Canada in, China out: Ottawa looks to localize critical minerals supply – Richard Mills

2022.12.16

For decades, China has dominated critical minerals, with Canada and the US, among other nations, all too willing to let Beijing do the mining and/ or processing and sell the end-products, such as rare earth oxides, lithium carbonate and battery-grade graphite, back to us.

A recent Bloomberg article states China has also locked up Indonesia’s nickel by investing US$14 billion dollars into the country building mines, smelters and refineries. China now has enough nickel to supply their battery industry well into the next decade and now dominates the nickel supply chain.

China’s near-complete dominance of ‘green economy’ metals

That, however, is beginning to change.

This year, the United States government invoked its Cold War powers by including lithium, nickel, cobalt, graphite and manganese on the list of items covered by the 1950 Defense Production Act, or DPA.

To bolster domestic production of these minerals, US miners can now gain access to USD$750 million under the DPA’s Title III fund, which can be used for current operations, productivity and safety upgrades, and feasibility studies.

The Biden administration has also allocated $6 billion as part of the $1 trillion infrastructure bill — towards developing a reliable battery supply chain and weaning the auto industry off its reliance on China, the biggest EV market and leading producer of lithium-ion cells.

With an abundance of battery metals and cheap hydroelectric power, particularly in Quebec and British Columbia, Canada is uniquely positioned to become an EV leader, from the mining and processing of metal ores, all the way up to the manufacture and assembly of electric and hybrid vehicles.  

The Liberal government under Prime Minister Justin Trudeau has said it is planning on spending CAD$400 million to build 50,000 electric vehicle charging stations, on top of half a billion Canadian dollars for charging infrastructure through the Canada Investment Bank and $1.7 billion to extend an incentive program for EV purchasers.

According to the president of the Canadian Vehicle Manufacturers Association, Canada will need 4 million charging stations by 2050, 80 times higher than the 50,000 currently targeted.

The large spending package is part of the government’s plan to require that 20% of new light-vehicle sales in Canada be zero-emissions by 2026. After 2026, the government’s mandate will require that at least 60% of sales are zero-emission by 2030 and 100% by 2035. Trudeau’s stated goal is to phase out gasoline-powered cars by 2040.

Canada first policy

But it isn’t just car manufacturing that is getting Ottawa’s ear.

Facing criticism of “going too easy” on China, the Canadian government recently passed legislation making it harder for foreign state-owned firms to invest in Canadian critical-minerals companies.

Effective immediately, transactions involving investments by state-owned firms into these companies will only be approved on an “exceptional basis”.

Canada’s protectionist stance triggered action in October, when Chinese firms were ordered by governments to divest from three small battery metals explorers, including Calgary-based Lithium Chile.

Canada has also joined the Minerals Security Partnership, aimed at securing the supply of critical minerals as global demand for them rises. Other members include the United States, Australia, Finland, France, Germany, Japan, South Korea, Sweden, the United Kingdom and the European Commission. Note who is not in the club: China and Russia.

Northern Ontario Business gives a great overview of the Canadian government’s thinking, reporting on a Dec. 5 news conference showcasing Canada’s first full-scale electric vehicle plant at General Motor’s CAMI Assembly complex in Ingersoll, ON:

Trudeau emphasized the importance for Canada to have “control” of its own sources of critical minerals, like nickel and lithium, and the downstream processing facilities that produce the battery-ready material used in electric vehicle production.

Trudeau was responding to a reporter’s question about Ottawa’s tighter foreign investment review policies and clampdown in stopping certain countries, deemed hostile to Canada’s natural interests, from taking ownership stakes and securing offtake agreements in Canadian critical minerals projects.

Trudeau said Canada is “extraordinarily fortunate” have an abundance of the critical minerals and production plants that the world needs for the transition to a clean energy economy and the plethora of new technologies being advanced. Establishing secure domestic supply chains of this material works in our interest, he said.

“We wanna make sure that companies that do business with Canada, that allies who are relying on Canada, will be able to rely on us to deliver on our commitments. And that’s why making sure we’re in control of our critical minerals, we’re in control of the manufacturing processes, is extremely important and that’s why we are ensuring the integrity and reliability of Canada as a partner.”

US funding foreign mines

As Canada leans into mining, the Biden administration has mostly come out against it, through a number of anti-extractive industry decisions, and has chosen instead to support mining overseas.

On Dec. 12, Axios reported the Democratic government is mulling “around a dozen” mineral projects around the world for potential federal financing.

The money would be distributed through the above-mentioned Mineral Security Partnership. Canada being a partner, it seems to me a no-brainer that Canadian projects and the country’s long mining history, along with its wealth of expertise, should be top of mind.

The US military has reportedly been allocated hundreds of millions of dollars to implement the DPA and expand the domestic mining sector. It’s interesting to note that Canadian mining projects qualify under this program, because the country belongs to the US military industrial base. Canadian officials say they’ve already provided the US with a list of 70 projects that could warrant funding.

Renforth Resources

A very early stage sulphide nickel project is the Surimeau battery metals project in Quebec, being developed by Renforth Resources (CSE:RFR, OTCQB:RFHRF, FSE:9RR), a tiny but increasingly visible junior exploration company.

Surimeau hosts several areas prospective for gold/silver and battery/ industrial metals (nickel, copper, zinc, lead, cobalt and lithium). It is located south of the Cadillac Break, a major regional gold structure.

The property occurs within a unique geological setting where two types of mineralization, formed from different geological processes, are “mashed together” in one distinct orebody. It is best described as a magmatic nickel sulfide deposit, juxtaposed with a copper-zinc volcanogenic massive sulfide (VMS) deposit.

