Prime Minister Mark Carney said Canada can meet a steep expected increase in its North Atlantic Treaty Organisation obligations spending partly by leaning on the country’s bounty of critical minerals…The 32-member military alliance is meeting in The Hague and discussing a new total spending target of 5% of gross domestic product — 3.5% in core defence funding and 1.5% in related investments including infrastructure…For Canada that comes out to about C$150-billion, he said, before clarifying “a little less than a third of that overall number is spending on things that quite frankly we’re already doing to build the resilience of the economy.”…Some of the spending on extracting, processing and exporting Canada’s critical minerals in partnerships with allies “counts towards that 5% — in fact, a lot of it will count towards that 5% because it’s infrastructure spending,” he said, such as railroads and “other ways to get these minerals out.”…“We don’t need an aircraft carrier any more” but rather drones, integrated with cybersecurity, satellites, AI, he said.

One common factor across both topics is the influence of growing trade tensions between China and the US – and to an extent the rest of the world. China has spent the last few decades building a dominant position in the supply of many critical minerals. While China and Chinese companies are not always major extractors of these minerals, they have established authority over separation, purification and refining of high quality and purity materials…That gives China enormous power over supplies of many critical materials, including most of the 17 rare earth elements, lithium, and metals like antimony and tungsten. In recent years, China has been a reliable supplier of most of these materials at relatively low prices. That has led to producers elsewhere closing down, and minimal investment in new production. But now, as the geopolitical landscape becomes more strained, China is using its supply chain dominance as a lever in negotiations by restricting exports, leading to higher prices and fears of shortages…Governments in other countries are looking to escape China’s dominance, which presents an opportunity for producers to diversify and bring in new, competitive technology. But without consistent state support, there is an enduring risk that – just as these competitors begin to establish themselves in the market – China will reverse its restrictions, lower prices and use its market power to quash commercial competitors, while the state absorbs and subsidises temporary losses…But cobalt export prices have been depressed after a huge spike in 2018, owing to oversupply and slower-than-expected demand growth. That leaves the DRC government with little tax revenue from cobalt exports with which to fund its reform efforts – hence it has imposed a temporary ban on exports and aims to use export quotas and controls to prop up prices and stabilise the market and its tax revenues.

The presentation made at Fortune Minerals’ Annual Meeting is available on the Company’s website and can be accessed by clicking the blue title above.