Canadian Government Launches $1.5 Billion Critical Minerals Infrastructure Fund

• The Canadian government has launched a $1.5 billion Critical Minerals Infrastructure Fund (CMIF) to support critical mineral development.
• The fund will finance infrastructure like roads, rail, power lines and ports to unlock remote critical mineral deposits.
• Global demand for critical minerals to make EVs and renewable energy is surging. Canada can be a major supplier with its abundant resources.
• The CMIF provides patient capital to improve project economics and represents strong government support for the sector.
• Funding infrastructure and expanding critical mineral supply chains offers major economic opportunities for Canada and can advance climate goals.

Fund to Provide Financing for Roads, Rail, Power and Other Infrastructure

The Canadian government has announced the launch of a $1.5 billion Critical Minerals Infrastructure Fund (CMIF) to support the development of the country's critical minerals sector. Critical minerals like lithium, cobalt, rare earth elements, nickel, copper, and graphite are essential for manufacturing clean energy technologies and electric vehicles. However, many critical mineral deposits in Canada are located in remote areas lacking roads, power grids, and other infrastructure required to develop mines and processing facilities.

The CMIF will provide financing for enabling infrastructure like roads, rail, power transmission lines, and ports to connect critical mineral projects to markets. This could benefit junior exploration and development companies focused on critical minerals by helping fund infrastructure costs and improving project economics. For investors, it signals government support for critical minerals, which could boost investor interest in the sector.

Critical Mineral Demand Growth Driven by EVs and Clean Energy

Global demand for critical minerals is expected to expand rapidly as more electric vehicles and renewable energy capacity is built out. Electric vehicle sales are rising exponentially as costs drop and more models come to market. Many countries have set aggressive electrification targets, with some countries like Norway aiming to phase out gas-powered vehicles entirely within the next decade. Each electric vehicle requires substantial amounts of critical minerals - a typical EV battery needs around 8 kg of lithium, 14 kg of cobalt, and 32 kg of nickel.

Renewable energy also leans heavily on critical minerals. Wind turbines and solar panels require large quantities of metals and minerals. Offshore wind farms and large-scale solar installations are being built at record rates. Even the electricity grid itself needs upgrading with more copper and aluminum wiring to handle increasing loads. Overall, the International Energy Agency forecasts demand for critical minerals rising 4-6 times by 2040 in a scenario meeting Paris climate goals.

Canada Well Positioned to Supply Responsibly Sourced Critical Minerals

With abundant mineral resources, Canada has the potential to be a major global supplier of responsibly sourced critical minerals. Canada is already a major producer of nickel, cobalt, aluminum, and platinum group metals. And many juniors are making new discoveries of lithium, rare earths, and other critical minerals. However, many of these resources are undeveloped due to high infrastructure costs. Projects in remote regions of the Canadian Shield often lack the roads, rail lines, electricity, and ports to connect the sites to processing facilities and markets.

The CMIF Provides Strategic Patient Capital for Enabling Infrastructure

The CMIF will provide patient capital with flexible terms to fund enabling infrastructure for critical mineral projects. Funding areas could include roads, rail, power transmission lines, grids, port facilities, and renewable power generation. In total, $1.5 billion has been allocated to the fund, which will provide financing through both debt and equity.

Several flagship critical mineral projects could benefit from infrastructure financing through the CMIF. For example, the Nechalacho rare earths project in the Northwest Territories could require expanded port facilities and hydroelectric power generation. Lithium projects in northern Quebec and Manitoba could need access roads, rail upgrades, and power lines. Nickel and cobalt projects in Ontario might benefit from electrical grid connections.

CMIF Funding Could Improve Project Economics and Feasibility

For companies developing critical mineral projects, securing infrastructure funding can improve a project's economics and enhance its feasibility. Building a new road or rail spur purely for a mining project can cost tens of millions of dollars, a heavy burden for a small cap company. The ability to access concessionary financing for infrastructure could allow more projects to be built. Overall, it provides a valuable source of non-dilutive financing that junior developers have historically lacked access to.

Investor Upside from Government Support for Critical Minerals

From an investor perspective, the CMIF provides reassurance that the government aims to proactively support critical mineral development and remove infrastructure barriers. The long-term patient financing model aligns with the lengthy timelines to explore, develop, and permit a mining project. The fund's focus on beneficiation, value-added processing and supplying clean technology supply chains also underscores Canada's strategic vision for the sector.

Recent heightened investor interest in the battery metals and critical minerals space further underscores the opportunity. Lithium prices have soared 10-fold over the past two years due to booming EV demand. Many Canadian lithium juniors have seen their valuations rocket higher this year as investors take notice of the secular growth trends. However, Canada will need more than just lithium projects to become a broad-based critical minerals hub. The CMIF could aid projects across a spectrum of metals and minerals required for the green transition.

Critical Minerals Development Offers Major Economic Opportunities

For Canada more broadly, becoming a major global supplier of responsibly sourced critical minerals represents a generational opportunity. Critical minerals and the downstream sectors they supply represent a rapidly growing segment of the global economy. Developing these resources and value chains domestically provides jobs, tax revenues, economic development, and opportunities for Indigenous partnerships. Being an early mover could also give Canada's mining sector a first-mover advantage as global demand takes off.

