EU-Canada strategic partnership on raw materials
In September 2020, the European Commission published its critical raw materials action plan. This aimed for the EU to engage in strategic partnerships with resource-rich third countries in order to diversify and strengthen the resilience of supply chains.
On 6 March 2023, European Commission President Ursula von der Leyen visited Canada in part to take forward the EU-Canada Critical Raw Materials Partnership (Partnership). The Partnership, developed in 2021, is the primary mechanism for engaging the European Commission and EU Member States on Canada’s critical mineral and battery value chains and was established within the mandate of the EU-Canada Comprehensive Economic and Trade Agreement.
The main objective of the Partnership is to advance the value, security, and sustainability of trade and investment into critical minerals and metals. This includes agreed areas of collaboration in relation to integration of value chains; science, technology and innovation collaboration; and collaboration to advance ESG criteria and standards.
The EU’s energy transition requires more access to critical raw materials. They are crucial for manufacturing solar panels, wind turbines, and electric cars, among other things. Demand is increasing significantly, and the EU is currently highly reliant on China as the largest producer and controller of the processing chain.
The Partnership seeks to diversify that supply chain. Given Canada’s size and resource rich status, it is likely to be an effective exporter to the EU. The Partnership therefore may likely bring further opportunities for EU-based companies to access critical raw materials, in particular when reports of draft EU legislation suggest that its Member States will aim to extract enough ores, minerals, and concentrates to produce at least 10% of their strategic raw materials by 2030. This would leave the EU still a significant net importer of such materials. This also brings significant opportunities for mining investment in Canada for the exploration, development, production, and processing of these materials.
Canada-UK strategic partnership on raw materials
Also on 6 March 2023, the UK and Canada announced a cooperation agreement on critical raw materials. According to reports, and similar to the Partnership, the agreement between the UK and Canada aims to promote and build secure supply chains between Canadian and UK industries, drive higher ESG performance and to promote skill-sharing, and R&D between industry, academia, the Governments and other allies.
Like the Partnership, the agreement with Canada increases the potential for UK industry to have access to critical raw materials necessary as part of the UK’s own energy transition strategy.
Conclusion: protecting access after it is secured
Critical raw materials will attract significant investment from investors around the world at all parts of the supply chain. On the one hand, there are those who will seek to mine for, produce and process them. On the other hand, others will seek to access them for use in works like developing electric cars, or producing wind turbines.
The importance of these materials – and the significant regulatory attention given to them by Governments – means that it is important to ensure that investors continue to protect themselves. One tool which may be available to investors is the protection offered by investment treaties.
We are well placed to assist investors in determining whether and to what extent they may be protected, and to help them restructure their investments in order to gain protection.
Authored by Markus Burgstaller and Scott Macpherson.