Canada's Critical Minerals Ambition Hits a Hard Reality: The Missing Refining Link

While Canada boasts 32 critical minerals and strong exploration momentum, the near-total absence of domestic refining and smelting capacity means the country may simply mine resources for others to process unless policymakers and industry close the gap quickly.

Over the past several years, critical minerals have moved from niche industry jargon to a central pillar of national economic and security strategy in Canada and among its allies. Governments have identified dozens of priority minerals, investors have poured capital into exploration, and mining companies have advanced projects with renewed urgency. Yet according to Sander Grieve, a partner at Bennett Jones LLP who advises companies, investors, and governments across the mining sector, one of the most important challenges is receiving far less attention than it deserves: Canada’s near-total lack of domestic refining and smelting capacity.In a wide-ranging discussion on the Markets and Leaders Podcast, Grieve laid out a clear-eyed assessment of where Canada stands in the global critical minerals race — and why closing the downstream gap will determine whether the country becomes a true leader or simply a supplier of raw materials to others.

The Core Problem: Mining Here, Processing There

Canada has successfully identified 32 critical minerals, all of which exist within its borders. Exploration activity has picked up significantly, supported by targeted tax incentives. Many projects are advancing through the development pipeline. However, Grieve highlighted a structural weakness that undermines much of this progress. “The refining and smelting capacity for these minerals is almost entirely outside of Canada at this stage,” he noted. Even with successful mine development, there is a high probability that material extracted in Canada will be shipped to Asia for processing before being sold back to Canadian manufacturers and battery plants with the value added elsewhere. This dynamic creates a troubling outcome: Canada risks simply changing who it buys its processed minerals from, rather than building genuine domestic capability in the full value chain. As Grieve put it, without action on downstream processing, “we’ll just be changing who we’re buying our resources back from when we’re trying to build things in Canada.”The issue is not limited to critical minerals. Similar patterns exist in forestry and other resource sectors, where Canada excels at extraction but often loses the higher-value processing stages to other jurisdictions.

Policy Momentum vs. Execution Gaps

Canada has made progress on the exploration side through tax incentives that are successfully directing capital toward early-stage projects. Policymakers are also articulating clearer intentions around regulatory processes for project development. However, Grieve observed that Canada is largely playing catch-up to more aggressive approaches elsewhere — particularly in the United States, where the government has moved beyond incentives to direct equity investments, concessional debt, and offtake agreements with mining companies. The hardest part of the puzzle, according to Grieve, lies in building or attracting refining and smelting capacity. These facilities are complex, capital-intensive, and often viewed as less attractive than mine development. Yet without them, Canada’s critical minerals strategy remains incomplete. Community relations and regulatory complexity add further layers. British Columbia stands out as particularly challenging, but issues around Indigenous engagement, land use, and permitting exist across the country. Grieve stressed that industry must do a better job demonstrating the tangible benefits mining brings to host communities — including high-quality employment that can transform economic prospects in remote areas.

Gold and Silver Retain Strong Investor Appeal

While critical minerals dominate policy conversations, traditional precious metals continue to attract significant investor interest. Gold has reasserted itself strongly, benefiting from its role as a safe haven amid geopolitical uncertainty, inflation concerns, and ongoing money printing across Western economies. Grieve noted that the Toronto Stock Exchange hosts a large number of gold companies across the exploration, development, and production spectrum, giving investors multiple ways to gain exposure. Majors and mid-tier producers offer more predictable outcomes, while earlier-stage companies provide higher-risk, higher-reward opportunities tied to exploration success and development timelines. Silver has also seen renewed momentum. Both metals benefit from the broader environment of geopolitical tension and macroeconomic uncertainty, which Grieve expects will support continued interest.

Uranium and Copper Stand Out in Critical Minerals

Beyond gold and silver, Grieve identified uranium and copper as attracting particularly serious strategic interest. Uranium benefits from Canada’s world-class assets in the Athabasca Basin and aligns with the growing focus on reliable, low-carbon base-load power. Copper’s outlook is viewed as exceptionally strong due to the combination of declining supply and rising demand from electrification, data centers, and renewable energy infrastructure. Investors are clustering around these clearer, higher-conviction stories within the broader critical minerals universe.

M&A Activity Showing Early Signs of Recovery

Grieve also sees early indications that merger and acquisition activity in the mining sector is beginning to pick up. Majors are reaching the point where they need to replenish depleting reserves, creating demand for quality assets. At the same time, financing conditions have improved, making transactions more feasible. However, many mid-tier and junior companies remain attached to their projects and are willing to continue financing them independently until a compelling catalyst — whether a scarcity of capital or an attractive offer — emerges. This suggests M&A may accelerate gradually rather than in a sudden wave. Geopolitical considerations are increasingly influencing deal-making, with companies prioritizing jurisdictions that offer regulatory certainty, community support, and the ability to advance projects efficiently.

The Long-Term Stakes for Canada

Looking three to five years ahead, Grieve argued that Canada’s success in critical minerals will depend on moving beyond rhetoric to large-scale execution. He noted that while a small number of projects have been designated as being of national interest, the country needs to dramatically scale this approach — potentially to hundreds or even a thousand priority projects across the country. The current model, where Canada mines material that is processed abroad before returning for battery manufacturing or other uses, is unsustainable if the goal is genuine economic leadership. Building domestic processing capacity and shortening the full supply chain will be essential.

What This Means for Canadian Mining Investors

For investors in TSX and TSXV mining stocks, the interview highlights both opportunity and selectivity. Gold and silver remain accessible and liquid ways to gain exposure to precious metals momentum. Copper and uranium offer clearer thematic alignment with long-term structural demand drivers. In critical minerals more broadly, investors should pay close attention to companies that can demonstrate credible paths toward not just mining but also downstream integration or strategic partnerships that capture more value. Projects in jurisdictions with clearer permitting pathways and strong community relations are likely to attract capital more readily. The sector’s momentum is real, but so are the execution risks. Companies that can navigate regulatory complexity, maintain strong social license, and advance projects toward production stand to benefit most as the broader themes of supply chain security and energy transition continue to play out.

Conclusion

Sander Grieve’s assessment offers a pragmatic counterpoint to the often optimistic narrative around Canada’s critical minerals potential. While exploration activity and policy attention have increased, the absence of meaningful domestic refining and smelting capacity remains a fundamental constraint. Closing this gap — alongside accelerating project development and strengthening community partnerships — will determine whether Canada captures the full economic upside of its resource endowment or remains primarily an exporter of raw materials.For Canadian mining investors, the message is clear: the themes are powerful, but success will favor those companies and projects best positioned to overcome the practical challenges of turning resources in the ground into finished products and economic value at home.

Disclaimer

This article is for informational and educational purposes only and does not constitute investment advice, financial advice, or a recommendation to buy, sell, or hold any securities. All statements regarding critical minerals, government policy, commodity markets, mining stocks, and investment outcomes are forward-looking and involve significant risks and uncertainties. Actual results may differ materially from those expressed or implied due to factors including regulatory changes, project execution risks, commodity price volatility, geopolitical developments, and operational challenges in the mining sector. Mining investments involve substantial risk of loss. Investors should conduct their own thorough due diligence, review all public filings and disclosures, and consult qualified financial, legal, and tax advisors before making any investment decisions. Past performance is not indicative of future results.