China currently owns the battery supply chain and it’s time for Canada to redraw the map
Electric vehicles are big business. A decade ago, there were 120,000 EVs sold worldwide. Today, that many are sold in a single week. By 2030, the number is expected to be closer to a million a week.
Around the world, automakers are pouring millions of dollars into electrifying their vehicles. But with supply snarls pulling the handbrake on sales of all kinds of cars—gas and electric alike—one thing is clear: supply chains matter.
And because EVs use six times the amount of critical minerals of a gas car, the supply chains that have served the traditional auto sector for decades are being reforged. It’s a huge opportunity for Canada—if we play our cards right.
Currently, just a few countries are responsible for much of the production of EV battery minerals, and often these countries are ruled by authoritarian regimes. China and the Congo were responsible for 70 per cent and 60 per cent of the global production of cobalt and rare earth elements, respectively, in 2019, according to the International Energy Agency. And the geographical concentration is even higher for battery mineral processing, where China dominates.
Handily, Canada ranks fifth in the world for its battery supply chain potential, in large part thanks to its supply of metals and minerals. It is the only country in the Western Hemisphere with known reserves of all the minerals necessary to manufacture EV batteries, ranking sixth globally in lithium reserves, seventh in nickel, and eighth in cobalt.
The U.S. and the European Union have flagged their dependence on China for battery minerals and materials as a major risk to their auto industries. Both regions are working to restructure supply chains—and both have identified Canada as a secure and stable source of raw materials.
What’s more, Canada’s clean electricity grid gives it a competitive edge with automakers looking to source low-carbon materials and reduce the carbon footprint of the vehicles they produce. BMW has committed to cutting emissions across its operations, for instance, while Tesla has indicated a preference for lower-carbon input materials like nickel, recently signing a deal with Vale SA to supply nickel from its Canadian operations.
And with the exceptional rise in demand for batteries outstripping the existing supply of certain critical minerals, there is a mineral resource vacuum just waiting to be filled by Canada. Known reserves of the metals and minerals that go into EVs and batteries are more than sufficient to support a global transition to zero-emission vehicles, but new mines are not being built fast enough. The world wants what Canada has—it just needs to step up to the plate.
There are some signs of action. The federal government put critical minerals front and centre in its most recent budget, allocating $3.8-billion toward manufacturing, processing, and recycling projects while introducing a new tax credit for the exploration for battery minerals. Meanwhile, Ontario has produced a critical mineral strategy to “establish and support a battery chain ecosystem” for its auto industry using northern Ontario’s mineral wealth.
But despite some strong investments at either end of the supply chain, very few of Canada’s metals and minerals are actually making their way into batteries. And none of them are doing so within a Canadian supply chain. Unless this changes, Canada runs the risk of repeating history by remaining a “staples” economy, where its raw materials are exported and later reimported with the value added (and the associated jobs created) somewhere else.
If Canadian governments want to seize the battery mineral opportunity, they need to up their game. That means picking winners and going all in, whether it’s building our supply of lithium and graphite or maximizing Canada’s early-stage nickel mines.
That should be coupled with accelerated mining project permit timelines that still ensure Canada meets the highest environmental, social, and governance standards, including Indigenous consultation and partnership. New and existing mines must also be electrified so that Canadian mining products are among the cleanest in the world. Finally, we must build up our domestic processing and refining capabilities.
This is Canada’s race to lose, but winning will require taking the right steps today. It’s time we picked up the pace.
This post originally appeared in The Hill Times.