Ottawa’s plan to spend C$3.8 billion (US$3.02 billion) to boost domestic production of lithium, copper and other strategic minerals should help propel the country’s efforts to become a key part of the global electric vehicle supply chain, and complements the additional C$8 billion allocated to transform and decarbonize industry and invest in clean technologies and batteries.
The spending, announced during Canada’s federal budget unveiling on Thursday, promises grants for mineral surveying, processing, and recycling, as well as tax credits for starting new mines and subsidies for infrastructure, though it would not reduce regulatory oversight.
Lomiko Metals has a new vision and a new strategy in new energy. Lomiko represents a company with purpose: a people-first company where we can manifest a world of abundant renewable energy with Canadian and Quebec critical minerals for a solution in North America. Our goal is to create a new energy future in Canada where we will grow the critical minerals workforce, become a valued partner and neighbour with the communities in which we operate, and provide a secure and responsibly sourced supply of critical minerals.
Budget 2022 proposes to establish the Canada Growth Fund to attract substantial private sector investment to help meet important national economic policy goals:
- To reduce emissions and contribute to achieving Canada’s climate goals;
- To diversify our economy and bolster our exports by investing in the growth of low-carbon industries and new technologies across new and traditional sectors of Canada’s industrial base; and
- To support the restructuring of critical supply chains in areas important to Canada’s future prosperity—including our natural resources sector.
The Canada Growth Fund will be a new public investment vehicle that will operate at arm’s length from the federal government, however no detail has been provided on how companies can access this funding.
The budget foresees doubling the exploration tax credit to 30% for companies exploring for a range of EV metals, including nickel, lithium, cobalt, graphite, copper, rare earths elements, vanadium, tellurium, gallium, scandium, titanium, magnesium, zinc, platinum group metals and uranium.
Belinda Labatte, CEO and Director stated: “While the budget will help the move Canada into the EV future with dedicated government support, the government must consider how to responsibly accelerate the mining of these critical minerals and the development of the projects through all phases including greenfields exploration, Preliminary Economic Analysis, Pre-feasibility stage and Feasibility stage. While Canadian tax effective flow through spending works in a very narrow way to support the completion of exploration programs, it is not designed to support all the community engagement, environmental, metallurgical and engineering studies required to advance a critical minerals project to get it into production. Committed equity investments from a pooled vehicle and grants in the amount of $500,000 to $2 million to advance projects through these phases should be made available as soon as possible, for fast turnaround of funding. This is what acceleration must do: support entrepreneurs who are looking for responsible commercial solutions to bringing more EVs on the road with domestically sourced minerals. Community engagement and education on new energy and mining must be included in funding opportunities.”
Further, she stated: “Canada’s vast resource endowment in graphite, lithium, nickel,cobalt and PGMs must be financed and it starts with small cap junior exploration companies, or our EV future cannot be manifested as the supply shortfall of those critical minerals will be in excess of at least 30% by 2030, with demand increasing a staggering 500% for these critical minerals according to the World Bank – this means we are seeing an absolute global shortage of critical minerals while we have an abundance of critical minerals endowment in Canada that can be responsibly extracted. Federal and provincial governments should promote and take action on funding and collecting baseline data for the exploration regions containing critical minerals. It is imperative that the permitting process for critical minerals projects is streamlined and shortened to up to 6 months instead of years once baseline data is collected and project registration submitted.”
Lomiko Metals has the largest inferred graphite resource in Canada at 46Mtonnes and needs capital to develop its La Loutre graphite project through its next stage, which is the completion of a Prefeasibility Study (“PFS”). The works needed to complete a pre-feasibility study are related to increasing confidence in the mineral resources and infill drilling EV and Battery Zone mine areas so it can rerate its Inferred mineral resources into Measured and Indicated, conduct infrastructure and geotechnical assessments, and prepare mine and site designs that include metallurgical testing to confirm plant design and concentrates suitability for anode production and other industrial applications. The PFS stage and subsequent stages of development also require funding to engage local communities and First Nations , and conduct baseline environmental studies and market studies, with a goal to ensuring that project development provides benefits to all stakeholders and rights holders involved.
In short, a greater degree of support is needed to enable Lomiko Metals to move its natural flake graphite project forward with Quebec and Canadian battery manufacturers.
Currently and historically, all critical minerals exploration companies have been funded solely and exclusively with retail investment money and no institutional or government support – and yet it will be impossible to have every vehicle sold in Canada by 2035 be electric without the extraction and mining of Canadian critical minerals.
The criteria for investment should include companies who have demonstrated their commitment to creating a net positive impact for all stakeholders and rightsholders: committed C-level leadership with separation of board from management, First Nations advisors at management or board level with existing or in process pre-development agreements, and qualified spending for environmental or engineering studies. As exploration works are already well funded by the flow through program, hard dollars are required to advance these studies, and those are the hardest to raise for junior explorers.
Lomiko is committed to developing, growing and being part of the Canadian EV supply chain as a member of Accelerate which works with private and public sector stakeholders to define and build Canada’s zero emission vehicle supply chain and industrial strategy. We are also a member of the Canadian Chamber of Commerce of Critical Minerals strategy to ensure a cohesive voice is presented to the Government on the Battery metals supply chain.
First Nations engagement and government and private sector’s role
The budget also includes C$25 million for “early engagement and Indigenous communities’ capacity building to support their participation in the critical minerals strategy.” Lomiko applauds and supports this initiative. Companies like Lomiko need to see the mechanics of the support being offered to understand how best to utilize the funding available.
Many natural resource projects are located in or near Indigenous communities, including projects to develop the critical minerals that will be needed for Canada’s economy to reach net-zero by 2050. Investing in these partnerships early in the development of resources projects can ensure meaningful opportunities for Indigenous participation, as well as greater certainty for investors and will provide for wealth creation to all stakeholders and rightsholders, with the outcome of a return on capital for investors.
Budget 2022 proposes to provide $131.3 million over five years, starting in 2022-23, as follows: $103.4 million over five years, starting in 2022-23, to Natural Resources Canada to develop a National Benefit-Sharing Framework, and the expansion of both the Indigenous Partnership Office and the Indigenous Natural Resource Partnerships program.
Belinda Labatte stated: “Lomiko believes that at least $25 million of this funding should be dedicated to early engagement and Indigenous communities’ capacity building to support their participation in the critical minerals strategy. These investments will provide opportunities for Indigenous communities to benefit from all types of natural resources projects, including critical minerals. Access to funding should be demonstrated immediately via First Nations communities’ communications portals and provincial associations representing critical minerals.”