Mining for critical minerals in North America
The call for electric vehicles is increasing to stem the global environmental damage that has been and continues to be caused by combustion engines and fossil fuels. The electric vehicle and the overall electrification of our transportation infrastructure presents a path to a sustainable future. But is it the case?
As is frequently the case, the simplicity of the electric vehicle solution is not as straightforward when subjected to closer scrutiny. Batteries are required to make electric vehicles work. For that matter, batteries are also needed to make many of today’s conveniences work; from computing on your phone, tablet, or laptop, to manufacturing electric appliances for home and in medical use and everything in between.
Batteries require metals such as lithium, nickel, manganese, and cobalt, which are all sourced from critical minerals. Access to those minerals is essential in the move towards a green and digital economy. Critical minerals are sourced through mining.
In North America, it is not just the mining companies who are focused on developing critical minerals project, the governments at the federal and provincial/state levels have extensive programs focused on securing in-continent commodity supplies and mineral production. In late 2022, the Canadian government provided the Pentagon with more than 70 mining project names in Canada in a bid for grants from the U.S. military for critical minerals sites. The U.S. military is studying funding mining projects in Canada through the Defense Production Act of 1950. This will greatly benefit investment in these Canadian based projects while also attempting to further secure domestic supply.
The U.S. Department of Energy recently announced a conditional loan of $700 million to a mining company to pursue a lithium project that could support the production of 370,000 electric vehicles annually for decades.
The Biden administration has made a strategic initiative to implement 500,000 charging stations for electric vehicles as a signature piece of its infrastructure goals. That effort, and the growth of electric vehicle companies will require much more lithium to make batteries.
The loans and grants by governments are unprecedented and have been extended not just to mining operations but to facilities as well that are being designated as electric vehicle battery material and production operations like Redwood Materials in Nevada.
More recently, during PDAC this past March, the Hon. Jonathan Wilkinson, Minister of Natural Resources, made an announcement of $15 million being provided to a handful of companies focused within the critical minerals space. This is being done to secure a domestic critical minerals supply, create prosperity and high-quality jobs for Canadians, and foster economic reconciliation with Indigenous Peoples from coast to coast to coast. As this funding gets deployed, the Government of Canada is also in the process of reviewing Canada’s regulatory framework to identify opportunities for advancing clean growth projects in a timely and predictable manner, while safeguarding the interests of Canadians, protecting the environment, and respecting the rights of Indigenous Peoples.
This is good news, as it confirms that governments are not just becoming aware of supply chains but are becoming increasingly proactive/protective of their respective natural resources, particularly those focused on critical minerals. At the end of the day and because of the boost in global demand and growth in green and digital applications, many of these critical minerals, the energy sector’s overall needs are expected to increase dramatically. Not only that but by 2030 the zero-emission vehicle market could reach $174 billion, which could generate 220,000 jobs in mining, processing, and manufacturing.
Governments are not the only ones expressing interest. Auto manufactures like Tesla, GM, Ford, and Volkswagen, among others, have made substantial investments in the electric vehicle market and have been availing themselves of early and long-term offtake investing opportunities to secure the critical minerals supply needed. There is a greater pool of capital now available for sustainability or energy transition-linked financing which is reason for optimism.
It cannot be overstated though that mining for critical minerals is a balancing act between the exploration and extraction through mining projects and the essential priority of sustainable and green mining technologies. It is this balance that is presenting challenges to the mining industry from a practical and public relations perspective.
Companies have been tripping over themselves and each other in the rush to become profitable in critical minerals mining. This rush brought on by some management teams has resulted in failures like that of Nemaska Lithium, which failed to their attempt to launch a lithium mine and become a lithium carbonate and/or lithium hydroxide producer. Nemaska Lithium entered creditor protection in late 2019. In many ways, the project underlined some of the challenges that Canada is facing, namely lack of technical due diligence and technical depth to take their project from pilot scale to commercial operations.
It is also noteworthy that 70% of the companies looking to break into this area of mining are juniors which means less expertise, resources, and experience at their disposal.
The failures as much as the successes are providing something to consider for investors, and with that kind of scrutiny, companies are seeing the value of services like those that SGS can provide.
Bringing in companies who provide technical knowledge, expertise, and insights across the entire mine project life cycle allows for companies to leverage unbiased third-party technical insight and fill in any technical gaps that they have within their project teams. SGS provides technical expertise across the entire project life cycle including geochemistry, geological services, metallurgy, process development, consulting, and commodities trade with a focused goal of making mining more sustainable for future generations. The best chance at success comes from the advance preparation that includes testing, analysis, consulting, and forecasting which takes time. The development process can feel impossibly slow for a mining company that feels poised on the edge of a huge discovery. The mining industry is full of examples of projects whose failure is related to not doing the due diligence required to mitigate the risk. By taking shortcuts and not doing the in-depth testing, mining companies put the commercial success of their projects at risk, this results in a failed project and a company that files for bankruptcy protection.
Companies would be well-advised to take a step back, slow down, prepare properly and accept the findings from the experts. The future of their projects as well as future supply chain considerations hang in the balance.
If critical minerals and the transition to green energy is important to not only Canada but the world, then the investment is key. We are charged with the task of building a sustainable industrial base to support emission-reducing supply chains that will address climate change for generations to come. Not an easy task, but one that is necessary.
We can see the future, but to get there, we need to plan for its excavation with as much information as we can muster today.
P.J. Kwong is a writer with the Content Store.