Backgrounder: Why demand for critical minerals is expected to skyrocket in the coming decades

This story is a backgrounder on the global critical minerals market and why demand is forecast to grow significantly. See our coverage on Canada’s efforts to become a supplier of choice for strategic critical minerals here.

Critical minerals are those that are essential to a country’s economic and national security and whose supply may be disrupted, according to the American Geosciences Institute.

The “criticality” of a mineral changes with time and supply and as society’s needs shift. Table salt, for example, was once considered a critical mineral.

Canada has 31 critical minerals and metals on its list, ranging alphabetically from aluminum to zinc. The U.S. has 35 minerals and metals on its critical minerals list, including 13 already supplied by Canada.

“Critical minerals are the building blocks for the clean and digitized economy,” Natural Resources Canada says.

They are essential for renewable energy and clean technology applications, such as batteries, powerful permanent magnets, solar panels and wind turbines. They’re also required inputs for advanced manufacturing chains, including defence and security technologies, consumer electronics, agriculture, medical applications and critical infrastructure.

For example, demand for minerals such as graphite, lithium and cobalt could increase by up to nearly 500 percent by 2050 in order to supply electric vehicles batteries and other clean technologies, according to the World Bank.

A country’s list of critical minerals — including Canada’s — typically includes “rare earth elements" due to their increasing importance to advanced technologies, from electric vehicles to missile guidance systems.

Rare earth elements — also called rare-earth metals — are a group of 17 elements on the periodic table of elements. The lustrous, silvery-white, soft heavy metals have unique electronic, magnetic, catalytic and other properties ideal for a range of high-tech applications.

Global demand is expected to increase five-fold by 2030

Adamas Intelligence, an Ontario-based research firm, forecasts that global demand for rare earths will increase at a compound annual growth rate of seven percent through to 2030.

The market for rare earth oxides used to make permanent magnets is expected to increase five times over by 2030 to US$15.65 billion, up from US$2.98 billion in 2020.

“Looking ahead to 2030, it is exceptionally challenging to foresee how, under any realistic scenario, the supply-side of the rare earth industry will be able to keep up with rapidly growing demand for magnet rare earths,” according to Adamas Intelligence.

Canada has an estimated 830,000 tonnes of rare earths reserves (China, in comparison, has 44 million tonnes), but not all of these deposits are commercially viable. In some cases, the technologies for processing Canada’s hard rock minerals into rare earth concentrates and oxides don’t yet exist.

Turning rare earths into products is complex and difficult. After ore is extracted from the ground, the rare earths must be separated to produce a concentrate. Then individual rare earths need to be separated from each other and processed into oxides, which can be further processed into powders.

These intermediate products are then converted, through processes such as powder metallurgy, sintering and machining, into magnets and other products.

Economic impact of Canada’s minerals and metals

In 2019, Canada produced more than 60 minerals and metals worth $48.2 billion. Metals represented over 50 percent of total production.

Canada is a leading global producer of many minerals, including those such as graphite and nickel used in advanced battery technologies.

The minerals sector, which includes mining, primary processing and metal product manufacturing, directly employed 392,000 individuals in 2019.

Domestic exports of mineral and metal products reached $106 billion in 2019, accounting for 19 percent of the country’s total merchandise exports.

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