Yahoo Finance Australian miner bails on Quebec rare earth projects amid First Nation resistance
Australia’s Vital Metals Ltd. walked away from two Quebec-based projects earlier this week due to objections from the Kebaowek First Nation, the latest evidence that maximizing Canada’s potential to be a player in the energy transition will require a more sophisticated relationship with Indigenous communities.
The Sydney-based company had signed an $8-million agreement with Montreal-based Quebec Precious Metals Corp. (QPM) in August last year to acquire 68- and 100-per-cent interests in the Kipawa and Zeus rare earth projects situated in Quebec’s Témiscamingue region, about 90 kilometres northeast of North Bay, Ont.
But Vital said on Oct. 10 that the deal would not go ahead because it wasn’t “satisfied” with the Quebec company’s “ability to progress its understanding of the Kipawa (Kebaowek) First Nation’s stated objection to the projects and to determine whether support from the First Nation can ever be obtained.”
Justin Roy, Kebaowek First Nation’s economic development officer, said that the Zeus and Kipawa projects were situated near Brennan Lake, which he described as the “heart” of the community, as the area was home to a significant population prior to the early 1970s.
“We understand the need for rare earths in today’s world, and also understand the technology to extract these materials has … become less impactful,” said Roy. “(But) for Kebaowek to get behind a mining project that would largely impact the location of where our community came from is just a non-starting point.”
Roy added that the sites of the projects were located on the Kipawa river, which is “the main water entry point” for Lake Kipawa, a water body that the Kebaowek community and Wolf Lake First Nation depend on for drinking water.
“The possibility for contamination of our waters, is also a big non-starting point for us,” said Roy.
QPM’s CEO Normand Champigny said in a press release that he expects to receive other offers for the company’s non-core projects. “With the current market conditions for rare earth projects, we expect that we will receive further expressions of interest for these projects,” he said.
Prime Minister Justin Trudeau’s government allocated more money in its latest budget to develop projects dealing with rare earths and other critical minerals such as nickel and lithium, as it looks to build a battery eco-system to support the production of electric vehicles. The government also is looking into ways to speed up the development of mines, some of which take up to 15 years to build.
But activists say governments must also focus more on the relationships these projects have with Indigenous groups for it to meet its goals. “The kind of conflicts that we are seeing, Indigenous communities don’t necessarily want to stop mining, but they do want a say in how it happens and where,” said Jamie Kneen, who co-leads operations at Mining Watch Canada, an Ottawa-based non-profit.
“We have heard industry voices over the years saying they understand this and some of them are working towards that. Others may be less diligently,” Kneen said.
The Ring of Fire project, situated in northern Ontario’s James Bay lowlands, about 500 kilometres from Thunder Bay, is another example where authorities have faced resistance from Indigenous groups.
Ontario has described the Ring of Fire as one of the most promising regions for developing critical minerals, and Premier Doug Ford’s government hopes to build an all-season road into the area to make mining easier.
While the First Nations of Marten Falls and Webequie support the move and are currently conducting environmental assessments for the planned roads, some of the other First Nations in the area, including Neskantaga, Attawapiskat and Fort Albany, oppose construction and have asked for a clearer picture of the impacts of mining on the region’s environment before the project progresses.
Canadian miners who run projects outside the country have also faced similar battles in recent weeks.
Chile’s environmental watchdog filed four charges against Toronto-based Lundin Mining Corp. in early October in relation to a 36.5-metre-wide sinkhole that first appeared near the company’s copper mine in July.
In late September, an analysis conducted by geo-environmental experts of a Colombia-based non-profit alleged that there were “serious errors and omissions” in Toronto-based Dundee Precious Metals Inc.’s plans of developing a gold-copper mine in Ecuador that could put local communities at “significant risk” and lead to arsenic contamination. The Canadian miner rejected the findings.
Vital Metals brands itself as Canada’s first rare earth producer, thanks to its Nechalacho mine in the Northwest Territories. The company’s decision to bail on its agreement with QPM could prove to be a crucial development, as analysts expect a major crunch in rare earths in the coming years.
“It has become evident to Vital that, given the excellent potential of the assets it currently holds, proceeding with the acquisition would divert funds from its current high priority Nechalacho project construction,” Vital said in a press release, adding that the development of the Kipawa and Zeus projects would not have occurred for “several years.”
Rare earths are a group of 17 naturally occurring metallic elements often found together in the earth’s crust. The demand for them, specifically neodymium, praseodymium and smaller levels of dysprosium and terbium, has increased in recent years as they are needed to manufacture electric vehicles and wind turbines.
Adamas Intelligence, a research firm, expects a major neodymium-praseodymium oxide shortage by 2035 and estimates the commodity will triple in value by then. Ryan Castilloux, the research group’s founder, in June said China, the world’s biggest producer of magnet rare earth oxides, could stop exporting the minerals within the next decade to meet its own demand.
Despite the high demand, there are few producers outside of China. A number of junior Canadian miners though are exploring rare earth properties, and for these projects to be a success in the future, analysts like Kneen are calling for better relationships with indigenous groups.
As he puts it: “Unless, all those issues are taken into consideration, there is a real risk that all of the political plans are really not going to come to fruition.”
• Email: nkarim@postmedia.com | Twitter: naimonthefield