The CMIF also helps advance national climate change and electrification goals. As Canada aims to cut emissions and build out renewable energy, domestic critical mineral production helps strengthen national supply chains. Ramping up domestic extraction and processing reduces reliance on foreign imports. It also provides opportunities to implement and showcase sustainable mining practices.

Additionally, critical mineral development predominantly occurs in northern and remote regions which have historically lagged in infrastructure investment and economic inclusion. Done right, building up these resources can spur investment and inclusion for local communities. Ensuring Indigenous participation, delivering regional benefits, and sticking to high ESG standards will be critical.

Unlocking the Full Critical Minerals Value Chain

Looking ahead, the opportunities span the value chain from exploration and mining to downstream processing, battery manufacturing, and recycling. Canada already has expertise in mining, chemicals, and manufacturing which can be leveraged. Post-mining, Canada has the potential to be a major processor, refiner, and producer of advanced materials and chemicals. Building out a fully integrated domestic battery supply chain is a longer-term ambition.

Realizing these opportunities, however, requires strategic coordination between government, industry, Indigenous groups, and support ecosystems like research institutions. Early indications suggest the CMIF aims to take a collaborative and multi-pronged approach. The fund will be administered by the Canada Infrastructure Bank in coordination with other government departments and initiatives like regional resource tables.

The first call for funding proposals will occur in late 2023, so details remain forthcoming. But the stage is set for Canada to leverage its natural resource advantages to become a global leader across critical minerals and clean technology supply chains. With rising demand for materials essential to decarbonization, the CMIF provides a catalyst to unlock domestic resources and realize national goals.

Canadian Critical Mineral Companies to Watch

Frontier Lithium‍

Frontier Lithium Inc. is a mining company focused on the exploration and development of lithium deposits in Northern Ontario, Canada. The company's flagship asset is the PAK Lithium Project, located in a premium lithium district. The PAK Project represents the largest land package in the region at close to 27,000 hectares, with significant potential for further exploration.

The project contains North America's highest-grade lithium resource, with two premium spodumene-bearing deposits - PAK and Spark - located 2.3 km apart. A 2023 pre-feasibility study outlined a 24-year project life, at a post-tax NPV(8%) of US$1.74 billion and an Internal Rate of Return (IRR) of 24.1%. Frontier Lithium aims to become a major supplier of spodumene concentrates and battery-grade lithium hydroxide to support the growing electric vehicle market in North America. The company is advancing PAK toward production as the first fully integrated lithium mining and processing operation in Ontario.

Canada Nickel

Canada Nickel is emerging as a major player in the nickel mining sector through its 100% owned Crawford Nickel Sulphide project in Timmins, Ontario. Crawford is the largest nickel discovery since the 1970s and is located in an established mining jurisdiction with good infrastructure. Through over 20 transactions, Canada Nickel has also consolidated a vast regional land package 50 times larger than Crawford with 20 additional targets, demonstrating the potential for further substantial discoveries and resource growth. With its significant existing resource, low carbon production potential and exploration upside across its district-scale land holdings, Canada Nickel is well positioned to become a leading nickel producer.

Latitude Uranium

Latitude Uranium is a Canadian uranium exploration and development company focused on two district-scale projects. Their flagship project is the Angilak property in Nunavut, which hosts one of the highest-grade undeveloped uranium deposits globally. The Company is working to expand the resource base and advance Angilak toward production.

Additionally, Latitude is exploring the promising CMB Project in central Labrador, situated adjacent to the Michelin uranium deposit. The large CMB land package features numerous occurrences of uranium, copper, and potential IOCG-style mineralization. Through systematic exploration, Latitude aims to delineate additional resources and make new discoveries across this highly prospective but underexplored belt.

With Angilak and the CMB Project, Latitude Uranium is well-positioned to create value for shareholders through focused exploration in two of Canada's most favorable uranium and IOCG districts. Latitude Uranium's vision is to make new, district-scale discoveries and advance their portfolio of projects toward development.‍

Palladium One Mining‍

Palladium One Mining is a Canadian mineral exploration and development company focused on discovering district-scale deposits of metals critical for green transportation, including nickel, copper, and platinum group elements (PGEs).

Palladium One's flagship project is the Läntinen Koillismaa (LK) Project in Finland, which contains existing mineral resources of PGEs, copper, and nickel. The Company also holds two early-stage, high-grade nickel-copper projects in Canada - the Tyko Project in Ontario and the Canalask Project in the Yukon.

Palladium One is committed to exploration and development that is both environmentally and socially responsible. Their vision is to supply the metals needed for cleaner transportation and energy storage, helping enable the global transition to reduced carbon emissions.

With a seasoned management team and strategic land positions in proven districts, Palladium One is poised for new discoveries of metals that will be in strong demand as the world moves towards a greener future.

Li-FT Power

Li-FT is a mineral exploration company focused on acquiring and developing lithium pegmatite projects in Canada. Their flagship Yellowknife Lithium Project in Northwest Territories contains 13 lithium pegmatite dykes near infrastructure and they have initiated a 45,000 meter drill program in 2023 to define resources. Li-FT also has the early-stage Cali Project in Northwest Territories within a historic lithium pegmatite belt and drilling is planned once permits are received. In Quebec, Li-FT has three large exploration properties near the Whabouchi deposit where 10 targets have been generated and initial drilling of two targets will occur in 2023 with more exploration planned for 2024. Overall, Li-FT is advancing a portfolio of Canadian lithium assets through systematic exploration and drilling.