Canada needs a national strategy and large public-private sector investment to create a homegrown battery metals supply chain for electric vehicles, a report by the Transition Accelerator recommends.
The initial target should be to build an EV supply chain from mines to vehicles that replicates the country’s current 10-per-cent share of North American automotive manufacturing, according to the report.
Canada should develop this capacity at a pace necessary to meet the federal government’s zero-emission vehicles sales mandates of 60 per cent of light-duty vehicles by 2030 and 100 per cent by 2035, says the report.
The country will need to produce 1.3 million ZEVs by 2030 to meet its climate goals and keep pace with growing demand, it says.
To achieve that target, the focus should be on building the midstream segment of the battery metals supply chain to serve as the linchpin in an integrated and competitive supply chain, says the report.
Building the midstream – the chemical processing of mined metal concentrates into battery active materials – will drive demand for upstream mining as well as downstream manufacturing of batteries and EVs, the authors argue.
“The midstream is what China controls. Without it, we have to ship minerals to other countries before they come back as batteries,” says Dr. Bentley Allan, PhD, the report’s lead author and resident fellow at the Transition Accelerator
“Midstream adds economic value,” he told Research Money in an email. “Midstream also is key to long-term innovation. It will pay dividends over the transition, allowing our supply chain to adapt to new battery chemistries.”
The Transition Accelerator led the report, in partnership with the Battery Metals Association of Canada, the Energy Futures Lab, and Accelerate, Canada’s ZEV supply chain alliance.
The report makes four main “interventions,” or propositions:
To produce 1.3 million EVs by 2030, Canada will require mining and processing of about 200 kilotonnes per year of elemental lithium, nickel, manganese, cobalt, iron, phosphate and graphite along with producing batteries for 100 gigawatt-hours of battery capacity, according to the report. (See Research Money stories about critical minerals, here and here).
However, an “acute issue” facing Canada’s battery metals industry is that currently there is very little midstream production in the country, “and Canada risks falling further behind as other nations jockey to ramp up,” says the report.
The authors recommend four priority actions in a national strategy:
Public-private investments required to build supply chains
There needs to be major catalytic investments, which pool public, private and Indigenous financing within a national industrial strategy, the report recommends. Those investments may include subsidies, direct investments, loans and loan guarantees.
Large, public funds to establish pilot and demonstration projects would help build strong ecosystems and firms in tandem, says the report.
“Public funds should be tied to strategies,” which makes having a strategy just as important as securing funding, Allan said.
The report points to recent positive developments in Canada, including:
It is critical that foreign direct investment and downstream-driven strategy be complemented by efforts to maximize the potential of an integrated Canadian battery supply chain and leverage foreign investments into homegrown capacity, according to the report.
Allan said the US$700-billion economic package approved on August 8 by the U.S. Senate will have a big impact on Canada’s battery metals supply chain.
The package included major legislation on health care, tax and climate change. The legislation says that a tax credit for purchasing EVs should apply to all electric vehicles assembled within North America, and requires that critical minerals used to build EV batteries are extracted or processed in any country with which the U.S had a free-trade agreement.
“It [the legislation] will turbocharge EV demand pull and critical minerals pull in Canada,” Allan said. “It will have a huge effect on the Canadian investment picture.”
As the immediate next step, he said, Canada should create a public-private-Indigenous partnership that brings together an independent organization and a small, autonomous government agency or task force to deliver an action plan.
However, a potential obstacle to cross-border EV collaboration is Canada and the U.S. reaching an agreement on cohesive standards for EVs. In late July, the U.S.-based Multi-State ZEV Task Force released a policy framework on a zero-emission vehicle action plan. While there are 17 American state signatories to the framework, Quebec is the only signatory from Canada.
The document includes 65 recommendations for policy-makers, and points to areas where uniform standards between Canada and the U.S. are needed on everything from charging infrastructure to vehicle requirements.
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