Breaking China’s Hold on Critical Minerals: Canada’s Chances and Roadblocks

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As China uses its dominance of critical minerals as a geopolitical tool—limiting exports and imposing tariffs—and as demand for these elements in defence and the high-tech sectors grow, there’s a new sense of urgency in the West to break China’s hold.

Ottawa recently joined other G7 leaders in launching a critical minerals action plan, and Prime Minister Mark Carney has noted the important role such minerals play in expanding the country’s defence plan.

Some also point to Canada’s regulatory processes for major projects, saying more streamlining is needed.

“China won and secured and now maintains its stranglehold on critical minerals with government control and massive government subsidies to corner the global market over the past 20 to 30 years,” Adams said.

“While Canada continues to welcome foreign direct investment, we will act decisively when investments threaten our national security and our critical minerals supply chains, both at home and abroad,” Champagne said at the time.

Ontario’s Minister of Energy and Mines Stephen Lecce has also alluded to the risks China’s dominance of the market presents.

“Resource security is now national security, and the race for critical minerals is on,” Lecce said on July 3 in Thunder Bay, Ont.

“Too much of today’s global supply is controlled by regimes that just don’t share our values as Canadians. China, for example, dominates much of the world’s critical mineral market using forced and child labour, unsafe conditions, and destructive environmental practices.”

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Carney announced in June that his government intends to gradually increase NATO spending to 5 percent of the GDP, saying that a major part of that plan will be achieved by investing in critical minerals.

Natural Resources Canada (NRCan) has described critical minerals as essential for defence applications, including in aerospace alloys and permanent magnets employed in military systems.

“By scaling up domestic production and processing, Canada is reinforcing its defence industrial base and strengthening its contributions to NATO,” NRCan spokesperson Christian Tessier said in a July 23 email to The Epoch Times.

Australia is considering a price floor for the industry to support its domestic critical minerals sector. The scheme would guarantee a minimum price for local producers, shielding them from low global prices to establish reserves.

“We know that our competitors in this field in China are between 20 and 30 years ahead of us,” Australian Resources Minister Madeleine King said on Aug. 5. “That’s a long time where the Western world has ... subbed out of ... resource extraction, a lot of chemical processing, a lot of mineral processing. So now we’re going to start doing it.”

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In the United States, the White House has recently announced plans to scale up its support of domestic rare earth companies as a way to break China’s monopoly, including forming public-private partnerships to boost production.

Many American companies have recently announced plans to expand their critical minerals production.

U.S. mining company Ramaco broke ground in Wyoming in June on what it says is the first rare earth and critical minerals mine in the United States in more than 70 years. The deposit contains several rare earths critical to U.S. national security that have recently been banned for export by China, the company says.

News also broke in June that the U.S. Export-Import Bank is in the review process for granting a US$120 million loan for a rare earth mine in Greenland run by Critical Minerals Corp.

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The European Commission has selected 13 new projects to obtain and develop more non-China based critical minerals from outside the EU, in addition to the bloc’s 47 existing projects operating as part of its Critical Raw Minerals Act.

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A employee checks the electrolysis as sheets of copper cathodes are created from copper anodes at the Canadian Copper Refinery in Montreal on July 25, 2025. The Canadian Press/Christinne Muschi

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Canada’s Reserves

Canada has the world’s sixth-largest reserve of critical mineral lithium, along with significant deposits of graphite, nickel, cobalt, copper, and various rare earth elements. Canada is also the world’s leading supplier of key fertilizer ingredient potash, at 32 percent of global supply. It’s among the top five worldwide producers of critical minerals indium, niobium, platinum group metals, titanium concentrate, uranium, and primary aluminum.

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Canada has an estimated 15 million metric tons of rare earth metals. The U.S. Department of Defence noted that an F-35 fighter jet needs more than 900 pounds (about 0.4 metric tons) of rare earths, while a nuclear-powered submarine needs more than 9,000 pounds (4 metric tons).

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The International Energy Agency said future demand for critical minerals is projected to grow significantly, including a 500 percent growth in demand for lithium by 2040, 200 percent growth for graphite and nickel, and 50 to 60 percent growth for cobalt and rare earth metals.

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But besides extraction, a main part of China’s dominance of the market is its refinancing and processing capability in the sector, a field that the West wants to gain more control of to build resilient supply chains.

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A U.S. F-35 takes part in military exercises in Oahu, Hawaii, on July 19, 2024. Critical minerals have important applications in the defence industry. Marco Garcia/File Photo/Reuters

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Canada’s Plans

Canada introduced a Critical Mineral Strategy in 2022, presenting it as a “comprehensive initiative” to grow the economy and cut down on Canada’s “dependency on other countries for inputs and manufactured goods.”

Natural Resources Canada’s Tessier said the federal government intends to allocate more funds in research and work with partners to better develop the country’s critical minerals sector.

