Canada’s critical minerals strategy: a rock‑solid plan for mining companies?

The global race to critical minerals has never been tougher, in light of the shift from oil and gas to renewables as energy sources. With Canada home to deposits of several critical minerals around the country, it makes sense to have a critical minerals strategy that guides how the country can take advantage of these resources.

In this article, we will discuss this strategy, its relevance to mining companies, and how lawyers can help companies navigate it. For anything else not covered here, you can also consult a Lexpert-ranked mining lawyer or law firm.

What is Canada’s critical minerals strategy?

The critical minerals strategy of Canada is the federal roadmap for how the country will find, develop, process, and recycle key minerals that feed the green and digital economy. It sets out how the country will move from simple extraction to full value chains that run from exploration through manufacturing and recycling.

Its vision is to increase the supply of responsibly sourced critical minerals, while also building both domestic and global value chains for clean energy and technology. It identified 31 (now 34) minerals as “critical” because:

• they support the country’s economic or national security
• they are catalysts in moving to a low-carbon and digital economy
• their supply is at risk, not just in Canada, but also worldwide

Released by Natural Resources Canada in 2022, the strategy came with a $3.8 billion commitment from the Canadian government. Watch this video of the Minister of Natural Resources explaining this strategy:

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The exploration-to-recycling approach

Another important aspect of the critical minerals strategy is its clear structure for the critical minerals value chain, which is broken down into five stages:

• geoscience and exploration
• mineral extraction
• intermediate processing
• advanced manufacturing
• recycling

By focusing on all five stages, the strategy aims to stop Canada from acting only as a raw-ore supplier and instead grow more processing and manufacturing at home.

The focus areas and initiatives of the critical minerals strategy

There are six focus areas and initiatives under the critical minerals strategy, namely:

1. Driving exploration, research and development, and innovation

First, the strategy focuses on finding deposits and then improving the science and technology behind the critical minerals. It backs public geoscience, advanced exploration, and research on new processing methods for these minerals.

2. Accelerating responsible project development

This focus area aims to move strategic projects from concept to operation more quickly, while keeping Canada’s high environmental and social standards. The strategy recognizes that long timelines and complex approvals can hold back the mining business.

3. Building sustainable infrastructure

Through investments designed to work alongside existing programs, the strategy addresses gaps in roads, ports, and clean power that hold back many deposits. The strategy also moves away from using diesel at remote mine sites, still in line with the country’s clean energy goal.

4. Advancing reconciliation with Indigenous peoples

Through the strategy, Indigenous peoples are understood as the stewards and rights holders over the lands where mining projects take place. As always, the goal is early, ongoing, and meaningful engagement, along with getting the required free, prior, and informed consent for these projects.

5. Growing a diverse workforce and prosperous communities

The fifth focus area looks at people and communities, while placing diversity and inclusion at the centre of the strategy. It also links workforce planning to local development in communities, since many projects sit close to rural and Indigenous populations.

6. Strengthening global leadership and security

The strategy looks outward to allies and security partners. Canada’s strategy responds to the fact that production and processing of many critical minerals are concentrated in a small number of countries that often rely on non-market practices.

What are the updates of the critical minerals strategy in Canada?

Recent federal updates show how the critical minerals strategy has turned into concrete programs and investments. Examples include:

• 30% tax credit for exploration and clean technology manufacturing
• major funding envelopes under the Strategic Innovation Fund (SIF)
• the creation of the Critical Minerals Infrastructure Fund (CMIF)
• research and demonstration programs for new processing and recycling technologies

These newer measures come from the original strategy and show how Canada is using them to:

• promote production and processing
• protect critical mineral value chains
• deepen partnerships with Indigenous communities and international allies

Why is the critical minerals strategy relevant to mining companies?

Roy Hudson, co–head of mining for the Americas at DLA Piper (Canada) LLP, shares some insights on Canada’s critical minerals strategy.

“Canada’s Critical Minerals Strategy is consequential for mining companies because it combines what is expected to be longer-term market demand for certain resources with active government intervention and support,” Hudson says. “This is expected to create both opportunity and complexity.”

