Divya Rajagopal
TORONTO (Reuters) – Canada is concerned about market manipulation and dumping of key metals used in electric vehicle batteries, a Canadian federal minister told Reuters, adding the country wants to study an alternative pricing model proposed by the United States.
Canada, along with Australia and the United States, is seeking to develop its critical minerals supply chain to break the monopoly of China, which controls more than 90% of key metals critical to the energy transition.
“There will be a significant increase in demand for critical minerals in the future, but right now we do have some problems with prices and obviously we are concerned about issues related to market manipulation and dumping,” the Energy and Natural Resources Minister said this week. Resources Jonathan Wilkinson, adding these concerns are shared by many democracies.
Dumping is an anti-competitive trade practice where a country exports certain goods at a price lower than what is sold in its home country.
The minister said the topic will be discussed during the Prospectors and Developers Association of Canada’s (PDAC) annual conference in Toronto, one of the world’s largest gatherings of mining companies and their financiers, which begins Sunday.
Wilkinson said Canada and its allies still have some way to go before they solve the dumping problem, but one of the ideas being discussed is the concept of an alternative pricing mechanism.
The US Department of Defense plans to develop a program to estimate the prices and forecast supplies of critical minerals to improve market transparency.
Wilkinson said Canada doesn’t want to end up in the position of Germany, which depended on Russia on the cheap.
“We need to find ways in which we develop resources outside of Chinese influence.”
The mood at the four-day PDAC meeting will be gloomy as mining companies suffer from declining demand and plummeting prices. Over the past year, lithium and nickel prices have fallen by more than 70% and 40%, respectively, forcing many to cut production and cut jobs.
The S&P TSX Venture Metals and Mining Index is down 28% year over year.
In Canada, home to about 40% of the world’s mining companies, falling battery metal prices have impacted companies’ ability to raise funds. Canadian mining companies say the commodity crisis, macroeconomic problems and increased government scrutiny of foreign deals have led to a perception that Canada is not as attractive a place to accumulate capital as it was a few years ago.
“I think Canada has lost its luster in terms of wealth accumulation,” said Dominic Barker, chief financial officer of Lithium Royalty Corp., adding that better policy alternatives in countries such as Australia are making them more attractive to investors.
Ottawa’s decision in 2022 to force three Chinese companies to sell shares in Canadian-listed companies, citing national security concerns, has cast a shadow over new deals in the mining sector.
“The decision (to ask Chinese companies to sell assets) has destroyed or reduced the ability to conduct transactions during a very active fundraising phase,” said Ali Haji, CEO of ION Energy, a lithium exploration company that owns the project in Mongolia.