Yes — Canada has a real chance to challenge China’s dominance in the critical minerals space, but it also faces significant hurdles. It won’t be easy, and it won’t happen overnight. Below is a breakdown of where Canada is strong, the obstacles, and what would need to happen for Canada to make a serious dent in China’s stranglehold.

What Canada already has working in its favour

Abundant natural resources

Canada has many of the key minerals needed for technologies such as electric vehicles, batteries, magnets, renewable energy. These include lithium, graphite, nickel, cobalt, rare earths, copper, etc.

Some parts of Canada also have good geology and reserves that are under‐developed or awaiting investment.

Policy momentum & government support

The Canadian government has published a Critical Minerals Strategy, with significant funding (~US$3.8 billion in its 2022 budget) earmarked for exploration, innovation, processing, and improving supply chain resilience.

Tax incentives: exploration tax credits, investment tax credits aimed at encouraging both upstream (mining) and downstream (processing/manufacturing) activity.

More stringent rules regarding foreign investment in critical minerals to protect strategic resources.

International partnerships

Canada is building alliances (e.g., with Germany) to secure supply chains and to co‐fund projects. This helps share risk and increase scale.
(Prime Minister Canada)

Participation in G7 Critical Minerals Action Plans and similar international dialog to establish standards, traceability, reliability in supply chains.

Potential for downstream value addition

It’s not enough just to mine the raw materials; the big leverage comes from refining, processing, manufacturing components. Canada is pushing to build these capabilities.

Major challenges Canada must overcome

China’s entrenched dominance, especially in processing & refinement

China doesn’t just dominate raw mining or extraction; it has built up massive capacity in refining, chemical processing, the mid- and downstream stages of the supply chain. That gives it leverage and scale, producing at lower cost in many cases.

Many critical minerals are hard to refine to battery/usable/industry‐grade. This requires specialized plants, regulatory approvals, environmental permits, etc. Canada lags China in many of those.

Capital costs, timelines, regulatory complexity

Building a mine → refining → component manufacture is expensive and takes many years. There’s risk (price fluctuations, permitting delays, environmental/community opposition). Canada has to ensure not just discovery, but getting through the regulatory, environmental, supply chain and labor hurdles.

Sometimes the financial returns are uncertain for projects, especially in remote regions or for minerals with smaller markets. Attracting private capital under those uncertainties is difficult.

Scale and efficiency

China’s economy of scale in refining and processing gives it cost advantages (labor, environmental regulation flexibility, longstanding infrastructure). Competing on cost alone will be hard; Canada will need to specialize, innovate, or leverage allies.

Also, many of Canada’s critical mineral projects are still in exploration or feasibility stage. The conversion from reserve to operational mine + refining + downstream capacity is often slow.

Supply chain/linkage gaps

Even if raw minerals are extracted, Canada needs domestic or proximate downstream capacity (refineries, chemical processing, magnet and battery component factories) to capture more value and reduce dependency.

Also, for some minerals, there are rare or “difficult” ones (heavy rare earths, etc.) for which Canada currently has less of a foothold than China.

What needs to happen for Canada to be a true challenger

Here are some strategic levers that, if well executed, could allow Canada to meaningfully contest China’s dominance:

Speeding up permitting, improving regulatory clarity

Ensure environmental/community standards are high, but also that processes are predictable and timely. Delays kill competitiveness.

Strengthening Indigenous and local community engagement to reduce opposition and ensure social licence.

Scaling up processing/refining capacity

Not just mining, but building facilities for separation, chemical processing, refining to battery grade etc. Possibly with government or public‐private investment to reduce financial risk.

Clusters of critical mineral value chains (e.g. mining + refining + manufacture) to reduce transport, time, cost.

R&D and Technology Innovation

Developing more efficient extraction or processing methods, recycling, substitution of scarce minerals, lower environmental footprint.

Innovation in material science so that the same function can use less of rare minerals or cheaper alternatives.

Attracting capital & investment

Both domestic and foreign investors need incentives, stability, and confidence in returns. Tax credits, grants, loan guarantees.

Strategic partnerships with allied countries, possibly sharing cost and risk (e.g., Canada-Germany, etc.).

Trade, standards, policy cooperation

Work with allies to set standards (environmental, labor, traceability) to favour “trusted supply chains” over purely low‐cost ones.

Use trade policy, subsidies, procurement policies to favour minerals and components with certified origin, responsible sourcing.

Diversification and resilience

Avoid putting all eggs in one basket: multiple sources, multiple routes for supply, recycling and circular economy.

Make supply chains resilient to geopolitical risk, export controls, environmental disruptions.

Bottom line

Canada has the resources, political will, and beginnings of infrastructure to pose a credible challenge to China’s dominance in critical minerals, particularly in mining and upstream activities. But to truly reduce dependency, Canada also needs to build out downstream capacity, refine minerals locally, scale up, and ensure policy, regulation, and investment enable competitiveness.

If these things happen, Canada could move from being mainly a supplier of raw materials to being a significant player in the more value-added parts of the chain. That shift would reduce reliance on China, benefit Canadian jobs and sovereignty, and help allied countries diversify their supply chains.