Natural Resources Minister Tim Hodgson says G7 countries will announce a pact on critical minerals this week, incorporating a range of commodities and companies.Christinne Muschi/The Canadian Press
Natural Resources Minister Tim Hodgson said the G7 is set to announce a Canada-led critical minerals pact involving purchase agreements, price floors and stockpiling in a co-ordinated bid to fight market manipulation from China.
The announcement will be unveiled Friday on the second day of the G7 energy and environment ministers’ meeting in Toronto, with Canada hosting its Group of 7 cohort of the United States, France, Germany, Italy, Japan and Britain.
The pact will build on the nascent G7 Critical Minerals Production Alliance, which was championed by Prime Minister Mark Carney at the June G7 meeting in Alberta. The alliance was tasked with enhancing critical supply chains for the defence and technology sectors.
In an interview in Toronto on Wednesday, Mr. Hodgson said the new G7 pact will benefit specific mining companies and critical minerals processing facilities across the G7.
“There will be a group of particular mineral projects and particular mineral processing facilities that are being enabled by a collective effort of all of these countries to go from idea to reality,” he said.
“Enough about talking. Let’s take concrete steps to make these critical mineral suppliers and these critical mineral processors real.”
Mr. Hodgson declined to provide details on specific projects or companies that will benefit from the agreement, but he indicated that rare earths, a subset of critical minerals, will be one focus.
Security of the global rare earths supply is front and centre, with China currently restricting exports to the U.S. of certain rare earths in retaliation for earlier tariffs imposed by U.S. President Donald Trump on Beijing.
Rare earths are mined in vanishingly small quantities worldwide and are known for their magnetic, fluorescent and conductive qualities. They are essential for the tech sector, robotics, low-carbon power and military applications.
“These export controls are designed to have geopolitical impact. They are designed to cause challenges in supply chains,” Mr. Hodgson said. “You should expect the G7 to focus on any critical mineral where we believe there is general non-market activity, non-free trade type activity to restrict and constrain a normal supply chain.”
Up until now, public-sector funding for the Canadian mining industry has come mostly in the form of grants, low interest loans and, on rare occasions, equity financings. The G7 agreement will significantly open the spigot to incorporate offtake agreements, which is buying a share of the production of a mine; price floors, which are guaranteeing the company receives a minimum price for the mineral; and stockpiling, which involves purchasing and storing the commodities.
All are untested on a large scale but have been pitched by industry proponents for years as sorely needed in the face of Chinese domination in critical minerals and amid a dearth of investors willing to put money into mining ventures as a result.
“This is the kind of security that the industry needs to make investments in commodities where you’re too much at the whim of Chinese manipulation,” said Pierre Gratton, president of The Mining Association of Canada.
China has about a 69-per-cent global share in the mining of rare earths and roughly a 95-per-cent share in processing. The Asian superpower is routinely accused of manipulating the market to bury competition from the West, and it has benefited from decades of state subsidies.
Canada is a global leader in some critical minerals such as uranium, potash and nickel, but is a bit player in others used in low carbon energy, such as lithium, graphite and cobalt. And while Canada has many early-stage rare earth projects, and a rare earths processing facility in Saskatchewan, there are no rare earth mines currently in production in the country.
“For some commodities where China has a monopoly or near-monopoly, the market doesn’t work,” said Mr. Gratton. “We have projects in this country that cannot be built unless there’s some kind of state participation.”
While the U.S. is an integral part of the G7, the Trump administration has been moving away from multilateral agreements in both trade and critical minerals in favour of bilateral pacts.
The U.S. recently signed an agreement with Australia that sees both countries committing to jointly spending US$2-billion on a range of critical minerals projects over six months, with both governments agreeing to equity deals and offtake agreements on a gallium refinery project in Australia operated by Japan’s Sojitz Corp. and U.S. aluminum giant Alcoa Corp.
The U.S. under Mr. Trump has also stood out recently for seizing significant equity stakes in two Canadian critical minerals companies, Lithium Americas Corp. and Trilogy Metals Inc. Washington secured highly favourable terms in both transactions, with the right to acquire millions of shares for virtually nothing.
Mr. Hodgson isn’t planning on pushing back on either of these deals in large part because the projects in question are located on U.S. soil.
“I’m not going to tell the Americans what to do about how they run their resources,” he said.
Ottawa will continue to consider its own equity deals in the critical minerals sector, Mr. Hodgson said. Since the Canada Growth Fund was launched in 2023, Ottawa has invested in the shares of two miners: $35.6-million in Quebec’s Nouveau Monde Graphite Inc. and $156-million in Saskatchewan’s Foran Mining Corp.