As Canada rapidly develops its LNG production and export capabilities and expands its oil industry, the North American country may also be looking to boost its reputation as a rare earth elements producer. Canada has produced rare earth elements (REE) for several decades and is thought to have extensive untapped reserves. It has supported other countries in the development of their REE industries and is now looking to expand its domestic mining activities to help achieve net-zero goals and develop a regional supply chain.
REE are a set of seventeen metallic elements that are commonly used in many electronic devices such as mobile phones, computers, and electric vehicles (EVs). In the early 1990s, the production of REE was distributed fairly evenly across the globe, with China accounting for 38 percent of output, the U.S. 33 percent, Australia 12 percent and Malaysia and India five percent each. Brazil, Canada, South Africa, Sri Lanka and Thailand also had REE-production capabilities, although contributed little to the total global output. Over the next two decades, production became more concentrated in China, which contributed around 97 percent of global REE output by 2011.
As Canada looks to strengthen its energy security and solidify its role in the global energy market, the government is hoping to exploit the country’s largely untapped potential to mine REE. If successful, this could support Canada’s green transition and counter China’s dominance in the global REE market. The government announced a $70-million investment for global partnerships to promote Canadian mining leadership, as well as several other initiatives to help establish Canada as a major REE power.
Canada’s 2024 Critical Mineral Strategy Annual Report outlines plans to mine for over 30 critical minerals, with a focus on lithium, graphite, nickel, cobalt, copper, and REE. The U.S. government has repeatedly stated concerns about the growing dependence on China for critical minerals and REE, as well as other energy sources and products, as it looks to develop more regional supply chains. The expansion of Canada’s mining industry could help it provide a stable domestic supply of REE as well as support the development of a North American supply chain. James Edmondson, the research director at IDTechEx, said “It is believed Canada has very large quantities of these materials, even if they have not yet begun processing them in significant quantities.”
The global demand for REE is set to grow exponentially in the coming years, as more countries invest in renewable energy projects and the consumer uptake of EVs rises sharply. An October Future Market Insights report predicted that the global REE market will increase from a value of $6.2 billion in 2024 to $16.1 billion by 2034, at a CAGR of 10.1 percent.
Canada has some of the world’s largest known REE reserves and resources. In 2023, it was estimated that Canada had reserves of over 15.2 million tonnes of rare earth oxide. It is thought to have abundant supplies of nickel, which is widely used in EV batteries and mainly produced by China and Indonesia at present. In addition to widely available rare earths, Canada also holds large quantities of highly valued ‘heavy’ rare earths, including dysprosium and terbium, which are in limited global supply.
Canada has been developing its capacity in processing and separation, to produce metal and alloy, as well as for recycling rare earth magnets. The sector has received significant amounts of public and private funding in recent years in the government’s pursuit of a green transition. Canada also has the potential to develop its magnet-making capacity, particularly as it is already a well-established producer of steel and aluminium, has a low-cost power grid, and has a skilled manufacturing workforce.
Canada has also contributed to several REE projects around the globe, supporting rare earth separation and magnet manufacturing activities in Estonia, the U.S., and Namibia. The North American country could, therefore, become a leader in the responsible, inclusive, and sustainable production of REE and supply chain development, thanks to its expertise in the sector and involvement in various projects around the globe.
While there is great optimism around Canada’s REE potential, experts suggest that the country’s strict environmental regulations may hinder the rapid development of the industry. New mines can take anywhere from 10 to 15 years to be developed if approved. This has led many to suggest that greater REE progress may be seen in the U.S., China, and Australia in the short- to mid-term, despite the untapped REE potential in Canada.
To successfully and sustainably develop Canada’s REE industry, the government must improve access to sectoral investment and mine development without compromising core environmental standards. Canada’s extensive experience in REE mining and role in the international critical mineral market could help the North American power become a major regional REE hub in the coming decades.
By Felicity Bradstock for Oilprice.com
