China Trying to Undermine Emerging Critical Mineral Miners, Freeland Says as Industry Leader Calls for Federal Help

Teck's Highland Valley Copper mine is pictured in British Columbia's Interior, on March 26, 2017. Jonathan Hayward/The Canadian Press

As concerns grow over China’s dominance in the global critical minerals supply chain, Finance Minister Chrystia is urging allies to unite in enhancing supply chain security, warning that the regime is deliberately trying to “wipe out” emerging miners and processors

Addressing Canada’s challenges in developing critical minerals, Freeland said, “We are seeing very targeted, very intentional Chinese action to wipe out the nascent miners and processors in some of these areas.” She also noted that G7 nations need to “find collective ways to support our miners, our processors” in the sector.

Freeland, who also serves as deputy prime minister, was asked during an Oct. 10 Ottawa press conference on an unrelated issue about a Canadian industry leader’s call for increased government spending and reduced red tape to help the critical minerals sector compete against China’s dominance.

Jonathan Price, president of Teck Resources, said China controls as much as 90 percent of global processing capacity for critical minerals, including copper and cobalt. He compared the situation to the 1970s, when an oil embargo by the Organization of the Petroleum Exporting Countries (OPEC), which controlled about 40 percent of the world’s oil supply, led to significant economic problems in the West, resulting in a global recession.

“With critical minerals increasingly forming the backbone of not just the energy transition and energy industry, but also technology and defence, that kind of intense concentration [by China] creates a material risk for our shared economic health and for national security,” Price said.

As an example, he cited China’s restriction of gallium and germanium exports last year. China produces around 98 percent of the world’s gallium and about 60 percent of its germanium, according to the U.S. Geological Survey. Gallium is essential for manufacturing semiconductors and solar panels, while germanium is used in fibre optics and infrared optics.

In July 2023, China restricted exports of both minerals in retaliation for the United States’ chip sanctions on the regime. U.S. President Joe Biden announced export control measures in October 2022 aimed at cutting off semiconductor chips made with American technology from being exported to China, in response to China’s military modernization and increasing hostility.

Government Investment

While Ottawa has allocated nearly $4 billion for the critical mineral sector from Budgets 2021 to 2024, Price noted that this pales in comparison to China’s $20 billion investment in the sector in 2023 alone.

“Chinese investment over the past decade has completely upended the industry, placing China in a dominant position and sidelining Western supply. They can flood the market, drive down prices, and make it impossible for companies to justify investing in new supply when there’s no hope of a reasonable return, which keeps the playing field tilted to their benefit,” Price said.

Teck Resources CEO Jonathan Price speaks to reporters in Vancouver, B.C., on April 26, 2023. The Canadian Press/Darryl Dyck

He also expressed concerns about the “lengthy and often unpredictable permitting processes” that have deterred new mining investments in Canada and the United States, noting that, on average, it takes 15 years to build a single copper mine.

“Canada and the [United States] need bold industrial policy that prioritizes critical minerals, ambitious, targeted government incentives, and investment to support growing our domestic critical minerals capacity.”

Diversification

Price’s comments were made during an Oct. 10 panel discussion with U.S. Ambassador to Canada David Cohen, organized by the Business Council of Canada and the American Chamber of Commerce in Canada.

In contrast to Price’s call for more government support, Cohen said the ultimate solution to China’s supply chain dominance lies with the private sector through diversification, citing the OPEC example.

“It wasn’t tariff or trade policy that has reduced the reliance on OPEC for oil and fossil fuels. It was maybe government encouragement, maybe some incentives, but it was the development of [production] capacity outside of OPEC for the production of oil, which was done by the private sector,” Cohen said.

“At the end of the day, the way we’re going to break the control of China over mining, processing, [and] refining is going to be private sector investment.”