Canada’s $65B Critical Minerals Challenge: Can It Keep Up?

Demand for critical minerals like lithium, nickel, cobalt, and rare earth elements is rising sharply as the world moves toward a low-carbon future. These materials are vital for clean technologies. They are used in electric vehicle batteries, wind turbines, and solar panels.

Canada holds vast reserves of these minerals and has the potential to become a global leader in sustainable supply chains. However, according to a new report from the Canadian Climate Institute, Canada risks missing out on billions in investment if it fails to act swiftly.

The Critical Mineral Boom Is On — Who Will Win?

Global demand for critical minerals will likely quadruple by 2040. This surge is due to clean energy technologies and increasing electrification.

The International Energy Agency (IEA) predicts that by 2030, demand for minerals in energy technologies will exceed 40 million tonnes each year. This is a big jump from only 7 million tonnes in 2020. This surge is causing strong international competition. Countries are racing to secure stable and ethical supplies.

In response, the United States and European Union have introduced massive incentives and trade frameworks under the Inflation Reduction Act (IRA) and Critical Raw Materials Act, respectively. These policies are changing supply chains. They emphasize “friend-shoring,” which means getting materials from countries that share the same values.

As a resource-rich and politically stable country, Canada is well-positioned to benefit. But the “Critical Path: Securing Canada’s place in the global critical minerals race“ report warns that its policy and permitting frameworks are falling behind.

Billions at Risk Without Swift Action

Canada currently supplies 60% of the world’s potash, 14% of nickel, and is home to 31 of the 50 minerals listed as “critical” by the U.S., EU, and IEA. Yet, its share of global investment in critical mineral extraction and processing has been declining.

• RELATED: Vale Base Metals Boosts Nickel: Completes Underground Mining of Voisey’s Bay Project in Canada

The Canadian Climate Institute report says that tens of billions in investment could be lost by 2030 without strong action. The report specifically stated:

“Yet current investment in Canada’s upstream mining of critical minerals is not keeping pace with both domestic and global demand growth… We estimate that Canada requires new investment between about $30 billion and $65 billion in upstream mining projects between now and 2040 to tap into its production potential… Based on average production capacities, this would mean that Canada must open more than 30 new mines over the same time period.”

According to the authors, regulatory delays, uncertain timelines, and a lack of coordination between governments are slowing progress. It currently takes 10 to 15 years to bring a new mine into production in Canada — too long to meet rising demand and capture near-term investment.

The U.S. and EU are fast-tracking projects with incentives, permitting reform, and strategic partnerships. Canada has launched funding programs such as the Critical Minerals Strategy and the Investment Tax Credit for Clean Technology Manufacturing. However, experts warn that these programs should be streamlined. Better coordination with Indigenous communities, provinces, and industry is also needed.

Why Critical Minerals Matter for Climate—and for Canada

Critical minerals are more than just economic opportunity — they’re key to achieving climate targets. Battery-grade lithium and nickel are essential to electric vehicles (EVs), while rare earth elements are used in wind turbines and electric motors. Without secure supplies of these inputs, global decarbonization will stall.

McKinsey estimates that global investment in critical minerals supply chains could reach $3 trillion by 2040. Canada has to act now to secure a meaningful share. The World Bank also projects that mineral production must increase by nearly 500% by 2050 to meet clean energy goals.

Canada’s climate goals depend on electrifying transport and industry, both of which require reliable access to critical minerals. The report says Canada’s clean energy shift might double the need for minerals by 2050. This includes a big demand for copper, lithium, and graphite.

Developing domestic supply chains also reduces reliance on unstable or unethical sources. Over 60% of the world’s cobalt comes from the Democratic Republic of Congo. This often happens in poor labor and environmental conditions. 

Moreover, the report further noted that Canada’s future exports don’t rely solely on the United States. Instead, demand could grow significantly in other nations.

The Fab Five: Minerals That Will Power the Clean Energy Era

The Canadian Climate Institute report highlights five key minerals that are especially vital to Canada’s clean energy ambitions. Here’s a closer look at their roles:

1. Lithium:

Often called “white gold,” lithium is a core component of lithium-ion batteries used in electric vehicles (EVs), laptops, and grid-scale storage. Canada hosts multiple lithium exploration projects, particularly in Quebec and Manitoba.

