Demand is suddenly soaring for electric vehicle batteries. Can Canada seize the moment?

“It’s still a question mark as to whether these economic opportunities will be realized,” said one expert.

OTTAWA — Business is business, but it’s not Jamie Deith’s dream to sell his precious graphite to China.

The crystalline carbon mineral is among those required for electric vehicle batteries, a 21st-century technology that is sparking what some call a “global arms race” for supplies, refining capacity and manufacturing. But Canada, despite the federal government’s grand vision to get a piece of the action, is still standing on the sidelines of this exploding global industry.

So Deith is stuck fielding calls from players in Asia, where Japan, South Korea and especially China dominate the bulk of the world’s EV battery production.

“All of North America is basically zero when it comes to anything in the battery supply chain,” Deith told the Star by phone from British Columbia, where his company, Eagle Graphite, owns a natural flake graphite quarry in the province’s mountainous interior.

“I would much rather be helping develop a Canadian industry than be put in a position where the only way to make the business go forward is to help China’s dominance,” he said.

“It’s not the dream come true.”

If the federal government has its way, Canada could soon have a remedy for Deith’s commercial ambivalence. Prime Minister Justin Trudeau has tasked key ministers with placing the country at the forefront of the global EV battery boom, a potentially golden opportunity from the necessity to confront climate change that the Liberal government has promised to help Canadians seize. Innovation, Science and Industry Minister François-Philippe Champagne is already talking a big game; describing himself as a “quasi-matchmaker” for top executives through the whole EV supply chain, Champagne is hinting about a host of projects to be unveiled within the next few months that will “build a new industry” and make Canada a leading global supplier of battery materials.

But as Deith and other industry insiders and experts know full well, Canada is already far behind other countries. Canada has reserves of the four major minerals that go into the batteries, but accounts for just a sliver of global production. There is a dearth of capacity to process and refine these minerals in Canada, and major car companies are so far choosing other countries to set up battery manufacturing plants.

“Canada still has almost no significant activity at any part of the supply chain,”said Joanna Kyriazis, a senior policy adviser with the think tank Clean Energy Canada.

“It’s still a question mark as to whether these economic opportunities will be realized.”

Those opportunities could be enormous. The consulting firm McKinsey and Company projects the world market for battery cells will grow about 20 per cent every year until it hits at least US$360 billion in 2030. The World Bank estimates global demand for critical minerals, which include those needed for electric vehicle batteries, could balloon 500 per cent within the next 30 years.

Simon Moores, managing director of Benchmark Mineral Intelligence, told a House of Commons committee studying the issue last year that the number of battery factories set for construction jumped from just three to 192 between 2015 and 2021

“We are in the midst of a global battery arms race,” Moores said at the time. “The world’s major economies are building a base to the energy storage revolution.”

Kyriazis sees “significant potential” for Canada to increase its share of this movement. The country has reserves of the four major minerals needed for EVs — cobalt, lithium, nickel and graphite — and also has significant established battery recycling businesses, such as Retriev Technologies, which recycles Tesla batteries in B.C.

Another company, Electra Battery Materials Corporation, plans to open the first battery-grade cobalt refinery in North America in Cobalt, Ont. this year. And Nemaska Lithium is gearing up to start a lithium mine and processing plant in Quebec.

But this activity pales in comparison to what’s going on in countries leading the EV battery surge. According to a report from Clean Energy Canada published last year, 80 per cent of the world’s EV battery production is in Japan, South Korea and China. The European Union is also pumping billions of euros into its own battery strategy; at least 15 battery cell factories are slated for construction within the bloc of countries, the Clean Energy report says, and the EU plans to supply its own EV batteries by 2025.

Canada is also far from a top producer of the minerals needed for these batteries, with limited known reserves at this point. A sweeping review of global mineral resources conducted by the U.S. Geological Survey shows Canada was responsible for just two per cent of the world’s cobalt production in 2020, six per cent of the nickel, one per cent of the graphite and none of the lithium. The report also pegged the country’s cobalt, nickel and lithium reserves at roughly three per cent of the world total for each mineral.

Pierre Gratton, president and chief executive officer of the Mining Association of Canada, said the government should put more money into geological surveying and increase tax credits for private companies that explore for these critical minerals. In last year’s election campaign, the Liberals promised to double a tax credit for critical mineral exploration, a move that Gratton said would make Canada one of the most attractive places in the world for companies to spend money to find new resources.

“It’s a huge thing,” he said. “That would help find those new mines we need to find if we’re going to produce the quantities we need for electric vehicle batteries.”

Gratton also said the middle of the supply chain — where minerals are processed and refined for use in EV batteries — is missing in Canada, and will require public money from Ottawa to entice companies to build that capacity.

Champagne is hinting such decisions are in the offing. In an interview with the Star this week, he declined to provide specifics but said the government is preparing to announce projects with private companies in the coming months.

“Government has to be part of the equation to really build that very complex supply chain,” he said. “I mean, we’re talking about building a new industry that does not yet exist in Canada.”

Champagne is also aware other countries are racing to get into this sector, including Canada’s allies in the G7. As Kyriazis pointed out, major North American automakers shifting to EVs are choosing to set up their battery production. General Motors announced just this week that it would spend US$7 billion to set up EV and battery production in Michigan.

But Champagne argues Canada has advantages that will help establish the industry here. The vast majority of Canada’s electricity supply comes from non-emitting sources like hydro and nuclear, which means new production facilities could claim lower greenhouse gas pollution.

Champagne also said the supply chain disruptions of COVID-19, including for semiconductors used in vehicles, have sparked an interest in “on-shoring” supply chains for EVs. And Canada, he argued, is in a good position, with its proximity to the U.S. and its existing base of auto manufacturing.

“It doesn’t really make sense to mine in Africa, to refine in China and produce batteries with coal,” he said. “Canada has everything to offer — kind of a complete solution to the auto manufacturers.”

There are also, however, geopolitics at play. This week, the Conservative opposition cited concerns about the strategic importance of critical minerals while questioning why the government did not launch a formal national security review of a state-controlled Chinese company’s purchase of a Toronto-based lithium company with a mine in Argentina. At the same time, Ottawa is objecting to how the U.S. is considering favouring American-made EVs with a federal tax credit, something that could draw resources for this emerging market south of the border.

Champagne dismissed both issues, stating there was a security screening involving security and intelligence agencies for the Chinese takeover and expressing confidence that Ottawa can “find a way with the Americans.”

For Kyriazis, the landscape for EV batteries means it will be difficult for Canada to secure business along the whole length of the supply chain, from mining to manufacturing. She said it would be wiser for the government to pick its battles. She suggested focusing on building up mineral processing and the fabrication of chemicals and parts like anodes and cathodes that go into the batteries.

“We really need to pick winners,” she said.

I know the article is mainly about flake but the trend bodes well for a graphene industrie in Canada.

Stay safe,inca.