May 28, 2020
Critical mineral supply chains essential for economic development opportunities
2 MIN READ
Regulatory policy must evolve to align with current industry needs
Don Bubar is the president and CEO of Avalon Advanced Materials.
Security of critical minerals supply has now become a major concern for government in light of the COVID-19 disruption to global supply chains. A North American solution is required to reduce reliance on China as a sole source of supply of many of our critical minerals.
North America does not have the full supply chains needed for many new technologies – such as electric vehicles, energy storage, sensor and data processing applications) and pharmaceuticals – although we do have all these minerals in the ground.
Northern Ontario is blessed with resources of many of these critical minerals, often referred to as “technology metals,” including all the elements needed in lithium-ion battery technology.
So why aren’t we already taking advantage of this rich mineral endowment to establish rechargeable battery manufacturing capacity in Ontario?
The answer lies in regulatory policy that has not adapted to the unique circumstances developers of non-traditional mineral commodities, like lithium, are facing.
Regulatory change is clearly needed, as mining regulations are effectively blocking these supply chain developments.
Historically, the Canadian mining industry has been oriented towards extraction of bulk or exchange-traded commodities, such as gold. Such mined commodities have had essentially unlimited markets – encouraging large-scale operations designed to keep unit operating costs low.
In contrast, many critical minerals have small but growing markets, meaning that initial production should be at a small scale, with production increasing as demand grows.
Canada’s mining regulations have evolved over time to manage potential impacts to the land and consequent environmental risks associated with large mining operations.
At the exploration and pre-production stages, securities regulations have evolved to manage and reduce speculative investment risk in exploration oriented towards gold and other exchange-traded metallic commodities.
These regulations were effective in the past, but are not as relevant for the future, which will be increasingly focused on newly emerging technology metals.
This is because most of these non-traditional mineral commodities are not commodities at all in the traditional sense of the term. Rather, they are manufactured products that require extensive processing to be utilized in new technology applications.
Thus, at the early stage, drilling off the largest, highest grade resource you can find is not the primary objective.
The work is instead focused on test sampling to determine if the resource is amenable to production of the desired derivative material, then producing trial quantities for customer qualification.
Once the process is proven, new developers must begin supplying the market quickly, which means initiating small-scale production as soon as possible.
Mining industry regulations in Canada never contemplated the consequences of new technology, what minerals would be needed in the future, or how the industry would evolve to produce them.
Critical minerals are required to transition to the low-carbon future policymakers envision.