Future of Canada’s off-grid mines crucial to decarbonization, says MAC’s Brendan Marshall

Brendan Marshall is a Vice President, Economic and Northern Affairs, at the Mining Association of Canada (MAC) and works to advance the industry’s understanding of energy, climate change, taxation and a host of other economic issues. He is also responsible for mining policy and regulation in Canada’s north. Marshall recently spoke to The Northern Miner on the Canadian mining industry’s decarbonization challenge, the impact that climate-neutral goals can have on the global mining sector and how a policy incoherence in Canada’s north could impact miners.  

The Northern Miner: Do you think the global mining industry is producing enough minerals to meet the demand for a low-carbon future?  

Brendan Marshall: The forecast for demand for raw materials to transition to a low-carbon economy is astronomical. According to a World Bank study we are seeing upwards of 500% projections in demand increase for raw materials needed to decarbonize. To answer your question, at present, no we are not producing the volumes of materials, we need more. 

In the case of nickel, the World Bank wants near or doubling to achieve that goal and most of that will go into batteries for electric vehicles. Currently there are seven [nickel] mines in Canada, there are two smelters and a refinery. If we are to maintain current market share, we will need to bring online about seven more new [nickel] mines in the next 29 years.  

TNM: What are the challenges? What do we need to do? 

BM: We need to discover where these deposits are located. We need exploration programs, new critical minerals deposits. We need infrastructure building. In the Canadian context, many of these deposits are likely to lie in remote northern regions. We need to create an economic and regulatory environment that allows these deposits to be viable. We need regulatory confidence and certainty that business needs to advance projects through the development phase … we need to do that in a condensed timeframe.   

TNM: Is that realistic?   

BM: We are never going to know until we try. If we don’t try, we have already failed. I am on the side of the equation where we need to put the policy in place to give ourselves the best opportunity for success. In Canada, another really important consideration is that it’s better for the global environment. Canada has the cleanest electricity grid on the planet and as a result, our metal production is among the least carbon-intensive in the world. Canadian-produced nickel is the second-lowest carbon intensive in the world. The more materials that we can source with the least carbon intensity, the better.   

TNM: Do you think an increase in critical metal production is going to increase carbon emissions? How do we balance that?  

BM: It’s one of the reasons why the mining industry acknowledges we are not here just to provide more raw materials, we need to be a part of the solution also in the sense of reducing our own carbon footprint. What that means for us practically, we need a technology push on an accelerated basis.  

We are seeing decarbonization of mobile equipment (cars, trucks) through the implementation of battery electric vehicles. There is a wide array of technology that is currently deployed and is allowing sites to decarbonize.  

But in the off-grid zones, it’s different.  In Canada we have a fleet of off-grid mines that are subject to mounting carbon costs. Looking long term, we need to ensure that the critical minerals are viable and we also need to ensure that we are responsibly creating technology that will allow the off-grid sites to decarbonize. We believe the future of off-grid mining in Canada is critical because this will increase.  

In 2018, 52% and 62% of Canada’s nickel and cobalt, respectively, were extracted from off-grid mines. That is over half of Canada’s mine production not connected to the grid. Despite that, despite the reliance on fossil fuels for transportation, the materials extracted are transported to smelters that are run by clean power and the low-carbon intensity smelting and refining activities are what create this low carbon advantage. We need both these activities to keep the supply-chain healthy. Assuring the future of Canada’s off-grid mining industry is a really significant part of achieving broader electric vehicles and batteries, which again is critical to help decarbonize.  

TNM: Can you elaborate on the need for a ‘just transition’ towards clean energy in the mining sector? 

BM: Currently what we are seeing in the north is an example of policy incoherence. Let me start from the beginning. The mining industry in the north is the largest private sector investor, it’s the largest private sector employer of indigenous Canadians, it’s the largest trainer and partner of indigenous communities around which mines are operating, it is a driver of indigenous economic reconciliation… so that’s one of those policies where it’s a priority for the Federal government to continue driving indigenous reconciliation. And in the north, the mining industry is the largest component of driving indigenous economic reconciliation.  

Now on the climate mitigation side, we see a number of measures that are put in place to drive decarbonization. Carbon prices are designed to facilitate changes in behavior. If you raise the cost of carbon for example, that creates an incentive to move away from that fuel to another tech, and that’s a powerful signal in many cases … but in the north that is muted because without alternative technology to move towards, the reliance on fossil fuels persists, and thus the carbon cost strategy does not provide the energy transition that everybody is desiring.  

We have a climate mitigation policy that is increasing the cost of doing business in a region that is already the most expensive jurisdiction in Canada and arguably the world. Then you have a message on the clean technology side, which says we need more materials, we need more graphite, cobalt to meet the projected demand of clean technology.  So, on the one side you get a policy that’s making it more difficult to do business, and then you have the indigenous reconciliation aspect. If those off-grid mines are unable to continue operating, the clean technology measures and also the broader business reconciliation driver become offline. 

Those sites are reliant on diesel. There is no other alternative available to deeply decarbonize. Companies are doing what they can, for example there are wind turbines, there are other members who are working to displace diesel with renewable power, but today it only amounts to 10% of displacement of diesel fuel. So, it’s not a scalable solution. 

We need more time but we need policies to be sensitive to that. Time is not something that one can afford with the proposed carbon price increases. We have a set trajectory for carbon price increases across Canada to $170 a tonne.  By 2030, we are anticipating a clean fuel regulation to come into effect, which is another significant cost for liquid fuel consumers which is what off-grid mines consume overwhelmingly and so, time is not on our side. And that’s where the policy incoherence resides. 

We would like to see greater policy coherence that allows progress in each of those areas. And we are not seeing that at present. There needs to be a greater set of balance particularly in the off-grid mining sector and the competing public policy priorities … if we don’t see that, those operations will become a constituency of concern in the context of just transition dialogue.