Banananomics: For The First Time Canada Takes Lead On China

For The First Time Canada Takes Lead On China

Vital Metals, an Australian mining firm, announced Monday that minerals collected from its Saskatchewan-based Nechalacho Project will remain within Canadian borders.

Inputs that matter: According to Vital, the Nechalacho site in northern Canada could hold more than 200 million tons of rare earth elements (REEs) used in green energy production and weapons manufacturing.

• Right now, China dominates the industry despite its comparatively small natural stock, clinching 75% of the global market with only 35% of the global REE reserves.

• "China was only able to establish such dominance over the REE industry partly because of lax environmental regulations," said Harvard Independent Review's Jaya Nayar.

The opportunity: That's because rare earths can produce green energy—but only after generating 2,000 times their weight in catastrophically toxic waste.

• Many Western nations refuse to accept this tradeoff inside their borders, imposing heavy regulations on domestic REE producers that keep exporters like China competitive despite high asking prices.

• Silver, though not deemed critical, is a component of electric vehicles and other green technologies that investors will likely acquire in anticipation of a tighter supply.

Zoom in: As green energy demand intensifies, so does the need for rare earth minerals.

• For example, due to mining demand, Allied Market Research forecasts that the global mining equipment market will grow from $141B in 2023 to more than $200B in 2040.

Between the lines: The recent Canadian purchase from Vital is also part of a more significant economic and political salvo led by Prime Minister Justin Trudeau, who told reporters there will be no reconciliation between Canada and China following accusations of election meddling.

• Canada recently joined the US, Japan, and the Philippines to conduct military exercises in the South China Sea.

Follow the money: On the mining stage, Canada is marketing itself as a direct competitor to China, flaunting its enormous mineral reserves as an alternative source for wary European countries afraid to rely on Chinese producers.

• Canada accused China of "anti-competitive practices" as it announced it is set to launch a public consultation exploring potential tariffs on Chinese electric vehicles (EVs), similar to that carried out by the US government.

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