New Concerns Arise in Canada’s Critical Metals Market
Growing Worries in the Market
Canada is now facing challenges regarding market manipulation and dumping in critical metals used for electric vehicle batteries. The country is keen on exploring a new pricing model proposed by the U.S. to address these issues.
Efforts to Diversify Supply Chain
Aligned with Australia and the U.S., Canada aims to diversify its critical mineral supply chain to decrease reliance on China, which dominates more than 90% of essential metals crucial for the energy transition.
Pricing Concerns and Proposed Solutions
Energy and Natural Resources Minister Jonathan Wilkinson expressed concerns about pricing, market manipulation, and dumping of critical minerals. The idea of an alternative pricing mechanism is being considered to tackle these challenges.
International Collaboration and Transparency
The U.S. Department of Defense plans to enhance market transparency by developing a program to estimate prices and predict supplies of critical minerals. Canada aims to follow a similar path to reduce dependence on Chinese resources.
Impact on Mining Industry
The mining industry is bracing for impact as demand weakens and prices plummet. Lithium and nickel prices have seen sharp declines, prompting companies to reduce production and workforce.
Challenges in Capital Formation
Canadian miners are facing difficulties in raising funds due to the commodity crash, economic challenges, and increased scrutiny on foreign deals. This has led to a perception that Canada is becoming less attractive for capital formation compared to other countries like Australia.
Impacts on Inbound Deals
The decision to ask Chinese companies to divest from Canadian listed companies citing national security concerns has affected transactions in the mining sector. This move has hindered active fundraising efforts and slowed down deal-making processes.
