Significant political and economic events, including the ongoing Russian invasion of Ukraine, continue to lead governments and businesses to re-evaluate their energy supply and security needs. Coupled with the increasingly expeditious global energy transition, the demand for metals and materials used in emerging energy technologies continues to surge. As a current and potential source of many of these critical minerals and metals, Canada and its provinces have taken a number of steps in recent years to promote development of these resources and to further cultivate a role in the critical minerals value chain on provincial, national and global levels.
This blog post provides an update on some of these recent developments, including the release of The Canadian Critical Minerals Strategy (Canadian Strategy), and new regulations in the Province of Alberta (Alberta) related to development of critical mineral resources.
Canadian Critical Minerals Strategy
Canada has taken significant steps to capitalize on increased global demand for critical minerals necessary to modern technologies and the global energy transition, including the release of the Canadian Strategy in December of 2022. Canada is a significant source of many critical minerals (including lithium, graphite, nickel, copper, uranium, potash and rare earth metals) and the Canadian Strategy is characterized as “the roadmap to seizing a generational opportunity” to establish Canada’s role in the critical minerals value chain and to become “the world’s green supplier of choice for critical minerals”.
The Canadian Strategy sets out five core objectives:
- (i) supporting economic growth, competitiveness and job creation;
- (ii) promoting climate action and environmental protection;
- (iii) advancing reconciliation with Indigenous peoples;
- (iv) fostering diverse and inclusive workforces and communities; and
- (v) enhancing global security and partnerships with allies.
These objectives are supported by six areas of focus:
- (i) driving research, innovation, and exploration;
- (ii) accelerating project development;
- (iii) building sustainable infrastructure;
- (iv) advancing reconciliation with Indigenous peoples;
- (v) growing a diverse workforce and prosperous communities; and
- (vi) strengthening global leadership and security.
The Canadian Strategy is notable for its focus on developing value chains, as opposed to supply chains, from exploration and extraction, to processing and manufacturing, to end product use and recycling. In particular, the Canadian Strategy identifies clean technologies (such as zero-emission vehicles, wind turbines, solar panels, advanced batteries, hydrogen fuel cells and small modular reactors), information and communication technologies (such as semiconductors) and advanced manufacturing (such as defence applications, permanent magnets, ceramics and electronic materials) as industries with strong potential for integrated value chains in Canada.
The Canadian Strategy ties together several of the federal initiatives that have come out over the last few years, including the Critical Mineral Exploration Tax Credit and the Strategic Innovation Fund to help encourage exploration for critical minerals and develop projects. The Strategic Innovation Fund, for example, will provide up to $1.5 billion in funding for projects that decrease or remove reliance of foreign critical mineral inputs across certain sectors.
The Canadian Strategy also points to the importance of bilateral cooperation with allied countries on critical mineral supply as the energy transition continues. Canada aims to positon itself as a trusted and reliable supply of responsibly sourced and sustainably produced minerals, while also recognizing the strategic value and importance of critical minerals to Canada’s own national security.
The Canadian Strategy is intended to be an “evergreen document” and to foster long-term coordination and collaboration with multiple partners and stakeholders and ongoing engagement via various roundtables, working groups and strategic partnerships.
Alberta’s New Critical Minerals Regulations
Alberta is diversifying its vital energy industry through the production of critical minerals. In addition to the presence of significant petroleum and natural gas resources, Alberta’s geology is favourable for the production of numerous minerals including lithium, copper, vanadium, rare earths and uranium.
In late December 2022, Alberta announced new and amended regulations “to strengthen Alberta’s mineral regulatory framework”. These include the Metallic and Industrial Minerals Tenure Regulation (Tenure Regulation). These new regulations follow the prior introduction of the Mineral Resource Development Act (MRD Act) and the corresponding strategy and action plan for developing Alberta’s minerals and mineral products industry introduced in 2021, as discussed in our previous blog post.
Among other aims, the new regulations are intended to provide clarity for industry and ensure the safe, orderly and responsible development of Alberta’s mineral resources within the emerging and evolving minerals sector.
Notably, the Tenure Regulations establish a new tenure regime for brine-hosted minerals. Brine-hosted minerals are defined as metallic and industrial minerals extracted or recovered from soluble components naturally dissolved in groundwater and are geologically common across west-central Alberta’s sedimentary basin. One of the most notable of these brine-hosted minerals is lithium, which is listed as a critical mineral in Canada and a number of other countries.
Under the Tenure Regulations, brine-hosted mineral leases may be granted for an initial term of 10 years, and, subject to satisfaction of the terms of the lease and compliance with the Mines and Minerals Act, leases may be continued for an indefinite term in relation to the productive locations or zones. As part of the transition to the new regulations, former exploration permits that were granted in respect of minerals now falling within the definition of brine-hosted metallic and industrial minerals will cease to be in effect in respect of those minerals and parties must submit a new application for a brine-hosted minerals licence. However, former leases granting rights in relation to minerals that now fall within the definition of brine-hosted metallic and industrial minerals will be replaced with a brine-hosted minerals lease.
The Mineral Resource Development Regulation (Development Regulation), enacted under the MRD Act, further empowers the Alberta Energy Regulator (AER) to fulfill its new role as the sole administrative agency responsible for the oversight of brine-hosted mineral development. These regulations clarify the AER’s the authority to issue approvals for schemes, wells and facilities related to mineral resource development, and its authority to grant and regulate licences for the drilling, operation and construction of wells and facilities for mineral resource development will in both cases include brine-hosted minerals. The AER is currently developing new and revised rules, directive and manuals to support this expanded mandate under the MRD Act.
The Tenure Regulation came into force on January 1st, 2023 and the Development Regulation will come into force concurrently upon proclamation of the MRD Act. Additionally, the Province introduced several statutory and regulatory amendments aimed at harmonizing and modernizing Alberta’s legislative approach to critical minerals.
As Alberta’s critical minerals and mineral strategy evolves, it is likely that further amendments will be introduced to support the development and diversification of the Province’s mining and minerals development sector. McCarthy Tétrault will continue to follow developments in the minerals and mineral products industry in Canada. Our Power Group and Global Metals & Mining Group provide leading advice on national and international power and mining projects, offering our clients a 360 degree view of the power and mining industries. For further information, please contact your McCarthy Tétrault trusted advisor or one of the authors.