According to Financial Times News, Canada has announced 25 critical minerals investments and partnerships worth C$6.4 billion (US$4.6 billion) as part of a coordinated G7 effort to counter China’s dominance in global mineral supply chains. Energy Minister Tim Hodgson revealed on Friday that Ottawa will use the country’s Defence Production Act to stockpile critical minerals, mirroring similar US national security measures. The announcement follows two days of G7 talks in Toronto focused on creating a “buyers club” for critical minerals, with specific projects including Norway’s Vianode building a multibillion-dollar synthetic graphite plant in Ontario and Rio Tinto’s scandium plant in Quebec receiving multilateral support. Canada will guarantee to purchase producers’ output at predetermined prices to secure returns on upstream investments, while companies like Nouveau Monde Graphite have secured offtake arrangements with Panasonic and Traxys alongside government investment pledges. This strategic shift represents a fundamental rethinking of mineral security in the Western alliance.
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The New Resource Nationalism
What we’re witnessing is the emergence of a coordinated Western response to China’s decades-long strategic positioning in critical mineral supply chains. Unlike traditional trade disputes, this represents a fundamental shift toward resource nationalism where nations are using defense legislation and economic statecraft to secure strategic materials. The timing is particularly significant given that China’s recent export controls on germanium and gallium demonstrated how quickly supply chain vulnerabilities can become national security crises. Canada’s move to invoke its Defence Production Act for mineral stockpiling marks a departure from its traditional market-based approach to resource development, signaling that Western nations now view critical minerals through the same lens as energy security.
The Scale of the Challenge
While Canada’s C$6.4 billion investment is substantial, it represents just the beginning of what’s needed to meaningfully challenge China’s dominance. China currently controls approximately 60-70% of global rare earth mining and 85-90% of processing capacity, creating a supply chain stranglehold that took decades to build. The critical challenge for Canada and its G7 partners isn’t just funding new mines but developing the entire value chain—from extraction to processing to manufacturing. Projects like Vianode’s synthetic graphite plant address a crucial gap in anode material production, but similar investments are needed across dozens of rare earth elements and critical minerals where China maintains near-monopoly positions.
The Price Guarantee Model
The Canadian government’s commitment to purchase output at predetermined prices represents a sophisticated understanding of mineral economics that previous Western initiatives have lacked. Mining projects require massive upfront capital with payback periods spanning decades, making them vulnerable to commodity price volatility. By providing price floors, Canada is effectively de-risking the investment decision for private capital—a crucial intervention given that many critical minerals have smaller markets than traditional commodities like copper or iron ore. This approach recognizes that pure market forces won’t deliver the strategic supply chain resilience that Western nations now require, necessitating a hybrid model of public underwriting and private operation.
The Limits of Multilateralism
The G7’s “buyers club” concept represents an ambitious attempt to coordinate Western demand, but history suggests significant implementation challenges. Previous multilateral resource initiatives have often stumbled over competing national interests, subsidy disputes, and differing regulatory frameworks. The success of this effort will depend on whether participating nations can maintain alignment through inevitable market fluctuations and political changes. The one-year nature of the recent US-China rare earth agreement underscores the fragility of current arrangements and the urgent need for durable Western alternatives. True supply chain resilience requires not just coordinated purchasing but harmonized standards, shared infrastructure investments, and streamlined cross-border project approvals.
Strategic Implications for Canada
For Canada, this initiative represents both an economic opportunity and a strategic repositioning. With some of the world’s largest untapped mineral reserves and stable governance, Canada is uniquely positioned to become the Western hemisphere’s answer to China’s resource dominance. However, success will require navigating significant hurdles including environmental approvals, indigenous partnerships, and infrastructure development in remote regions. The integration of this minerals strategy with Canada’s increased NATO defense spending commitments suggests a broader recognition that economic security and national security are increasingly inseparable in the 21st century. If executed effectively, this could establish Canada as a cornerstone of Western strategic autonomy for decades to come.