The country’s lithium sector is gaining momentum, particularly in Quebec, where Sayona Mining and Piedmont Lithium jointly operate the North American Lithium (NAL) project. This is currently the only active lithium production site in Canada. The project is part of Quebec’s broader ambition to become a hub for battery metals, supported by proximity to clean energy and auto manufacturing.

As demand for EVs grows, the International Energy Agency estimates lithium demand could grow more than 40 times by 2040.

• RELEVANT: Lithium Prices Crash Below $10K, Hitting a 4-Year Low: Will the Market Rebound?

2. Nickel:

High-grade nickel is used in EV batteries, particularly for extending vehicle range. Canada is the sixth-largest nickel producer in the world. Its main operations are in Ontario, Manitoba, and Newfoundland.

Nickel demand may triple by 2040. Canada’s low-emission production gives it an advantage in ESG-conscious markets.

One notable nickel company is Vale Canada, which plays a leading role in nickel production. With operations in Ontario, Manitoba, and Newfoundland, Vale is a major supplier of battery-grade nickel, a key input for electric vehicles. The company recently completed underground mining development at its Voisey’s Bay site, reinforcing Canada’s status as a reliable source of high-grade, low-emissions nickel for global supply chains.

3. Copper:

Essential for electrification, copper is used in electric wiring, power grids, EVs, and renewable energy systems. Canada’s reserves are concentrated in British Columbia. Demand for copper is expected to double by 2035 as countries invest in electric grids and renewable infrastructure.

Teck Resources, one of Canada’s largest mining companies, is a significant copper producer through its Highland Valley Copper operation in BC. The company also has projects in Chile and is positioning itself as a global copper supplier for electric grids and renewable energy infrastructure.

4. Graphite:

A lesser-known but vital mineral, graphite is the single largest component in lithium-ion battery anodes. Canada doesn’t have much commercial graphite production now, but Quebec and Ontario are developing their deposits. 

Northern Graphite is emerging as a leading graphite producer in Canada, owning the Lac des Iles mine in Quebec. The company also has plans to expand through new developments in Ontario and Namibia. With demand for graphite projected to rise 25-fold by 2040, Northern Graphite is well-positioned to supply this essential material for lithium-ion battery anodes.

5. Cobalt:

Cobalt is another important battery material that is used to improve battery life and stability. Canada has large cobalt deposits, mainly found as a byproduct of nickel and copper mining. It is one of the few countries outside the Democratic Republic of Congo with these resources.

Fortune Minerals is developing the NICO project in the Northwest Territories, one of the few cobalt-focused projects outside the Democratic Republic of Congo. Fortune’s plans include building a processing facility in Alberta, creating a fully integrated North American cobalt supply chain.

• SEE MORE: Canada’s Cobalt Cache: Pentagon Invests US$20 Million in Electra Battery Materials

These minerals aren’t just powering EVs—they’re critical to building an entire ecosystem of clean technologies. Prioritizing sustainable extraction and refining of these resources will help Canada stay competitive in the clean energy economy.

The Path Forward: Recommendations for Canada

To stay competitive and take advantage of the critical mineral opportunity, the report suggests a few key recommendations:

• Streamline permitting with clear timelines and regulatory certainty, especially for low-risk projects.
• Increase funding for processing and refining capacity, not just extraction.
• Align tax incentives with U.S. and EU frameworks to avoid capital flight.
• Support Indigenous leadership through equity partnerships, revenue-sharing, and capacity support.
• Enhance coordination between federal, provincial, and territorial governments to eliminate policy duplication.

Canada’s edge lies in its reputation for environmental stewardship, rule of law, and strong ESG standards. But these advantages will only deliver returns if backed by speed and policy clarity.

Ticking Clock: Global Players Are Moving Fast

The global landscape is moving quickly. China currently dominates the processing of most critical minerals — refining over 80% of rare earths and lithium globally. Western countries are now trying to diversify these supply chains, making Canada a natural partner. But without policy action, that window may close.

Other countries are already moving. The U.S. Department of Energy recently awarded $2.8 billion to 20 companies for domestic battery material production. Meanwhile, Australia has invested over $1 billion in downstream mineral processing. Yet, Canada has the geology, the workforce, and the credibility. What’s needed is urgency — and alignment — to turn potential into action.

• READ MORE: Unlocking the Power of Critical Minerals with US DOE’s $45 Million Investment: A Focus on Antimony

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