Resource Security Is National Security: The Price of Critical Mineral Independence

For decades, commodity prices, project economics, and access to capital have driven the development of new mines. Governments have supported resource development, but the private sector has generally driven investment decisions.

That approach is changing as Western governments increasingly view dependence on foreign critical mineral supply chains as a national security risk.

Critical minerals are essential to defence, aerospace, advanced manufacturing, and energy infrastructure. Yet a handful of countries still process many of these materials. According to the International Energy Agency's Global Critical Minerals Outlook 2026, the leading refining country accounted for an average of 72 percent of supply across key minerals, excluding rare earths, in 2025.

Recent export restrictions have demonstrated the consequences of this concentration. The IEA estimates that fully implementing China's expanded rare earth export controls could put about US$6.5 trillion in annual downstream production outside China at risk, including in the automotive, electronics, defence and energy sectors.

The challenge is that developing alternative sources of supply is expensive, and commodity markets are not necessarily providing the financial incentives needed to build them.
Global critical mineral investment fell 9 percent in 2025, with battery metals investment down more than 20 percent. Meanwhile, the IEA estimates that refining projects outside dominant supply centres can face capital costs between 20 and more than 150 percent higher, with operating costs averaging approximately 50 percent more.

The IEA describes this additional expense as a "mineral security premium": the cost of reducing exposure to concentrated supply chains and potential disruptions.

Importantly, that premium may be smaller than expected when measured against the value of finished products. The IEA estimates that even a tripling of rare earth prices would increase the cost of a conventional car by just 0.1 percent.

This raises a question for governments and industry: if the economic consequences of supply disruptions are so substantial, is paying more for secure supply a reasonable investment?

The United States is already testing this approach. Washington has used direct investment, procurement commitments and price-support arrangements to encourage alternative production. In March 2026, the U.S. government and Australia's Lynas Rare Earths announced a proposed four-year supply arrangement worth approximately US$96 million, including a floor price of US$110 per kilogram for neodymium-praseodymium oxide.

These measures recognize that conventional commodity prices may not reflect the strategic value of secure supply. They also demonstrate that governments are increasingly willing to intervene where market conditions discourage investment in strategically important projects.
For Canada, this shift comes at a particularly consequential moment.
The ongoing trade dispute with the United States has exposed the vulnerabilities of Canada's reliance on a single export market. Tariffs and uncertainty surrounding future trade arrangements have challenged longstanding assumptions about the stability of North American economic integration.

At the same time, Washington's pursuit of critical mineral security creates significant opportunities for Canadian producers. The United States needs reliable supply sources, but its industrial policies also aim to attract processing and manufacturing investment to American facilities.

Canada must therefore consider not only how to supply the U.S. market, but how to secure a greater share of the economic activity associated with its mineral resources.
The October 21 announcement by Prime Minister Mark Carney and Premier Doug Ford, including federal support of up to $1 billion for Ring of Fire road infrastructure, coordinated permitting, and additional project financing opportunities, reflects governments' growing willingness to invest in mineral development as an economic priority.

However, new mines alone will not resolve Canada's supply-chain vulnerabilities. Domestic processing capacity, reliable infrastructure, long-term customers, and access to allied markets are equally important.

This is where the mineral security premium matters most for Canadian policy.
Governments will need to decide which minerals and projects warrant strategic support, how to structure that support, and what economic benefits to expect in return. For some projects, infrastructure investment or loan guarantees may be sufficient. Others may require long-term offtake agreements, price-support mechanisms, or direct partnerships with manufacturers.
These decisions must remain grounded in commercial realities. Public investment should support viable projects, responsible development and meaningful Indigenous participation, while creating lasting economic benefits.

For mining companies, demonstrating strategic importance is becoming increasingly relevant to securing financing, attracting customers, and engaging governments. The strongest projects will connect their mineral resources to credible development plans, processing opportunities, and identifiable industrial demand.

Canada has the resources, expertise and international relationships to play a larger role in securing critical mineral supply chains. But the current trade environment has made clear that resource ownership does not automatically translate into economic security.The question is no longer simply whether Canada can afford to pay a premium for secure mineral supply. It is whether the cost of continued dependence may ultimately be far greater.