Energy Reports

This year’s Prospectors & Developers Association of Canada (PDAC) event in Toronto was abuzz with talk of Canda’s critical mineral riches and the speed at which they can be brought to global markets—at commercial scale. The industry is enthusiastic, the government supportive, but there is a long way to go to realize Canada’s mining potential. Here are seven themes that we observed at the event.

1. Diverging views of supply chains exposures

The U.S. and Canada approach critical minerals from materially different strategic frameworks, and that divergence has consequences for bilateral cooperation.

The U.S. framing is one of industrial decay and national security emergency—manufacturing surge capacity, weapons systems dependency, and concerns of China outpacing American armament production capacity by a factor of five to six. Within that frame, critical minerals are not a supply chain optimization problem but rather a symptom of a broader hollowing out of American industrial capability that extends to smelters, chemical processing, and advanced manufacturing.

Canada’s framing has been more “narrowly” commercial—a supply chain opportunity, a geological advantage to be monetized, and a seat among allies to be secured.

That gap in threat perception creates friction with an expectation the U.S. is (or at least will be, over time) operating on a more binary logic—alignment or non-alignment—while Canada has positioned itself as a middle power seeking rules-based multilateral cooperation.

Whether Canada narrows that perception gap—or develops an independent strategic rationale grounded in its own economic security interests—will likely impact how “seriously” it is taken at the bilateral table as the Canada-United States-Mexico trade deal review evolves.

2. Resolving refining bottlenecks will be key

Canada’s geological endowment is enviable, but extraction without downstream processing is increasingly seen as less than ideal. Yet, the economics of building processing capacity in Canada are deeply unfavourable.

Anecdotally, conversion costs for lithium spodumene to cathode-grade material run roughly twice what they are in China and at times in Latin America. Global copper smelter margins are often 2–5%, if not simply breakeven. Canada has closed multiple smelters over the past fifteen years. Even in China, the rare earth refining industry has not earned its cost of capital in three decades—arguably the watermark against which any new entrant must be measured.

These margins do not support private sector investment at scale without intervention. We heard overwhelming agreement that state capital needs to function as first dollar in, last dollar out on processing infrastructure. The buyers’ club concept—pooling G7 demand and stabilizing prices when they are depressed—addresses part of this problem, but the governance and trust architecture to deploy that capital at scale remains unresolved.

3. Project Vault is not a partnership of equals

The bilateral/plurilateral distinction that emerged from the sessions as it relates to the U.S. view of a buyers’ club—supply sourced bilaterally, but demand aggregated multilaterally—sounds like burden-sharing but warrants scrutiny. This architecture is in essence the U.S. acquiring mineral supply on its own terms, stored on U.S. soil and then asking allies to aggregate demand around what is effectively American strategic inventory. Put plainly: Buy American.

Nations’ tendencies to operate in self-interest in a scarcity scenario is precisely the reason for Project Vault’s domestic storage requirement. Still, for other nations like Canada, the risk is being a favoured supplier with no guarantee of preferred access when it matters most. Such asymmetry, hopefully, can be negotiated.

4. Copper is the clearest demand signal

If there is one commodity where the investment thesis is most favourable, it is copper. The convergence of AI infrastructure buildouts, electrification, defence procurement, and grid expansion has created a demand profile that generalist investors can underwrite without relying on policy-dependent assumptions.

Yet even with this enviable demand profile, there is strong consensus of a growing shortage of copper supply, still. As it relates to Canada, copper may be the most realistic near-term entry point through which broader mining investment, including in associated polymetallic deposits, gets unlocked, solving many of the “more traditional” less niche, mining development challenges.

5. Don’t ignore civilian demand

At its simplest, sustainable long-term demand secures supply chains. China built its critical minerals dominance through civilian demand—electric vehicles, wind turbines, batteries—at a scale that justified refining investment and created learning curve advantages that now make its processing margins tough to compete against.

The strategic paradox facing North America is attempting to construct supply chains for critical minerals while simultaneously pulling back on the civilian demand drivers to justify that investment. Without a credible domestic demand signal, processing facilities face uncertain offtake, and without offtake, project finance is unavailable. At present, alternative anchors such as defence and AI/data centres is expected to be the near-term catalyst, but the sheer size of the total addressable clean energy demand is one that better captures the attention of longer-term, more generalist investors.

6. Prioritize across the minerals list

Treating 30-plus minerals as a single policy strategy ignores the complexities of each metal’s supply chain. The genuine policy problem is in niche commodities where Canada punches above its weight—rare earths, scandium, tungsten, graphite, nickel and possibly lithium—where markets are either small, opaque, and/or structurally dominated by a single producer (often China).

A strategy focused on five to eight minerals with a clear demand anchor is viewed as more executable and more credible from an effective strategy than a broad-based approach. If oriented successfully, this will have positive spillover effects on the procurement of the types of skills and human capital associated with the greater strategy, such as rare earth separation, hydrometallurgy, and advanced processing requiring specialization unreplicated through equipment procurement alone. The expertise that exists across the G7 countries is an untapped potential.

7. Regulatory coordination as competitive advantage

The Major Projects Office represents a meaningful shift toward facilitation of these projects. Brownfield expansion is the near-term opportunity while Indigenous partnerships, structured early with genuine economic participation, is consistently the most effective accelerant to mitigate permitting and financing risks.​​​​​​​​​​​​​​​