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A stream runs along the outskirts of Neskantaga First Nation, part of northern Ontario’s mineral-rich Ring of Fire region, on Aug. 20, 2023. The Canadian Press/Chris Young

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“Canada will also work with G7 allies and partners across industry, international organizations, Indigenous Peoples, and civil society to build a roadmap for a standards-based markets critical mineral market. This roadmap will be completed this year,” Tessier’s statement said.

The government of Ontario, which has large deposits of critical minerals, has also put in place new initiatives to develop the sector.

Lecce said Ontario’s mining sector plans to more fully exploit its nickel, lithium, graphite, cobalt, and other critical minerals by expanding funding, cutting permitting timelines in half, and enabling more exploration.

Canada’s Infrastructure Challenge

Canada lacks infrastructure in its remote and northern regions to access the mineral resources, and the mining sector faces economic challenges including barriers to investment in large-scale critical mineral extraction projects, as noted in a 2021 House of Commons committee report.

Lifton, of the Critical Minerals Institute, said Canada is in need of a national infrastructure program so it can ramp up its production of critical minerals.

“Roads and electric power are the missing link,” Lifton said.

Federal Energy Minister Tim Hodgson has said that specific regions such as Ontario’s Ring of Fire and its extensive deposit of chromite, zinc, nickel, platinum, copper, and other critical minerals, along with the mineral-rich Slave Geological Province in the Northwest Territories, are two areas of focus. Hodgson made the comments when announcing a federal-territorial initiative to map critical mineral deposits with the assistance of artificial intelligence.

However, “all that is a smoke screen,” Lifton said. “Without infrastructure, there’s no point to that.”

If more infrastructure is built and there is government support, investments will flow in, Lifton noted. He said when he and his partner surveyed Canada in 2012, they found that approximately half of the global discoveries of critical minerals had been made in Canada.

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Energy and Natural Resources Minister Tim Hodgson speaks in Cochrane, Alta., on July 4, 2025. The Canadian Press/Lauren Krugel

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“Now fast forward 13 years, not a single one of those deposits has been moved into production,” he said. “Not one.”

Lifton also said that Canada needs to focus its capital because it doesn’t have the level of capital resources that the United States has, with just one-tenth of the population.

“It could attract American capital, European capital, if it starts building,” Lifton said, adding that, “mining and processing, refining and fabricating needs to become a major industry.”

Regulations and Production

A Scotiabank report in June noted that beyond current production, there are roughly 67 critical mineral mining projects planned or under construction in the next decade in Canada, totalling $72.4 billion in potential investment. But it emphasized the importance of streamlining government regulations to ramp up projects.

Citing Rebekah Young, a vice-president at the bank, the report noted that “if the federal and provincial governments are smart about policy and the onerous regulatory process is streamlined, we could see far more projects enter development given the demand for critical minerals.”

The United States is pursuing deregulation and investment and streamlining the permitting process to bolster domestic production as part of its focus on reducing reliance on China in the critical minerals sector.

Probe International’s Adams said the Carney government would be wise to “streamline project approval processes” and let markets work to attract investments in the sector. She said the government should also support the sector to counter China’s centrally controlled dominance, but not fall into the trap of over-regulation and control.

“[Canada] should break China’s monopoly, but by reinstating market rules and with tariffs to correct for China’s subsidization of their mining industry, not by government’s recklessly controlling the industry,” Adams said.

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Workers drain away polluted water near the Zijin copper mine in Shanghang, China, on July 13, 2010. STR/AFP via Getty Images

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Canada also faces challenges with processing capacity, an area that China has dominated.

“Canada currently has insufficient domestic processing capacity for certain minerals—for instance, no commercial-scale lithium refineries or rare earth separation facilities yet—meaning that even if mined, raw materials might have to be exported for processing (often to China) unless midstream facilities are developed,” a report published by the Public Policy Forum said.

The report noted that Canada would be well advised to build strategic reserves of critical minerals to make its supply chain more resilient.

“Japan, for example, created a rare metals stockpiling program in the 1980s and, after China’s rare earth embargo in 2010, significantly expanded its stockpiles and diversified supply — cutting its dependence on Chinese rare earth imports from 90 percent to about 60 percent within a decade. Canada should similarly evaluate building strategic reserves of critical minerals (possibly in coordination with allies) to guard against both physical shortages and wild price swings,” the report said.

The federal government has said its recently passed Building Canada Act will enable fast-tracking of major projects of national interest. So far, the list of projects that will be approved under the new legislation hasn’t been announced, but Ontario has pushed for projects relating to its critical minerals sector to be included.

Ontario has also recently passed legislation called Protect Ontario by Unleashing our Economy Act. The goal is to streamline approval processes for mining projects, with a specific focus on the province’s critical minerals sector.

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