Federal approval of lithium project brings Canada closer critical mineral player status, lawyers say

Ottawa go-ahead for Quebec mine comes with 271 conditions, while provincial assessment is ongoing

Federal approval of lithium project brings Canada closer critical mineral player status, lawyers say
Charles Kazaz, Blake, Cassels & Graydon; Martin Ignasiuk, Bennett Jones LLP

The federal government’s approval of a lithium mine in Northern Quebec is a “positive development” in Canada’s ambitions to become a player in the critical minerals space, say lawyers who deal with mining clients looking to develop those resources.

The approval for Allkem Ltd.’s Galaxy lithium project, situated about 100 kilometres east of James Bay, comes with 271 conditions, including measures to protect fish, birds, bats, wetlands, and lands and resources used by the Cree. However, Martin Ignasiak, a regulatory lawyer and partner with Bennett Jones LLP in Calgary, says most are “very granular” and involve consultations with Indigenous communities.

An example of one condition is that the Galaxy lithium mine project will need to ensure that traditional food sources for the communities living in the region remain safe by conducting regular tests. Another concern was the potential of surface water and groundwater to be contaminated by haul roads built with waste rock as a rolling layer. An impervious geomembrane could deal with that concern.

A positive start to lithium mining in Canada

While it isn’t known yet what the costs and challenges of meeting these conditions would be to those who want to develop the mine, Ignasiak says the large number of conditions doesn’t necessarily mean they are overly demanding.

He also notes that the federal government’s approval comes with some “realistic” expectations.

For instance, he says, “if you look at the conditions for greenhouse gases, they’re somewhat realistic, they take into account that the project can get all of its power from the Quebec grid.” The approval also accepted that the mine developers would use diesel for their equipment and propane to heat worker accommodations and other installations.

“It’s positive, in my view, that the government of Canada showed flexibility to allow the project to proceed instead of imposing unachievable targets in its quest to reduce greenhouse gas emissions,” he says, especially given the remote location of the project.

Charles Kazaz, an environmental lawyer with Blake, Cassels & Graydon who practices out of Montreal and Toronto, agrees that while there are a lot of conditions, some that will come with higher costs than others, most of these would live have been predicted ahead of time or dealt with during early discussions, “so would likely have already formed part of the project design.”

Kazaz adds that the indigenous engagement part of the approval process is critical. “When I’m advising clients. I tell them that probably the most critical part of the process is getting that indigenous engagement and doing it early on in the process.”

While the mine project must also pass an environmental assessment from the Quebec government, which is ongoing, the federal approval puts Brisbane, Australia-based Allkem’s project closer to the finish line. It also moves Canada closer to supplying a highly sought metal critical to transitioning towards more environmentally friendly energy.

Canada’s critical mineral strategy

“Critical minerals are one of the keys to building Canada’s low-carbon economy,” Environment Minister Steven Guilbeault said in a press release when announcing the conditional approval in January. “We can only develop those resources by designing from the outset with strong mitigation measures to protect the environment and working in true partnership with Indigenous Peoples.”

Prime Minister Justin Trudeau and several of his provincial counterparts have been selling Canada as potentially playing a vital role in the shift to electric vehicles, saying that the country’s mineral wealth will be a competitive advantage.

Kazaz says that while there is no cookie-cutter approach to getting projects through the approval process, the federal government’s strategy has done “a good job in identifying the issues in terms of timing in terms of process and engagement.”

Canada, along with the United States and some of the bigger European economies, is looking to shift supply chains away from China, which dominates the electric vehicle sector – for which lithium is an important component, to friendlier jurisdictions in the wake of geopolitical concerns.

However, Canada currently produces only a modest amount of lithium. In a critical minerals strategy released in December, Ottawa listed lithium as one of the top six critical minerals, along with graphite, nickel, cobalt, copper and rare earth elements, due to its importance in the clean technology sector.

The environmental assessment of the James Bay project began in 2017 with a joint committee that included the Impact Assessment Agency of Canada and the Cree Nation Government.

In the executive summary of the report, the committee said that while the project “could lead to cumulative residual effects on the current use of lands and resources for traditional purposes, including effects on navigation, which may have cumulative effects on access to the practice of rights,” the effects would not be significant considering the mitigation measures.

The mine is expected to run for 15 to 20 years and should produce more than 5,000 tonnes of ore daily. It will include an open pit mine, tailings, waste rock and a concentrator. According to the government, it would likely employ about 280 workers during construction and 170 workers during the mine’s operation.

The need to speed up the regulatory approval process

Ignasiak says it’s essential that any mining project meets environmental and regulatory concerns and involve consultation with Indigenous communities. However, shortening the approval process is key.

“Canada’s got to pick a lane, if you’re going to adopt a critical mineral strategy, you can have all the financial measures and tax incentives in the world, but none of that will work if you don’t make the regulatory process shorter in duration,” he says. There also needs to be better coordination between federal and provincial governments.

“Any investor is anyone who understands the net present value of money will see that if Canada takes six to eight years to get a project approved, whereas in other jurisdictions, it takes two to three years, that could take you off the list right from the start. We are competing for global capital.”

Kazaz agrees the approval process takes a long time. He notes that while  the time it takes for the environmental assessment is to be expected, administrative portions could go faster if the government departments had more funding to review projects in a more timely fashion.”

The multi-government process, “which often leads to duplication could also be better streamlined.”

Both lawyers say the Galaxy project’s conditional approval shows that a critical mineral project in Canada can get approved. Still, it is up to the proponents to say whether the conditions are feasible.

“This is a good first step, but we can still do better,” Ignasiuk says. “If we are going to compete for the global capital, we need to advance our critical mineral strategy. And I think we can accomplish those objectives, make sure that these projects are carried out in the most environmentally responsible way, but do it in a shorter time frame.”

Adds Kazaz: “Canada needs to send a message to global investors that we’re open for business, and if they want to develop projects, there needs to be a chance for [positive] results.”

Recent articles & video

SCC reinforces Crown's narrow scope to appeal acquittal, high bar to show mens rea to prove murder

Final changes to competition laws will require more sophisticated merger analysis: Blakes lawyers

Ontario Court of Appeal upholds paramedics' convictions over death of shooting victim

BC Court of Appeal upholds class action certification in Capital One data breach case

BC Supreme Court awards damages for chronic pain and mental health issues from car accident

BC court declines jurisdiction over property and support in Mexico divorce case

Most Read Articles

BC Supreme Court dismisses applications seeking personal liability of estate executor

BC Supreme Court upholds trust company's estate administration amid beneficiary dispute

Alberta Court of Appeal reinstates sanctions on naturopathic doctor for unprofessional conduct

Government of Canada publishes a report to tackle anti-black racism in the justice system