A mid-term look at critical mining in North America

The government policies defined to meet net-zero emissions targets require leveraging green technologies globally to ensure the health of the planet. For countries to meet their respective net-zero targets, the importance placed on the development of critical minerals’ projects has never been higher. In some cases, the need to accelerate project development is required to meet projected shortfalls in some critical minerals’ supplies; for example, the demand for lithium will quickly outpace supply as new operations are slow to come on-line.

In the rush to adopt green technologies based on critical minerals, there are as many challenges coming to light as there are solutions. There is a need for companies to slow down, take time during the development stage to do the proper testing and due diligence to ensure all the vital components of a mine plan and process understanding are thoroughly in place. Projects and governments benefit from taking a more comprehensive look at their goals and managing their expectations as well as their outcomes.

To understand what is at stake, we need to look at the status of the Canadian mining landscape where the supply chain of critical minerals is concerned. Canada and the U.S. have been playing ”catch up” to countries such as Chile, Australia, Argentina, and China who have established mines in the lithium space.

According to S&P Capital IQ, there are 152 active lithium projects where lithium is the primary commodity in Canada and the U.S. combined. Upon closer inspection, only three are in operation, a further five are in either active or planned construction, and an additional 21 are in some stage of scoping/pre-feasibility/feasibility studies. While not every exploration project will advance to the production stage, those that do, may take decades to finally reach production due to meeting regulatory and environmental permitting factors.

There is a vast potential within North America, with 36% of global exploration for lithium located in Canada and the U.S. and additional exploration projects that are hoping to uncover deposits consistently.

With high commodity prices, companies of all sizes have been rushing into the critical minerals space and attempting to create a path to quick and easy profit. The reality has been much harsher. While the end goal of a precious, base, or critical minerals project remain the same, the paths required to accomplish the end goal are quite different. Expertise in one commodity or geological terrain does not always transfer to another commodity in an entirely different geological terrain.

Individual familiarity across the project life cycle can drastically differ leading to knowledge gaps within a project’s technical team. Project experience in early exploration does not guarantee metallurgical knowledge during the feasibility stage of development. Companies can be very thinly staffed with personnel assuming responsibilities that are often outside of their traditional expertise, and this can lead to critical missteps in the decision-making process.

Such mistakes in the early stages of resource development can ultimately lead to missed recovery levels and production targets which can lead to significant stakeholder unrest, new management teams, or even “mothballing” projects.

Consequently, the project success has often been mixed over the last decade, and there are some examples where companies abandon their projects because of not meeting production targets nor generating the results that investors were anticipating. Investors are watching this very closely.

Companies, such as SGS, are positioned to provide a wide range of technical knowledge and expertise across the entire project life cycle, allowing companies to leverage unbiased third-party insights and fill in any in-house technical gaps they may have to improve decision making and stakeholder engagement throughout the entire mining value chain resulting in efficient and sustainable mine operations.

To help companies in the critical minerals space, the government of Canada has recognized its potential and, in late 2022, unveiled a $2.78 billion critical minerals strategy, aimed at boosting “production and processing of the critical minerals, including lithium, nickel, and cobalt within Canada.”

Canada is positioned to become a major player in the critical minerals supply chain. “The new (government) strategy focuses on supporting economic growth, and job creation; enhancing global security and partnership; promoting climate action and environmental protection; promoting diverse workforces and communities; and advancing reconciliation with Indigenous people.” Ambitious.

Auto manufactures including Tesla, GM, Ford, and Volkswagen among others have made substantial investments in the electric vehicle market and have been availing themselves of early and long-term offtake investing opportunities to secure the critical minerals supply needed. There is a greater pool of capital now available for sustainability or energy transition-linked financing which is reason for optimism.

“There are still hurdles to be overcome, but the spirit of discovery is as strong as it has ever been. Creating pathways to meaningful solutions for our transition to a de-carbonized economy is front and centre; we must focus on the path and conduct our due diligence to ensure the successful development and eventual commercial realization of our critical minerals’ projects within North America,” said Stephen Mackie, NAM senior director for SGS Metallurgy and Consulting.

Stay tuned. This may not be about gold, but as a society, we still need mining for critical minerals like lithium to pan out.

P.J. Kwong is a writer with the Content Store.