Inside Canada's Path to Sustainable Critical Mineral Growth

As nations worldwide pursue supply chain diversification away from China-dominated critical mineral sourcing, Canada's ambitions to expand its domestic capabilities present an opportunity to reshape the industry through a more sustainable lens.

The challenge facing Canada extends beyond simple capacity building.

Developing a robust critical minerals sector requires substantially more capital investment than currently allocated, but crucially, how this expansion unfolds could determine whether the transition to clean energy technologies genuinely delivers on its environmental promises.

Powering the green transition

If Canada succeeds in building a responsibly managed minerals industry, it could offer a blueprint for other Western nations seeking to balance resource security with ecological stewardship.

A report by the Royal Bank of Canada (RBC) examines the requirements for Canada to develop sustainable sourcing strength in this evolving landscape, according to RBC.

Critical minerals underpin the infrastructure necessary for decarbonisation.

These raw materials, including copper, lithium, cobalt and nickel, are essential components in EVs, renewable energy systems and battery storage technologies that could enable the shift away from fossil fuels.

The demand trajectory reflects the urgency of climate action.

Lithium requirements have surged alongside EV adoption, while renewable energy deployment has fundamentally altered material consumption patterns.

According to the International Energy Agency (IEA), the critical minerals industry is expected to grow between two and three times globally, reaching a capital requirement of from US$500-600bn by 2040.

This expansion of six key commodities, cobalt, copper, graphite, lithium, nickel and rare earth elements, stems directly from clean technology deployment across electric vehicles, renewable infrastructure, manufacturing and electronics.

However, this presents a paradox: the materials enabling environmental solutions must themselves be extracted and processed with minimal ecological impact.

Sustainable development challenges

Canada possesses geological advantages that could support responsible mineral development.

Despite accounting for only 2% of global supply of the six core metals currently, the country could grow to 14% of total supply over the next 15 years, according to the Canadian government.

This expansion, however, must navigate significant sustainability considerations.

Quebec and Ontario contain high-grade lithium belts and graphite deposits, Manitoba offers substantial nickel resources and British Columbia holds competitive copper reserves.

Rare earth element capabilities exist across Newfoundland, Labrador and other regions.

The question remains whether these resources can be developed without repeating the environmental degradation that has characterised mining operations elsewhere.

The sector faces several obstacles to sustainable scaling:

• Misallocated capital – from 2000 to 2025, only 11% of Canada's mining capital has been directed to critical minerals development, with gold and precious metals accounting for 70%. Australia directed twice as much capital to critical materials in the same period
• Limited domestic diversity – only 19% of Canada's publicly listed S&P/TSX Composite mining firms are diversified miners
• Refining infrastructure gaps – China controls 70% of the global refining market share for 19 out of 20 most critical minerals, often with less stringent environmental standards. Canada maintains only one remaining active copper smelter and refinery, Glencore's Horne Smelter

Building responsible mineral corridors

Canadian companies need to scale capital across the value chain while embedding sustainability principles.

The Canada Growth Fund (CGF) has made three mineral investments, including to Thompson Nickel Mines in Manitoba and Quebec's Nouveau Monde Graphite facility, which emphasises low-carbon production methods.

Through developing mineral corridors with shared processing infrastructure, environmental efficiency could improve significantly.

Lithium projects could support regional refining hubs that minimise transport emissions and enable better waste management.

Corridor economics could extend to logistics, transport and shared environmental monitoring systems.

Shared projects and stronger corridors could prove more financeable and inherently more sustainable through economies of scale and consolidated environmental oversight.

Canada could also address its capital gap by strengthening relationships with the US, which is investing heavily in defence and industrial supply chains with increasing environmental requirements.

Through partnership, Canada could position itself as a supplier meeting higher ecological standards.

However, maintaining diversification through alliances with European and Asian partners committed to responsible sourcing practices remains essential for long-term resilience and environmental accountability.