How Are Critical Minerals Transforming Canada's Energy Sector?
Discover how critical minerals have the potential to transform Canada's energy sector: lithium, rare earths, sustainable innovations, and economic challenges
Canada's energy future rests on a foundation that is often invisible but absolutely essential: critical minerals. These natural resources, ranging from lithium to rare earths, literally constitute the building blocks of the global energy revolution. Their absence would compromise the entire modern energy system: renewable energy storage, transportation electrification, and clean electricity production from wind and sun. As the Canadian Critical Minerals Strategy emphasizes, "electricity flows through copper, wind turbines require manganese, platinum, and rare earth magnets, electric vehicles require batteries made with lithium, cobalt, and nickel" [1]. This fundamental interdependence raises an essential question: how are critical minerals shaping the transformation of Canada's energy sector?
Canadian Critical Mineral Projects Serving the Global Energy Transition
The restart of the North American Lithium (NAL) mine in Quebec in March 2023 marks a decisive turning point for North America. This facility becomes "the only major source of spodumene concentrate (lithium) in North America," with a targeted production of approximately 226,000 tonnes of lithium spodumene concentrate per year [1]. The strategic importance of this project is measured by the scale of contracts already signed: LG Chem committed to purchasing 200,000 tonnes over four years, while Tesla secured 125,000 tonnes over three years [1]. These partnerships concretely demonstrate how Canadian minerals directly feed the global supply chain for electric vehicles.
At the same time, Canada is entering the strategic rare earth market. In 2021, the country's first rare earth mine, Nechalacho in the Northwest Territories, began producing rare earth concentrate, with approximately 500 tonnes shipped by the end of 2021 for processing in Saskatoon and Norway [1]. This breakthrough is all the more significant as it offers an alternative to Chinese dominance in this crucial market. As the NWT Minister of Industry stated, "Canada is effectively a serious player in the international race toward a sustainable, reliable, and responsibly extracted source of critical rare earth elements, independent of China and also Russia" [1].
Integration of Hydrogen, Carbon Capture, and Battery Recycling
Canadian innovation is not limited to traditional extraction. The mining sector is actively integrating hydrogen technologies, particularly relevant since cobalt, extracted as a nickel by-product in Canada, is used in hydrogen fuel cells. Platinum group metals, of which Canada is a major producer, are essential for electrolyzers and fuel cells [1][2]. Off-grid mines are already exploring the adoption of wind, solar, hydrogen, and battery storage to electrify their operations, thereby reducing their carbon footprint [2].
A particularly promising innovation emerges from FPX Nickel's Baptiste project in British Columbia. Laboratory tests at the University of British Columbia have demonstrated that injecting CO₂ into mine tailings can mineralize CO₂ into permanent solid carbonate, capturing between 13.3 and 15.3 grams of carbon dioxide per kilogram of crushed tailings within a few days [3]. This revolutionary technology "opens the possibility of larger-scale CCS... increasing the potential for developing a carbon-neutral or carbon-negative nickel mining operation at Baptiste" [3].
Battery recycling represents another pillar of the Canadian approach. Li-Cycle, based in Toronto, recovers critical minerals from lithium-ion batteries and reintroduces them into the supply chain. The company can currently process approximately 51,000 tonnes of used lithium-ion batteries per year and aims for a capacity of 81,000 tonnes by the end of 2023 [4]. The environmental impact is considerable: recycled battery metals generate approximately 80% fewer greenhouse gas emissions than producing the same metals through mining extraction [5]. The International Energy Agency predicts that recycling could reduce the need for new extraction of certain minerals by 25 to 40% by 2050 [5].
Environmental and Social Innovation: Low-Impact Extraction and Circular Economy Approaches
Canada's mining sector relies on strong environmental, social, and governance (ESG) credentials. The Mining Association of Canada's "Towards Sustainable Mining" (TSM) program is recognized worldwide [1]. This approach is reinforced by Canada's energy advantage: 82% of the country's electricity comes from non-emitting sources (hydro, nuclear, wind, solar) [2]. The government supports ambitious projects such as "the world's most sustainable potash mine in Saskatchewan" and Rio Tinto's $737 million project to decarbonize its Rio Tinto Iron and Titanium operation in Quebec, including up to $222 million from Canada's Strategic Innovation Fund, aimed at reducing greenhouse gas emissions by up to 70% [2].
The Canadian strategy also aims to "advance circular solutions to close material loops" by recovering minerals from end-of-life products and mining waste [1]. This circular economy approach is essential to maximize the value of critical minerals already extracted, thereby reducing pressure on new mining operations. By reusing and recycling these strategic materials, Canada can increase the availability of critical minerals for the energy transition while minimizing the environmental impact of their production. This circular philosophy extends to all aspects of the value chain, from recovering metals from used electronic equipment to optimizing processing methods to extract more value from existing ores.
Beyond Lithium and Rare Earths: Other Emerging Critical Minerals
The Canadian strategy encompasses an impressive diversity of critical minerals. Nickel, crucial for increasing energy density and storage capacity in batteries, is the subject of major investments. Vale is studying a nickel sulfate plant in Bécancour and has signed an agreement to supply 25,000 tonnes per year of battery-grade nickel sulfate to General Motors [1].
Graphite, the main component by weight of lithium-ion batteries forming the anode, represents another strategic opportunity. Nouveau Monde Graphite in Quebec is developing what could be the largest graphite mine and anode material plant in North America, with a memorandum of understanding signed with Panasonic to supply battery-grade graphite [1].
Copper, the "metal of electrification," is an excellent electrical conductor used in electrical cables, electric motors, solar panels, wind turbine generators, and transformers. Electric vehicles use 2 to 3 times more copper than conventional cars [1]. Other minerals such as vanadium (for vanadium redox batteries used in large-scale energy storage), manganese (to harden steel and aluminum in wind turbines), and titanium (of which Canada ranks among the top five producers worldwide) complete this strategic portfolio [1][2].
Towards a Sustainable Energy Future
Critical minerals are fundamentally transforming Canada's energy sector, positioning the country as a central player in the global energy transition. The economic opportunities are considerable: without accelerated mining development, Canada could lose $12 billion per year by 2040 in unrealized critical mineral production. Facing demand that will double by 2040 and potential investments of $65 billion [7], Canada's success will depend on its unique ability to combine several competitive advantages: 82% clean electricity [2], innovative partnerships [1], and a circular approach that maximizes the value of each extracted ore.
References
[1] Government of Canada, Natural Resources Canada. The Canadian Critical Minerals Strategy: From Exploration to Recycling – Powering the Green and Digital Economy for Canada and the World. Ottawa, 2022.
[2] Canada Energy Regulator. "Market Snapshot: Critical Minerals are Key to the Global Energy Transition." CER Market Snapshots, 18 Jan. 2023.
[3] Canadian Mining Journal. "Capturing carbon with tails could make FPX Nickel's Baptiste project carbon neutral." 2 Nov. 2021.
[4] The Energy Mix. "Toronto-Based Li-Cycle Expands Battery Recycling Operations to Europe." 11 Apr. 2023.
[5] International Energy Agency (IEA). Recycling of Critical Minerals – Analysis. IEA, Paris, July 2023.
[6] Energy Capital & Power. "CMA to Highlight Canada's Growing Impact on African Critical Minerals." African Mining Week (News), 25 Sept. 2024.
[7] Canadian Climate Institute. "Canada risks missing out on billions in critical mineral investment without swift policy changes: report." News release, 12 June 2025.
