Canada’s domestic miners have raised concerns on whether the country can follow through on its promises of an abundant supply of critical minerals for the electric vehicle (EV) industry as funding for extraction gets off to a slow start in 2023 and the government tightens regulations on foreign investment. 

According to the Prospectors & Developers Association of Canada (PDAC), mineral exploration raised little over $420m on the Toronto Stock Exchange (TSE) and Calgary’s Venture Exchange (TSX) in January, compared with roughly $620m and the $1.25bn raised in the same month in 2021 and 2022 respectively. In 2022, equity financing on both exchanges was down by 18.2% from the previous year, thus reflecting the investment slump the mining sector experienced worldwide. 


The TSE and the TSX have traditionally offered junior mining companies — companies that are currently exploring mineral deposits and therefore tend to burn a lot of capital before generating any revenue — a favourable environment in which to list and raise equity. 

Canada also prides itself for holding all the critical minerals required to manufacture EV batteries, a key selling point used to attract foreign car manufacturers of the likes of Volkswagen, whose subsidiary PowerCo announced plans to establish an electric vehicle battery manufacturing facility in St Thomas, Ontario, on March 13. The company cited the local supply of raw materials and wide access to clean electricity as key reasons for its decision.

However, the mining industry is now questioning whether the government is walking the walk when it comes to fulfilling the country’s ambitions of becoming a beacon of electric mobility. 

“The government has not incentivised investments into mineral production,” says Pierre Gratton, president and CEO of the Mining Association of Canada, tells fDi. “We're certainly hopeful that the upcoming budget will do that because otherwise we question how these battery plants are going to be supplied with the materials they need.

The government has not incentivised investments into mineral production

Pierre Gratton, president and CEO, Mining Association of Canada


“Given the volumes required for electric vehicles, we need a lot more mining than we are currently doing in Canada for products like nickel, cobalt and copper. In the past 15 to 20 years, there’s actually been a decline in in base metal reserves, critical mineral reserves, and critical mineral production and that has to be reversed.”

In October 2022, Canada introduced tougher foreign investment rules into its critical minerals sector, leading to an order issued the following month requiring three Chinese firms to divest their investments in Canada-based critical minerals miners. 

Further measures have been proposed including amendments to the Investment Canada Act that would give the government powers to impose interim and permanent investment conditions and extend investment processing timelines for national security review. The act is expected to become law in mid-2023.

While some junior mining companies have expressed concerns that the move would hinder the ability to raise the funds needed for critical mineral exploration, the deteriorating global market conditions have been cited as the more probable cause for the lack of capital into the sector.

“We've definitely seen an overall slowdown in investment coming into the sector over the past year and in the first months of 2023,” says Jeff Killeen, director, policy and programmes at the PDAC. “It appears to be in step with the broader market slowdown that we're seeing outside of the mineral space, and across really all market segments. So it wouldn't seem to be directly linked with any proposed changes to Canadian legislation or the Investment Canada Act.

“That said, the three forced divestitures that we saw announced last year have raised a number of questions from the industry. There’s uncertainty at this point around who can invest in the sector, but we haven’t seen it translate into any tangible impediments to investment.”

Canada is set to unveil its federal budget on 28 March.

“If Canada wants to attract more investment into its mining operations, it’s going to have to do something,” says Mr Gratton. “Or we’re going to be importing material to feed those battery plants.”