Canada has unveiled its first set of projects under a G7 critical minerals production alliance aimed at countering China's dominance in the sector. Announced on Friday, the initiative includes 25 projects, such as purchase agreements for a graphite mine in Quebec and investments to enhance a rare earth elements refinery in Ontario.

Energy and Natural Resources Minister Tim Hodgson emphasized that these initial projects signal the G7's commitment to reducing market concentrations and enhancing national security. "As we move swiftly to reduce dependence on concentrated supply chains, our collective commitment is clear. Every delay is a concession of economic and national security interests. We will no longer accept that," Hodgson stated.

China currently holds a significant position in the critical minerals market, controlling about 70% of the market share for 19 out of 20 key minerals, according to the International Energy Agency. Its dominance is even more pronounced in the rare earth elements sector, where it accounts for 91% of global refining production. Recently, China has tightened export limits on these minerals, increasing pressure on G7 nations to diversify their supply chains during their meetings in Toronto.

Just before the G7 discussions began, China agreed to pause export controls for certain rare earth minerals for one year as part of a deal with the United States. However, U.S. Energy Secretary Chris Wright highlighted the need for the G7 to develop its own mining and processing capabilities. "China, frankly, just used non-market practices to squish the rest of the industry, the rest of the world out of manufacturing those products with strategic leverage. Everybody sees that now," Wright said at a news conference.

Among the investments announced, Nouveau Monde Graphite secured offtake agreements for its Matawinie mine near Montreal. These agreements involve the federal government, Panasonic, and Traxys, a Luxembourg-based mineral company. Additionally, Canada is supporting a Norwegian company's plan to construct a synthetic graphite plant in St. Thomas, Ontario, with potential financing of up to $500 million from Export Development Canada. The Norwegian firm, Vianode, recently signed a multi-billion-dollar supply deal with General Motors for electric vehicles.

A facility operated by Ucore Rare Metals in Kingston, Ontario, also received conditional approval for up to $36 million in federal funding to enhance its processing of two rare earth elements: samarium and gadolinium. These elements are crucial for applications in nuclear reactors and medical imaging.

The demand for critical minerals, essential for decarbonizing the economy, is projected to surge in the coming years. A report from the Canadian Climate Institute estimates that Canada will require capital investments of approximately $30 billion by 2040 to meet domestic demand alone. Wolfgang Alschner, a professor at the University of Ottawa, noted that Canada has positioned itself at the forefront of the minerals discussion during the G7 talks. However, he cautioned that the announcements were more focused on specific projects rather than broader policy initiatives. "Much policy work remains to be done, particularly on market standards," Alschner stated, emphasizing the need for a comprehensive strategy in Canada’s international critical minerals approach.