’t be perceived as a strategic place to invest in mining. It’s that simple.”


Part of the Future of Mining Series presented by: