Can North America become a leader in critical minerals mining? That’s a question that was explored by a panel of industry experts at BMO’s 32nd annual Global Metals, Mining & Critical Minerals Conference.

Moderated by BMO Financial Group Chief Sustainability Officer Michael Torrance, the panel saw the question tackled by Susan McGeachie, Head of the BMO Climate Institute, Remi Piet, Co-founder and Senior Partner at Embellie Advisory, Eugene Lei, Senior Vice-President and Chief Financial Officer at Hudbay Minerals, and Jeff Hanman, Senior Vice-President of Sustainability and External Affairs at Teck Resources Limited.

Michael Torrance opened the panel with a conference poll showing that 61 percent of respondents agree that North America is falling behind other major resource regions in accelerating the production of critical minerals feedstock. The question for the panelists was whether they agreed, or, if not, why?

Panelists agreed that with demand for critical minerals like lithium, graphite, copper, and rare earths rapidly increasing, North America must do more to become a strategic supplier of these up-and-coming commodities.

“We have developed world-class governance systems and sustainability standards, but how do you turn that into a competitive advantage?” said Eugene Lei, whose diversified Canadian mining company primarily produces critical minerals copper and zinc, as well as gold, and applies Canada’s Towards Sustainable Mining (TSM) standards across its operations, globally.

Embracing ESG

In Lei’s view, North America’s advantage lies in its commitment to environmental, social and governance (ESG) practices and its ability to source materials in sustainable ways that benefit the people and areas companies are in. “It’s critical to align yourself into the social and economic fabric of the communities where you operate,” he said. “So, the opportunity to achieve premium pricing for materials lies in producing them in a more ethical and socially responsible way.”

Hudbay Minerals, as part of its commitment to sustainability, is also looking for ways to keep production chains for its North American operations within the continent. At a new project in Arizona, the company plans to both mine and produce cathode copper for the U.S. supply chain in the same place. “That’s something that people are demanding and by the end of this decade it’s going to be critical for us to have that sort of premium product out there, to reduce our operational GHG footprint as well as benefit from not having to spend $750 million over the life of mine to ship these products (overseas) for processing,” he said.

Better Access to Resources

Remi Piet, whose firm helps international investors in mining and other projects in the Americas and other regions, said North America currently has three strategic advantages over other nations: access to resources, financial capacity to develop mines and operations, and the technological capacity to innovate. But he also said that other parts of the world, such as Saudi Arabia and Europe, will catch up, especially in the latter two areas.

If Canada and the U.S. are going to get ahead, they must do a better job of developing their resources, which are fairly extensive, said Piet, especially when it comes to lithium, nickel, and other in-demand battery-related materials. “The question is much more in terms of access to resources,” he explained. “The lack of investment into undeveloped pipeline projects as well as greenfield developments over the last few decades has clearly limited the capacity of North America to develop and produce minerals compared to other regions.”

The trend may be turning, he said, especially in the U.S, where the recently passed Inflation Reduction Act (IRA) is creating incentives for people to buy electric vehicles (EVs) and for companies to manufacture EVs in the U.S. “The IRA has created strong appeal for the entire sector to settle in North America,” he said, pointing out that battery company Northvolt is now considering allocating resources once earmarked for Europe to the U.S.

Faster Permitting

Plentiful resources, political stability and a strong infrastructure is what Jeff Hanman said gives North America its competitive advantage, but it has one major challenge it must overcome before it can become a critical minerals leader: permitting. Companies are struggling with “getting access to these resources in a timely fashion,” he explained.

Part of the problem is that while ESG factors are driving demand for critical minerals, the same forces can constrain supply, making access to resources more complex as companies need to mine in more sustainable ways. “If you’re trying to decarbonize rapidly, you need the supply, otherwise it will become too expensive to do anything in a reasonable timeline,” he said. “But at the same time, governments and the public want those minerals, but they expect them with far less impact than we’ve seen historically. That’s a real challenge for companies to both increase supply and do it in a way that has less impact.”

It’s a conundrum that can only be solved with innovation and finding ways to produce more minerals with fewer carbon emissions. Hanman is encouraged, however, by the number of companies seeking to build more nature-positive mining operations, which involves not only reducing emissions, but increasing biodiversity at the same time. Teck Resources is one company that has committed to becoming nature positive, which it’s doing to improve the world, and to meet rising regulator and stakeholder expectations.

“When you approach a resource development project, most of the concerns that local communities have are related to potential impacts on the environment. If you can find ways to mitigate those credibly at the outset, that has the potential to unlock some of the permitting challenges and really capture the advantage that North America inherently has.”

Clean Energy Opportunity

Susan McGeachie focused on the experience of North America’s capital markets industry in mining and metals finance, and how the finance sector is collaborating with the industry to develop credible ESG standards that alleviate the onus on banks and investors to evaluate for themselves companies’ ESG performance. “Having this close collaboration between the capital markets and industry can create an advantage for Canada and the U.S.,” she said.

McGeachie also spoke about differentiation potential in the U.S. and Canada through low-carbon mining. The two countries produce metals and minerals with approximately 30 percent lower GHG emissions than other resource-rich nations, McGeachie noted. Between the two countries, however, Canada has a slightly higher emissions intensity for its mining assets on average than the U.S., which at first blush may seem surprising given the cleaner grid. This higher footprint is due to the many remote mines dotted across the country, which therefore require the use of higher-emitting energy sources. To rapidly advance both countries’ competitive advantage for low-carbon products, they must invest more in clean energy generation, transmission, and distribution, including distributed energy systems.

“Access to clean electricity is going to be a massive advantage going forward for the U.S. and Canada to supply low-carbon material,” she said. “That will create further advantages for us in terms of attracting capital to the development of these resources and potentially attracting a lower cost of capital through transition financing products.”

A National Strategy

Ultimately, to fully realize North America’s competitive advantage, the continent needs national or even regional strategies for critical minerals mining, said McGeachie. She highlighted Australia as an example. The country overlays resource development hotspots with environmentally sensitive areas along with locations at a higher risk of community engagement issues and regulatory challenges. This strategy has allowed companies to expedite resource development by prioritizing lower-risk areas.

BMO’s Climate Institute conducted a similar exercise that looked across North America for development hot spots, critical habitats, and areas that were more at risk for social and regulatory issues, which identifies lower-risk areas that could be prioritized. “This doesn’t necessarily mean you won’t develop in more sensitive areas, but it does mean that you won’t be four years into the project approval process before getting rejected due to the project being located in a critical habitat area.”

Ultimately, if companies are going to tap into North America’s abundant resources, and do it in a timely manner, they’ll need to work with more diverse stakeholders and Indigenous rights holders, said Piet. “There’s an evolution we’re seeing in terms of integrating more and different stakeholders into projects,” he noted. “A national resource development strategy will still require consensus at a local level and create a deeper understanding between project developers and stakeholders to mitigate the prevalent not-in-my-backyard issue. Building that consensus, including through robust ESG frameworks, will help you transform the mining sector by bringing these more innovative projects to fruition.”