Canada, being a quick adopter of renewable energy and home to large reserves of sulphide deposits, which require less carbon intensive processing, becomes the ideal nickel supplier.

However, increasing geopolitical tension between nickel producers is posing potential threats to the security of the entire supply chain. As a result of this, Canada has decided to intensify the regulation of large foreign state-owned enterprise investments in its critical minerals sector.

Acquisitions of Canadian businesses, whose value is greater than the C$454m (US$349m) threshold, will trigger the Investment Canada Act. This means that the transaction will require the approval of the Minister of Innovation, Science and Industry on an exceptional basis. Moreover, all foreign controlled operations are subject to a potential national security review.

The government is targeting net zero by 2050, and to reduce emissions by 40-45% from 2005 to 2030, as stated in the Net-Zero Emissions Accountability Act. In 2020, the country emitted 672Mt of emissions, an 8.9% decrease from the 738Mt emitted in 2019.

However, this reduction is attributed to reduced economic activity caused by the pandemic. To further decarbonise, a C$8bn (US$6.2bn) Net-Zero Accelerator Fund has been launched to help large emitting companies retrofit their equipment.

Additionally, the deadline for all new vehicle sales to be electric has been brought forward from 2040 to 2035. The price of carbon will also increase by C$15 (US$11.5) per year, from its current price of C$50/t (US$38.5/t) to a cap of C$170/t (US$130.8/t) in 2030.

Integrated Operations

AME is forecasting Canada to produce 30kt of finished nickel in the December quarter. This will lead to a finished production of 121kt in 2022, a 6.6% annual increase. The US’ sole nickel producing mine – Eagle Project, also processes its concentrates here.

By 2027, the country is forecast to produce 139kt of finished nickel, equating to a CAGR of 2.8% from 2022 to 2027. This will further grow at a CAGR of 1.9% to 176kt in 2040. Growth is expected to largely come from existing projects expanding their processing capacities.

Ore mined in Canada is processed by two major producers. The first is mining giant Vale’s Sudbury and Long Harbour operations. Ore is sourced from a series of its own underground mines in Thompson, Voisey’s Bay and Sudbury, as well as other third parties. These feeds are then smelted and refined to a class 1 product. A nickel oxide intermediate is also produced to be processed at the Clydach refinery in the UK.

An agreement was struck with Tesla for the supply of low carbon class 1 products. The company is aiming to eventually supply 30-40% of its class 1 production to the EV batteries market. Vale produced nickel has a carbon intensity of 4.4tCO2eq per tonne of finished nickel, which is significantly lower than the industry average of 10tCO2eq.

In terms of decarbonisation efforts, the company is targeting a 33% reduction in emissions by 2030, compared to 2017, and to become net zero by 2050. A total of 30 battery electric vehicles (BEVs) have been deployed in Vale’s underground mines, while conveyors have replaced haul trucks to cut emissions. Hydroelectricity is sourced to partially power Vale’s Eastern Canadian operations.

Sudbury will remain competitive as a low carbon supplier in the medium to long term. The site is in the 2nd quartile of the cost curve and benefits from significant by-product credits. While current Reserves are only expected to last another 10 years, there is substantial exploration potential that could provide upside to ore reserves, and extend mine life. Other exploration projects in the Sudbury Basin may also opt to process ore at Vale’s facilities.

A nickel sulphate plant in Bécancour of Quebec has been proposed to expand Vale’s presence in the battery sector. The site will have a production capacity of 25ktpa of nickel in sulphate. A long term agreement has been signed with General Motors for its offtake.

The country’s other giant is Glencore, who owns the Sudbury Integrated Nickel Operations (INO). Produced matte is shipped to Nikkelverk in Norway for further refining. At the Raglan mine, an agreement with the Union has finally ended a three-month strike. In May, 630 workers had walked out to protest for better working conditions. Limited mining activities continued, but processing operations had been halted in the meantime.

The Sudbury INO is expected to remain stable and competitive in the medium to longer term. The site is in the 2nd quartile of the cost curve due to substantial by-product credits. The developing Onaping Depth mine is expected to extend the mine life of the operation.

The site will source BEVs from MacLean Engineering and Epiroc to eliminate diesel-powered vehicles, which is expected to reduce total project emissions by 44%. The Sudbury extension mine is located 2,500m below the existing Craig mine, and is expected to commence production in 2024. It will produce 20ktpa of nickel and 9ktpa of copper over a mine life of 11 years.

Glencore is aiming to achieve 50% emissions reduction by 2035, from 2019 levels, and net zero by 2050. In 2021 the company emitted a total of 2,400kt in Scope 1 and 50kt in Scope 2 emissions from its global nickel operations. Glencore is also part of the Quebec cap and trade system.

In 2021 the company was allocated a total of 288,485 carbon allowances, and an additional 14,779 credits were purchased. This amounted to a total of 312,844t of carbon emitted from its nickel, copper and zinc operations in Quebec.

Sherritt’s Fort Saskatchewan refinery processes MSP from the company’s own Moa Bay HPAL operation in Cuba. The site is in the 2nd quartile of the cost curve, with the largest source of cost coming from feed acquisition. The integrated nature of this operation allows production costs to be lower than other older HPAL operations.

Sherritt has published a target of 10% emissions reduction by 2030, and to reach carbon neutrality by 2050. In 2021 Fort Saskatchewan emitted 334kt in Scope 1 emissions and 59kt in Scope 2 emissions. An Energy and Greenhouse Gas Improvement Plan has been drafted to investigate the feasibility of different emission reduction methods.

Mined Supply

Canada is also forecast to produce 37kt of mined nickel in the December quarter, and a total of 139kt in 2022. This will be a 11.2% increase from 2021, as production saw a dip last year due to pandemic related lockdowns. By 2027, 166kt of mined nickel will be produced, an increase by a CAGR of 3.6%. Production will then grow by a further CAGR of 3.8% to 270kt in 2040.

Giga Metals has formed a JV with Mitsubishi called Hard Creek Nickel Corp to develop the Turnagain project in British Columbia. A recently released Preliminary Economic Assessment suggests a mine life of 37 years for a production of 33ktpa of contained nickel in 18% grade concentrate. Cost estimates puts Turnagain in the 2nd quartile of the cost curve when it comes online in 2028.

However, costs may increase in the longer term due to low ore grades. Waste and tailing rocks may be considered for carbon sequestration. The operation has access to Highway 37, which connects to the Port of Stewart 400km away, and a small 900m dirt airstrip. A Prefeasibility Study will be released in the first half of 2023.

Another Canadian explorer, Flying Nickel Mining, believes that its Minago project in the Thompson Nickel Belt will be a global leader in low carbon production. Preliminary analysis suggests that the project will have a carbon intensity of 0.99tCO2eq/t. Power will be sourced from hydroelectricity.

Trolley trucks and an electric mining fleet will also be used to further decarbonise. Further offsets are possible with waste rock sequestration. The project will have access to the Manitoba Provincial Highway 6 and a 230kV transmission line within 2km from the site.