This article is an on-site version of our Energy Source newsletter. Premium subscribers can sign up here to get the newsletter delivered every Tuesday and Thursday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters
Hello and welcome to Energy Source, coming to you today from New York and Toronto.
The decision by Opec+ to continue boosting oil output at the weekend despite fears of a looming global supply glut has ignited a “flashing red warning light” across the oil industry.
ConocoPhillips and Chevron have made deep cuts, outlining plans to shed up to a quarter and a fifth of their workforces, respectively. My FT colleague Malcolm Moore and I have run the numbers on the affect of falling oil prices on the industry, including a 4.3 per cent drop in capital expenditure this year and lower US production.
The trajectory of oil prices could depend on whether the US and EU agree to increase sanctions on Russia over its refusal to agree a ceasefire and work towards a peace deal with Ukraine. In this exclusive interview, Chris Wright, the US energy secretary, calls on EU states to stop buying Russian fossil fuels if they want Donald Trump to tighten sanctions on Vladimir Putin’s “war machine”.
Our main item today is from Ilya Gridneff in Toronto, who reports on Canada’s ambitions to use its rare earth resources to challenge China’s dominance of critical minerals.
Thanks for reading, Jamie
What’s missing from Canada’s critical minerals push
Canada is positioning itself as a strategic counterweight to China’s dominance of rare earths and critical minerals. But the Canadian mining sector needs more investment to become an alternative supplier of the materials essential for the energy transition, industry experts say.
Canada is a mining nation — the Toronto Stock Exchange and TSX Venture Exchange list more than 1,000 mining companies producing a range of commodities such as potash, gold and copper.
It also has some of the largest known reserves of rare earths, estimated at more than 15.2mn tonnes of rare earth oxides in 2023.
But China controls about 60 per cent of the world’s rare earth mining production and close to 90 per cent of processing and refining, according to the International Energy Agency.
Critical minerals have been a central focus of US President Donald Trump, who issued an executive order in March this year to “take immediate action to facilitate domestic mineral production to the maximum possible extent”.
Ian London, executive director of the Canadian Critical Minerals and Materials Alliance, an industry group, told Energy Source that developing complete supply chains for a broad industrial base is more important than simply focusing on mining.
“We have inconsistent policies and we have conflicting priorities. We need to stop the talk,” he said.
Last month Prime Minister Mark Carney met Germany’s Chancellor Friedrich Merz in Berlin and signed a “joint declaration of intent” to deepen co-operation on critical minerals, energy and supply chain resilience.
London said Carney’s critical minerals push in Europe was “certainly a step in the right direction” but he had “concerns” regarding the lack of deliverables or deals.
Heather Exner-Pirot, director of energy, natural resources and environment at the Macdonald-Laurier Institute in Ottawa, said financial support of the mining industry rather than policy was what is really needed.
“There’s consensus on using public funds to support projects with a security aspect,” she said. “But it will always be a challenge to find the right balance — to maximise the flexibility and responsiveness of the market with the structures of the private sector.”
“Canada will be better off if it can unleash its . . . mining financial sectors to solve these problems, rather than try to solve them all in Ottawa.”
In July the US defence department made an unprecedented $400mn direct investment in the Las Vegas-based MP Materials and guaranteed a decade-long price floor for its output at nearly double the current market rate. A tie-up with Apple, which is paying $200mn upfront to buy MP’s magnets, which will be used in iPhones and computers, sweetened the deal.
The Pentagon has made several minor investments in Canadian critical mining companies but far more is needed to encourage investment and to build refineries.
Torngat Metals, a Quebec-based rare earth company, secured C$165mn (US$120mn) in Canadian government loans in June to support the next phase of its Strange Lake project that aims to begin production in 2028.
It was one of the companies touted during Carney’s trip to Berlin as part of Canada’s diversification away from an over-reliance on the US economy.
Torngat also received $50mn in November 2022 from Cerberus Capital Management, which at the time was co-run by Steve Feinberg, who is now deputy secretary at the US department of defence and led the MP Materials deal.
But Exner-Pirot said despite the urgency, building new projects was still a slow process.
On average, a Canadian mine takes almost 18 years to become operational if it came online in 2020–23, according to an S&P Global study that looked at gold, copper, nickel and lithium projects that began production since 2000.
In June, Ontario premier Doug Ford said Canada would fast-track the “Ring of Fire” project as the deposit, about 1,000km north of Toronto, contains vast quantities of minerals, including nickel, copper and platinum elements.
But its remote location on lands belonging to First Nations people, as well as the huge costs and environmental risks involved in developing the region, have delayed its progress since being first discovered in 2008.
“It is a priority premier Ford has raised with the prime minister just last week,” said a spokesperson for Ford, adding there was an expected “update on enabling infrastructure for the ‘Ring of Fire’” on Wednesday.
London said Canada needed an integrated strategy for a complete re-industrialisation of its economy and geopolitical outlook.
“We need to get a blue-ribbon panel of proven and trusted industrial and financial experts to say, ‘here are the five projects or value streams we are going to be doing’ and get them into production. Right now, we essentially just aspire to do that,” he said. (Ilya Gridneff)
Power Points
EU weighs sanctions on China for Russian energy imports, as Trump signals a readiness to go after Moscow’s oil and gas revenues.
Heat pumpmaker Daikin warned Europe’s market was in a “structural” slump, as the Japanese company conceded demand was only one-third of its previous projections.
Is Norway too rich for its own good? As voters prepared to go to the polls, value for money became a key campaign issue in the “oil fund nation”.
Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Kristina Shevory, Tom Wilson, Rachel Millard and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.
Recommended newsletters for you
Moral Money — Our unmissable newsletter on socially responsible business, sustainable finance and more. Sign up here
The Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up here