Hudson adds that for mining companies, success depends not only on resource and financing potential but also on navigating the following:

• complex regulatory regimes
• government-sponsored financing structures
• ESG considerations
• in most cases, Indigenous consultation and participation

Check out this report on how Canada can capitalize on its critical minerals:

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Funding for mining companies through the strategy

The strategy also unlocks meaningful funding that mining companies can use. Budget commitments linked to the strategy include:

• $79.2 million for public geoscience and exploration
• $47.7 million for upstream critical mineral research
• $144.4 million for critical mineral R&D across the value chain
• 30% Critical Mineral Exploration Tax Credit for specified minerals

On top of that, there is a $1.5 billion envelope under the Strategic Innovation Fund for critical mineral projects, and a separate $1.5 billion for infrastructure tied to critical mineral supply chains.

For companies with serious development plans, knowing how their projects fit into these fundings and budgetary envelopes can make the most out of the strategy’s financial side.

Preventing headaches with permits and licences

Permitting and approvals also sit inside this strategy, since mining projects often face long timelines and layered assessments. The critical minerals strategy also sets out plans to improve issuing permits and licences to help proponents through the federal processes:

• the “one project, one assessment” approach on major projects
• more coordination with provinces and territories
• support from the Critical Minerals Centre of Excellence

Recent reports state that 14 critical mineral projects have advanced through the federal impact assessment process. Also, new mines and expansions at North American Lithium, Voisey’s Bay, and Raglan are moving ahead under this policy direction.

For mining companies, understanding these commitments is important in planning engagement, studies, and project phasing.

Partnerships with Indigenous communities

The critical minerals strategy also sets the tone on Indigenous partnership expectations and ESG standards, which gives businesses a stronger social licence to operate. It links project development to reconciliation with the following initiatives:

• Indigenous Natural Resource Partnerships Program: funding to increase the Indigenous participation and early engagement in natural resource projects
• National Benefits Sharing Framework: ensures that the First Nations, Métis, and Inuit can directly benefit from major resource projects in their territories and communities
• Critical Minerals Infrastructure Fund: Indigenous-focused grants to support engagement, participation, and capacity building related to infrastructure projects

At the same time, it promotes “nature-forward” mining, circular use of mine waste, and higher transparency on environmental and human rights performance.

Mining companies that align early with these expectations are better placed to secure long-term partnerships, meet lender requirements, and manage national security or foreign investment reviews. These details are important as the government now pays close attention to critical mineral supply chains through the strategy.

How can lawyers help clients when it comes to this critical minerals strategy?

In general, mining lawyers can help clients understand where a project sits within this federal strategy. By mapping a project against this list, counsel can show whether a mine, refinery, or processing plant lines up with the minerals and value chains that Ottawa wants to support.

“Lawyers are therefore critical enablers of the strategy – helping clients manage risk, unlock current and new funding sources, secure regulatory approvals, and ultimately translate Canada’s mineral wealth into commercially viable and sustainable projects,” says Hudson.

“For clients operating globally, it will be important to address compliance with Canadian policies in the context of changing regulatory environments and geopolitical considerations in other jurisdictions where they operate or sell products,” he adds.

Specifically, here’s how mining lawyers can help companies with this critical minerals strategy:

• help clients structure ownership, exploration agreements, and project plans, so that eligible spending fits the strategy’s funding programs and tax credits in a compliant way
• align project work with government approval requirements, plan for impact assessments, and manage the sequence of studies, Indigenous engagement, and public consultation that regulators expect under the strategy
• structure impact benefit agreements, equity participation, and governance arrangements under the strategy, and respond to local concerns about environmental and community safety

Critical minerals strategy: Turning policy into projects

With its critical minerals strategy, Canada now connects critical minerals policy to real funding, community support, and stronger review of foreign control. This mix can create both opportunities for well-designed projects and serious hurdles when it comes to these minerals.

As for mining companies, those that understand this policy and its legal details will be better placed to plan long-term investments. This is where mining lawyers can come in. Anyone looking to advance a project or invest in this space can benefit from a discussion with a Lexpert-ranked mining lawyer or firm.

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