The Lexpert Special Editions profiles selected Lexpert-ranked lawyers whose focus is in Corporate, Infrastructure, Energy and Litigation law and relevant practices. It also includes feature articles on legal aspects of Canadian business issues.
Issue link: https://digital.carswellmedia.com/i/1480531
www.lexpert.ca 13 it comes to metals like copper and nickel." However, Russia's invasion of Ukraine high- lights the importance of geographic diversity in assets and how regional instability can disrupt supply chains. The push for critical minerals e need for raw materials in managing this transition presents a considerable chal- lenge. Decarbonization efforts, ironically, will require more mining. Electric vehicle manufacturing requires, on average, six times the amount of minerals such as copper, cobalt, and lithium than it does to build gas-powered cars. According to analyst firm Wood Mackenzie, global production of aluminum, copper, zinc, and high-grade nickel must increase fivefold by 2040. And the World Economic Forum expects the production of minerals like lithium, graphite, and cobalt to increase fivefold by 2050 to meet the demand for clean-energy technologies. But the supply side shows many of the potential geopolitical risks that mining companies are facing these days in looking for and mining these metals: • About 85 percent of the world's neodymium, a rare earth metal crucial for products such as motors, turbines, and medical devices, is concentrated in a few Chinese mines. • China also has the market on three of the five minerals needed for photovoltaic cells – 73 percent of known gallium reserve, 67 percent of germanium, and 57 percent of indium. • Most of the world's cobalt production comes from the politically unstable Democratic Republic of Congo, which has about 65 percent of the world's known cobalt reserves, an element critical for extending the longevity of electric vehicle batteries. • A large share of palladium, used in cata- lytic converters, is mined in Russia, which is subject to Western sanctions aer it invaded Ukraine. • About 20 percent of high-grade nickel, a crucial ingredient of electric-vehicle batteries and stainless steel, comes from Russia. Refining and manufacturing capacity figures for these "green" minerals also show that some countries, like China, are ahead of the game. e Economist reports that China refines 70 percent of the world's lithium, 84 percent of its nickel, and 85 percent of its cobalt, controlling about 80 percent of global battery cell-manufacturing capacity. The geopolitics of "green" mining International trade is necessary to meet the global mineral demands of the energy tran- sition, but geopolitics could interfere. Even countries that have long been considered friendly for mining investment have taken steps to protect their resources, the envi- ronment, and profits from the explosion of interest in lithium. Mexico, for example, nationalized its lithium resources earlier this year, though President Andrés Manuel López Obrador urges the private sector to work with his new state-run lithium company. "We wouldn't have enough for it to be only public. It requires a lot of investment," López Obrador has said. e government expects the state miner named Litio para México, or Lithium for Mexico, to launch within months, but has given few details on how it will operate. Mexico does not yet have commercial lithium production, though about a dozen foreign companies hold contracts to "WE'VE SEEN VARIOUS GOVERNMENTS RENEGOTIATING MINING TENEMENTS, CANCELLING OWNERSHIP RIGHTS IN VARIOUS PARTS OF THE WORLD, NATIONALIZING CERTAIN AREAS OF MINING" Sander Grieve BENNETT JONES LLP explore potential deposits. Bolivia is also proposing joint ventures to extract lithium under a system with the nation owning 51 percent of the entity and taking around half the profits. To do that, it first needs to amend Bolivian law, which does not allow foreign firms to extract lithium. Local govern- ment officials are using that as an opportunity to lobby for their share of the royalties, threat- ening to take to the streets as they did in 2019 when community anger killed off a Bolivian partnership with German firm ACI Systems to develop lithium batteries. President Pedro Castillo unnerved the mining industry in Peru when he won a narrow election in 2021 by appealing to the working class, especially those in or affected by mining. Since then, social and political conflicts have been affecting the mining sector in Peru, the second-largest copper producer in the world (aer Chile). is type of uncer- tainty could put the brakes on mining investments and projects. And Chile, home to more than 50 Canadian mining companies that represent about 10 percent of Canada's inter- national mining assets, recently voted in a le- leaning government that had hoped to change the country's constitution to strengthen environmental regulations and indig- enous rights over mining. However, that change was defeated in a referendum held in September. Article 145 of the proposed consti- tution, for example, would establish the state's absolute domain over "all mines and mineral substances, metallic, non-metallic and deposits of fossil substances and existing hydrocarbons in the national territory." It adds that "the exploration, exploitation and use of these substances will be subject to a regulation that considers their finite, non-renewable nature, intergenerational public interest, and environmental protection."