Closer EU-Canada ties face critical minerals test

Ahead of Montreal summit, both sides agree they need to break free of China and Trump’s tariffs – but years of talks have yet to produce a real investment.

“There’s a lot of money to be made here. They say critical minerals are the new oil,” said Ronald Ewasiuk, mayor of Bruderheim, while looking over a paper map showcasing the area in his office.

In this rural town east of Edmonton, the mayor is hoping a new processing plant and Europe’s hunger for critical minerals will do for Canada’s industrial heartland what oil once did. The first test of closer ties is at a Montreal summit, where the EU and Canada aim to turn years of memorandums and strategic partnerships into actual investment.

It’s a shift both sides need as China tightens its grip on mineral supply chains and Washington’s tariffs strain Canada’s reliance on the United States’ market. 

Ewasiuk points to where a new hydrometallurgical facility is being developed to process mineral concentrates from a mine in the Northwest Territories. For the former oil worker, future European investment offers an opportunity for Canada. “We have plenty of opportunities here for European companies, in mining and processing.” 

The issue isn’t willingness, but comes down to details. Without a shared list of priority minerals and a solid funding plan, officials and analysts warn, the summit might end with another round of good intentions rather than mines and refineries both sides say they need. 

China’s grip, Canada’s potential gain

Critical raw materials underpin Europe’s economy, from electric vehicles and renewable energy to digital infrastructure and defence. Yet the bloc remains heavily dependent on imports, particularly from China, which accounts for 60 per cent of global production of critical raw materials and 90 per cent of refining capacity. 

Breaking its dependency on Beijing was at the heart of the EU’s critical minerals policy adopted on 2024. But, two years on, the European Court of Auditors warned that the EU risks falling short. It found that 10 of 26 critical raw materials are fully imported and that none of the rare earths used in the EU are processed domestically.

Canada is a mining powerhouse, home to 34 critical minerals including significant quantities of uranium, nickel, cobalt and copper, and is well placed to plug that gap – particularly as the two blocs grow closer, with the CETA trade deal in 2017 to European Commission President Ursula von der Leyen’s offer to make Canada the EU’s first associate member in September.

“Critical minerals are very much at the heart of the current conversations between the EU and Canada,” Ollie Sheldrick of Clean Energy Canada, a Vancouver-based think tank, told The Parliament. “The EU has almost no domestic raw materials. If it’s serious by doing away with China, a partnership with Canada is a logical move.”

Mutual benefits

Canada, meanwhile, has its own reasons to diversify trade and attract investment. Its mineral industry is closely integrated with the United States, but that relationship has become more uncertain amid the recent trade conflict with Donald Trump’s administration.

Last summer, Washington announced a 50 per cent tariff on Canadian goods, following disagreements over access to Canada’s critical minerals. U.S. officials reportedly sought preferential access to Canadian mines, including a right of first refusal on critical minerals.

“Trump’s aggressive, coercive trade policies have made it clear that like-minded countries like Canada, the EU and member states have to work together,” Lawrence Herman, senior fellow at the C.D. Howe Institute, a Toronto-based policy think tank, told The Parliament. “There’s now a very strong foundation in place for both Canada and Europe to do a separate deal on critical minerals.”

Canada is also in dire need of investment to develop its mineral resources and build processing facilities. Having closed multiple smelters over the past fifteen years, the country has become largely a “mine-and-ship” jurisdiction that leaves refining to others, mainly China.

Ottawa has announced C$2bn into its Critical Minerals Sovereign Fund over the next five years, alongside C$371m for northern infrastructure. But public funding alone cannot meet the sector’s needs.

“Access to capital is one of the top risks for the Canadian mining industry,” John Steen, Director of the Bradshaw Research Institute for Minerals and Mining in British Columbia, told The Parliament. “The industry is under a lot of pressure to expand, but can’t access the capital. Having a friendly and aligned partner like the EU would be very positive.”

European investment could help Canadian producers move beyond extraction into refining and recycling, while giving European manufacturers more reliable access to processed materials. On Thursday’s summit in Montreal, the European Invetstment Bank is expected to ink a framework financing agreement with Ottawa, Politico reports. Canada’s restrictions on investment by Chinese state-backed companies could create further opportunities for European firms. 

Technology is another area for cooperation. “The Canadian mining industry is in need of a lot of technological know-how to develop,” Steen adds. “And some of the EU countries are making great progress in developing technologies.”

A shared vision

Canada and the EU have already established a framework for cooperation, from their 2021 Strategic Partnership on Raw Materials to a 2026 letter of intent between the European Investment Bank (EIB) and the Canadian government. But these strategic partnerships have yet to turn into significant investment, explained Sheldrick.

The EIB has since applied for an exemption from foreign bank status in Canada, which could pave the way for European financing of critical minerals projects. Approval is pending, and the application carries no funding commitments.

For cooperation to succeed, analysts say both sides must agree on priorities.

“The EU and Canada need to have a clear shared vision for where they want to go,” Sheldrick said. The different agreements haven’t provided clarity on how to share the supply chain needs, he said.

Canada’s mineral trade is geared towards the U.S., meaning shifting supplies to Europe will require new commercial ties and infrastructure. Transport costs and EU regulatory requirements also pose challenges for Canadian suppliers.

Investors also need clarity on which minerals the EU wants. Of Canada’s 34 critical minerals, 24 are considered critical by the EU, including 13 classified as strategic. Yet the partnership has not established which should take priority.

“Right now, investors do not understand what they need to be looking for to ensure they’re separating the wheat from the chaff,” Marilyn Spink, executive director of the Canadian Critical Minerals and Materials Alliance, told The Parliament. “That means there needs to be a strategic plan for the Canada-EU partnership from mining to recycling.”

Neither Europe will wean itself off Chinese supplies overnight nor Canada abandon its U.S. trading ties. The key question is where the next mine, refinery or processing plant will be built, and who will finance it.

“It took China three decades to build a critical minerals supply chain,” Steen said. “The EU and Canada can do it faster, but they aren’t going to turn on a dime. What we need to see out of Montreal is a concrete, long-term plan to do that with real investment behind it and timelines that are realistic.”

In Bruderheim, the mayor is already looking ahead to what the new mineral refining plant could bring to the town. Driving through its streets, Ewasiuk points to the potential for new housing and businesses as the community prepares for an influx of workers. “We can accommodate twice as much growth. We are ready,” he said.