Why Ottawa’s ‘Economic Plan’ to Excel in EV Industry May ‘Flop’: Economist

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during a news conference in Ottawa on Oct. 24, 2023. (The Canadian Press/Adrian Wyld)

Economist Jack Mintz says it will be hard for Canada to become a leader in critical minerals and to make EV battery production profitable, despite Ottawa’s hopes.

“Our economic plan is turning Canada into a critical minerals superpower. From EV battery plants to net-zero mining, we are responsibly unlocking Canada’s natural resources to create more good jobs and prosperity today and for the next generation,” Finance Minister Chrystia Freeland said in a March 5 post on X.

“We can’t even get a road built for the Ring of Fire,” said Mr. Mintz, president’s fellow of the School of Public Policy at the University of Calgary. The Ring of Fire is a mineral-rich area in northern Ontario, and delays in accessing it illustrate Canada’s failings in getting mining projects going, Mr. Mintz told The Epoch Times in an email.

He published a report in 2022 analyzing Canada’s critical mineral potential and found it doesn’t necessarily match boasts of Canada becoming a world leader in the industry. Critical minerals—such as lithium, copper, and nickel—are key ingredients in batteries for electric vehicles (EVs).

“To turn into a critical minerals superpower—which is far from the case right now—Canadian mining companies need to make major investments in developing new projects,” Mr. Mintz said. “Canada is not one of the top seven critical mining producers except nickel and zinc—and our reserve life is short with these two cases. We have not had a major mining project for years, so we need to ask why.”

Obstacles to Mining

The government announced its $3.8 billion Critical Minerals Strategy in 2022, including a plan to streamline the sometimes decades-long process of getting a mining project going.

Mr. Mintz said one of the obstacles that remain is the federal government’s Impact Assessment Act (IAA).

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The IAA came into effect in 2019, overhauling how major projects are assessed for social and environmental impacts. It gave the federal government power to halt projects, and Alberta led a fight against it that ended up in the Supreme Court.

The Supreme Court ruled it “largely unconstitutional” last year, but Ottawa says it will come back with a new version of the legislation this spring.

Other obstacles Mr. Mintz named include Canada’s stringent environmental, social, and governance (ESG) regulations, as well as uncertainties regarding First Nation treaty developments.

Referencing the EV battery portion of Ms. Freeland’s “economic plan” statement, Mr. Mintz said the heavily subsidized industry is not particularly promising.

‘Our Strategy Will Flop’

Subsidies for battery manufacturers total about $50.2 billion, according to a Parliamentary Budget Officer report published last November. The subsidies will total $43.6 billion between 2023 and 2033 with additional debt charges of $6.6 billion.

In addition, the plants will receive a 10-year tax holiday worth $2.1 billion, according to a Regulatory Impact Analysis Statement first obtained by Blacklock’s Reporter.

“If the economic plan is to throw more subsidies at industries like the critical mineral exploration credits ... and battery facilities, our strategy will flop,” Mr. Mintz said.

He said the critical mineral tax credits were not needed, because his 2022 analysis showed Canada is globally competitive in terms of taxes for the industry. Other regulatory obstacles are the concern, he said.

Companies will invest in EV if the economics are good, he added. “But with a carbon tax rising to $170 (none in the US) and various regulations that impede investment, only huge tax-funded subsidies can attract investments.”