Canada seeks mining partnerships in Japan, but challenges remain

March 28, 2023

There is a steady stream of Canadian officials boarding flights bound for Japan to forge partnerships in the mining industry. Tokyo wants to diversify its supply chain of raw materials needed for low-carbon technologies, and Ottawa is keen to introduce Canadian suppliers.

Two major policies introduced in late 2022 are behind Ottawa’s push for more trade with Tokyo: the Indo-Pacific Strategy and the Critical Minerals Strategy. As the ink was drying on these announcements, Minister of Innovation, Science and Industry François-Philippe Champagne was touring Toyota Motor’s Motomachi plant with its CEO Toyota Tsusho. He also met with the Chairman of Mitsui, and the President and CEO of Panasonic Energy.

In December, International Trade Minister Mary Ng was meeting her Japanese colleagues and cleantech business leaders. She also opened a new trade office in Fukuoka, adding it to a list of Canadian trade offices which includes Tokyo, Osaka, Sapporo, and Nagoya.

Natural Resources Minister Jonathan Wilkinson is the latest to visit, leading a delegation of Canadian businesses in January. It included mining companies Nano One Materials, Giga Metals, Sherritt International, and E3 Lithium. 

Nano One Materials makes lithium-ion batteries, which are a key component for electric vehicles and bicycles, solar power systems, robotics, satellites, among others. The company is based in Burnaby, British Columbia and holds multiple Japanese patents related to high-performing cathode materials. Vancouver-based Giga Metals and Japan’s Mitsubishi Corporation have a partnership related to significant undeveloped sulphide nickel and cobalt resources in northern British Columbia. Also in the nickel and cobalt business is Toronto-based Sherritt International, which has a partnership with Sumitomo Corporation. Calgary-based E3 Lithium produces battery grade lithium needed in the auto industry, a key industry and employer in both Canada and Japan.

Representatives from Canada’s First Nations and Metis communities were also with Wilkinson in Japan. Those taking part included the First Nations Major Projects Coalition (FNMPC), British Columbia Assembly of First Nations (BCAFM), Nunatsiavut Group of Companies, and the Metis National Council (MNC). These groups are key drivers in export-led growth for their communities, and they have the legal right in Canada to approve or reject any mining project on their territory.

Canada’s federal government, however, has struggled to fix a flawed Indigenous consultation process and a notoriously slow mining permitting process.

In a 2021 Fraser Institute survey of Canadian mining companies, respondents described the rules on First Nations consultation as “vague”, some expressed uncertainty regarding land disputes and regulatory roadblocks at the municipal level, and others were dismayed about the establishment of protected areas without industry consultation.

The federal government:

– in 2019, replaced the Environmental Assessment Act with a new Impact Assessment Act
– in 2021, adopted the United Nations Declaration on the Rights of Indigenous Peoples, and
– in 2022, agreed to increase the percentage of protected land and water from roughly 13% in 2021 to 30% by 2030

These measures are important for Indigenous partnership, public engagement, sustainable development, and environmental stewardship. The regulatory changes, however, have not been matched with adequate support to improve capacity. Economic development units of First Nations and Metis communities are being flooded with applications and they don’t have the resources to keep up. 

 In its Critical Minerals Strategy, the government describes Canada’s regulatory assessments as “rigorous” in order to meet “high environmental and social standards”. It admits, however, that it can take between five and 25 years before a mine can become operational in Canada. According to the industry publication, the average is roughly 13 years in British Columbia

Meanwhile in Japan, legislation has made critical minerals part of the country’s national security strategy. As of February 18, 2023, the government is required by law to ensure a steady supply of these raw materials. The government has allocated 1.08 trillion yen (CAD 10.8 billion) to support industry and diversify its supply chain. Japan’s Ministry of Economy, Trade and Industry has also listed 34 rare metals to be stocked into emergency reserves, with targets of storing either 30- or 60-days of supply of the standard domestic consumption.

Japan’s dependency on Chinese rare earth elements was exposed in 2010 after Beijing briefly implemented an export ban over disputed islands. Tensions in the Taiwan Strait are a constant reminder of the geopolitical risks overshadowing the Sino-Japanese trade relationship. The drive for diversifying away from Chinese suppliers was made stronger at the onset of the COVID-19 pandemic when Japan suffered shortages in antimicrobial agents.  

If Canadian mining companies are unable to scale up output to meet growing domestic and international demand, Japanese businesses and their government will seek more reliable suppliers. Australia and the United States have led their own trade missions to Japan, and Tokyo is pursuing partnerships among emerging economies in Africa and Southeast Asia. 

Japan holds the G7 Presidency for 2023 and there will be more high-level meetings in the coming months, including a leaders summit in Hiroshima in May. Canadians can expect their ministers to be touting their new policies for critical minerals, green technology and climate action. The difficult work, however, remains at home. 

David Deen, Greentech Asia Research Associate

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