Canada's New Critical Minerals Strategy—Recycling the Regulatory Regime

December 16, 2022

Written By Sander Grieve, Martin Ignasiak, Christopher Doucet and Geoffrey Davis

On Friday, December 9, 2022, the federal government released the Canadian Critical Minerals Strategy (the Strategy), a comprehensive multi-disciplinary government policy package designed to facilitate increased production and processing of critical minerals vital to the green and digital economy. The government committed to, among other things, reviewing the regulatory processes and red tape faced by Canadian-regulated mining companies attempting to bring mines from exploration to production, with a view to placing Canada at the forefront of the increasing global demand for clean energy. Supporting economic growth and job creation, continued reconciliation with Indigenous peoples, enhancing global security and fostering a "nature-forward" approach to sustainability are among the objectives outlined in the 58-page Strategy.

As the global economic landscape transitions faster and faster towards a green future—and the production of the critical minerals necessary to underwrite this transition threatens to fail to keep apace—it appears the Government of Canada is turning over a new leaf when it comes to the regulatory processes and supply chain of mining critical minerals in Canada.

Revamp, Not Remodel

The Impact Assessment Agency of Canada (IAIC), the federal entity charged with responsibility for environmental assessments of major infrastructure projects including critical mineral mines, indicates that a mine project may be expected to take about five years to complete from initial application, the Strategy outlines that it can sometimes take up to 25 years for a mining project to become operational under the current regime. Recognizing that the bureaucracy can bring applications to a halt and deter investment, the federal government's commitment to reviewing the IAIC and related processes to increase the efficiency of mining project construction applications is a welcome sight to Canadian mining companies and foreign investors alike.

While there won't be an overhaul of the current regime and regulatory framework, and no changes to actual policy were noted in the Strategy, the Strategy does aim to create regulatory certainty with an aim to harmonize the regulatory and permitting regime for mine project applications. For major development projects that would ordinarily require both federal and provincial impact or environmental assessments, the Government of Canada has committed to meeting the "one project, one assessment" approach that has been called for by industry participants in recent years. The Strategy reconfirms the mandate of the Critical Minerals Centre of Excellence, established in 2021, to assist project developers as they navigate regulatory processes and access federal support measures.

The Strategy also lays out government priorities from exploration to reclamation along the critical mineral value chain seeking regulatory harmonization domestically and with the United States.

Credits, Not Carbon

In order to properly position Canada amongst the global leaders in supplying clean energy and the critical minerals essential to foster the necessary transition, the Strategy acknowledges the fruitful benefits a swift and efficient regime can create for Canada's future in the mining sector. Between the North American zero emission vehicle market and the battery production supply chain, the Strategy predicts the creation of up to 300,000 new jobs by 2030 to fulfill the increasing demand for critical minerals in these sectors. To capitalize on the opportunity presented to the Canadian energy sector, the Government has committed significant investment into the exploration, research and development, infrastructure and innovation of critical minerals. Budgets 2021 and 2022 include a $1.5 billion initiative for the Strategic Innovation Fund (SIF) to support critical mineral projects and a new 30 percent critical mineral exploration tax credit that will be introduced and become available to investors under certain flow-through share agreements to support specified exploration expenditures in Canada.

The Government hopes that the SIF investment will help build a world-class critical mineral supply chain that can lighten the dependency of Canada on foreign supply chains which can often be unpredictable. The Strategy outlined the number of benefits such independence can provide, including an increase in foreign direct investment, domestic sustainability and positioning Canada as a global leader in the clean energy sector as the world shifts to cleaner technologies.

Looking Forward

To the extent that Canada can refine the regulatory processes to materially shorten the current permitting timelines by increasing efficiency and predictability within a harmonized framework, mine project developers will welcome such changes with open arms. With the implementation of the national benefits sharing framework and a draft action plan with a legislated deadline for release in 2023 as announced in the strategy, a harmonized permitting framework could add regulatory certainty, create real and lasting benefits for affected Indigenous groups and materially shorten timelines without sacrificing environmental protection.

For more information about the Canadian Critical Minerals Strategy, please reach out to the authors of this blog or a member of the Bennett Jones Mining group.

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