The pace of mine openings in Canada needs to increase fivefold through 2035 to support its four major gigafactories, according to an internal government document that warns there are “major gaps” in the country’s electric-vehicle supply chain.

Canada currently has less than 50 per cent of the mineral production in place to support the battery factories being built by Volkswagen, Northvolt, Honda, and Stellantis and LG, according to notes from a December meeting of the federal government’s deputy minister clean growth committee, which included high-ranking public servants from departments including Innovation, Environment, Finance, Global Affairs, Transportation and the Privy Council. The Logic obtained the document via an access-to-information request. 

The document estimates that Canada will need $24.1 billion in total private-sector capital expenditures on battery minerals to avoid having gigafactory operators import their supplies from abroad. 

It shows the scale of work and investment needed to underpin the Liberal government’s $31.4 billion in subsidies to EV companies, and to keep them viable. While the document was made before Honda announced its gigafactory plans in April, Michael MacDonald, communications adviser at Natural Resources Canada, said the Honda announcement was already considered and the projections on the slide deck remain the same. 

Matthew Fortier, CEO of Accelerate—a group that has mapped Canada’s zero-emission vehicle supply chain, and that counts the likes of Volkswagen and Glencore among its members—said the numbers frame the “immense challenge” Canada faces if it wants to support a domestic EV sector. 

Still, he said he’s not discouraged by the scale of the transformation. His organization estimates there are 167 EV suppliers doing business in Canada, including 39 active in mining, material processing and battery materials. 

“It’s a challenge that I don’t think anybody in Canada even 10 years ago imagined that we would be undertaking,” said Fortier. “But the reality is we have to undertake it because we need to grow and diversify our economy. We have to because we have to reduce global emissions.”

Demand for EVs is growing more slowly than the industry expected, and in the seven months since the document was drafted, a number of companies have delayed their EV manufacturing plans in Canada, including Ford, which has pushed back its EV building plans in Oakville, Ont., in favour of Super Duty trucks, and cathode-materials maker Umicore, which is pausing plans for a $2.76-billion plant near Kingston, Ont., for at least 18 months. 

The document projections say that if Canada were to maintain the four major gigafactories currently under construction, it would need 15 more mines—a total of five graphite mines, five lithium mines and eight nickel mines. Only three battery mineral mines have opened over the past 15 years. 

“These [battery factory] companies have told us that they have located in Canada because of access to minerals,” the document says, “and are unlikely to be able to operate with a strategy of importing mineral feed.” 

It would also need to beef up the capacity to process those metals to supply the battery factories domestically. The document forecasts the need for five anode material plants, four cathode active material plants, seven nickel sulphate plants, five lithium hydroxide plants and two lithium carbonate plants.  

But as of December, Canada had less than 25 per cent of the midstream production it needs, according to the document—a reference to the factories that turn raw materials like nickel and lithium into battery materials like lithium hydroxide and nickel sulphate. 

The document says there are projects already well underway that could fulfil domestic demand for lithium, nickel and graphite. As of December, Canada had 26 per cent of its needed lithium hydroxide and lithium carbonate, 24 per cent of its anode materials, and 15 per cent of the nickel sulphate needed to supply four gigafactories.

Despite years of hype around critical minerals, the mining industry has struggled to get a stable foothold. Arcadium Lithium announced this week that it is pausing investment in one of its Canadian projects as it looks for a potential partner, with CEO Paul Graves saying “the industry does not need to add supply at the same pace as previously expected.” While many in the EV industry support protectionist measures against Chinese rivals, some worry that tightened rules around foreign investment could drive capital away from the mining industry.  

The document acknowledges the sometimes decades-long timelines and lack of capital needed to open new mines, calling out the permitting process as the ripest area for reform. But the document also says that despite domestic critics, Canada is lauded internationally compared with jurisdictions where getting mines approved is “impossible.”  

Still, mining strongholds like Sudbury, Ont., and B.C.’s Golden Triangle have become the centre of political showdowns. Conservative Leader Pierre Poilievre said this week he wants Canada to have the fastest mining approvals in the OECD. 

The Liberal government, meanwhile, announced last month it would spend another $75 million of its $1.5-billion Critical Minerals Infrastructure Fund on infrastructure in B.C., aiming to unlock $20 billion in capital investments in a critical minerals hot spot there. Earlier this summer, the Privy Council Office announced a federal permitting coordinator to cut timelines on clean growth projects.

Siddarth Subramani, global director of the lithium practice at consulting firm Hatch, said a full battery supply chain may eventually require significantly more than the $24.1 billion in private-sector capital expenditures the document estimates. The Parliamentary Budget Office estimates the total company and government investment in the four gigafactories is around $34 billion—although Honda’s project also includes other plants. Subramani estimates the spending upstream should be at least that high, with ideally $3 to $4 invested for each dollar spent on a gigafactory, especially considering the fact that some of Canada’s critical minerals will go to gigafactories outside the country. 

“They need to be committed for decades,” he said.

With files from Murad Hemmadi