The first type of deposit, which contains nickel, cobalt and platinum group elements (PGEs), is associated with ultramafic rocks. The second type, VMS, was formed on or near the ocean floor during ancient underwater volcanic activity.

VMS deposits are sought after for mining because they usually contain a mix of base metals such as zinc, lead, copper, and sometimes precious metals. The minerals often form massive sulfide mounds or layers, making them relatively easy to extract.

Renforth has mainly focused on the polymetallic “battery metals” package of nickel, cobalt, copper, zinc, platinum and palladium that is present in at least six known areas of the property.

The Victoria mineralized structure is estimated at about 20 kilometers long, and the Lalonde structure now measures 9 km in length. The company continues to define the surface and sub-surface polymetallic mineralization, evidenced by outcrops, drill results and geophysics.

However, a significant amount of ground remains untested, leaving heaps of upside for Renforth shareholders, in a project that is already showing district-size scale.

At Victoria West, information gleaned from drilling and trenching, along with surface sampling, creates an area of interest that includes over 5 kilometers of strike on the western end of a 20-kilometer magnetic anomaly.

The company interprets this anomaly to be a nickel-bearing ultramafic sequence unit, which occurs alongside, and is intermingled with, VMS-style copper-zinc mineralization.

So far, drilling from the 2.2 km of known strike length has yielded results that allude to the presence of a large polymetallic camp richly endowed with nickel, copper, cobalt and zinc, along with some PGEs (platinum group elements).

In addition, samples taken from the Lalonde target have delivered consistent elevated values from the exposed mineralized horizon.

In November, Renforth reported that sampling of three trenches dug at Lalonde was complete, with visual mineralization encountered within the north and south zones of the magnetic anomaly.

At that time, Renforth also announced the start of a new drill program at Surimeau, to follow up on the visual nickel/cobalt/copper/zinc mineralization trenched at Lalonde, and previously drilled polymetallic mineralized intercepts at Victoria West, located 4 km south of Lalonde.

On Nov. 28 RFR delivered the assays from Trenches 10, 11 and 12 at Lalonde, highlighted by 0.206% nickel over 2.25 meters in Trench 10, including 0.224% Ni over 1.55m. Read the news release

According to Renforth, the channels cut within the three stripped trenches, and the three drill holes that were sunk under them during the recently completed drill program, all intersected battery metals mineralization:

It is Renforth’s interpretation that, in each of the 3 channels cut within the trenches that are perpendicular to the magnetic anomaly at Lalonde, each surface mineralized “shoulder” of the anomaly was intersected, successfully yielding ultramafic nickel mineralization.

However, upon receiving the detailed magnetic and electromagnetic (EM) data from geophysical surveys flown last year, Renforth made a change to their planned drill program.

“The trenches in areas with no real geophysical anomalies of note still gave us nickel numbers… we started our drilling in the west and will move to the east, [turning the drill] under the road, aiming for the nice anomaly that is best looking under the road, but which is arguably also in the eastern-most trench, which we are drilling under now,” President and CEO Nicole Brewster wrote in a note to shareholders, Nov. 29.

Also of significance, the company says it is becoming clear that while the mineralization is very similar to Victoria it is not identical, with possibly more copper/zinc intersected in the current drilling than at Victoria.

On Dec. 14 Renforth press-released the completion of 3,076 meters drilled in 11 holes, all of which intersected mineralization, resulting in the visual identification of nickel, copper and zinc sulfides. Samples are on their way to the assay lab and should be available in January.

It was the first time Renforth drilled the Lalonde mineralized structure, consisting of seven drill holes designed to undercut the mineralized trenches and drill-test an anomaly identified by interpretation of the magnetic and electromagnetic survey data.

At Victoria, four holes were drilled within the 2.2 km east-west strike footprint of the drilling to date.

Renforth has already started planning a first-quarter, 2023 drill program, focused on targeting the never-before-explored-or-drilled western anomaly at Victoria. Initial prospecting in 2021 delivered surface mineralization in this area, which coincided with the subsequently flown mag/EM survey, and again delivered surface mineralization in confirmation prospecting in 2022.

“The mag/EM has been a great tool, a roadmap to mineralization, between the magnetic ultramafic and the EM sulfide targets, when we could expose bedrock, but now it is even better — we have more detail and that detail correlated to visual results in drill core,” Brewster wrote in a Dec. 14 update to shareholders.

“The accuracy of the interpretation supports our Q1 2023 drill program — about 4 km west of the current 2.2 km we are working at Victoria.”

Conclusion

Renforth is making great headway as it seeks to develop, potentially, Canada’s next supply of battery-grade sulfide nickel.

The future of Canada’s nickel supply isn’t Indonesia

The fact that nickel, copper and zinc sulfides have been visually identified during logging is highly encouraging, and I’m looking forward to seeing the assay results when they become available in January.

As mentioned Renforth has all the right metals at exactly the right time, just as Canada appears to be throwing its support behind domestic mining, mineral exploration, and battery/ EV plant manufacturing.  How, when or whether that support reaches Renforth and its Surimeau battery metals project is unclear, but it is exciting to finally see a major shift, in Canada and the US, underway.

Renforth Resources
CSE:RFR, OTCQB:RFHRF, FSE:9RR
Cdn$0.03; 2022.12.15
Shares Outstanding 262.3m
Market cap Cdn$10­m
RFR website

Richard (Rick) Mills
aheadoftheherd.com
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