Canada’s Role in Securing Critical Mineral Supply Chains for NATO

Critical minerals are pivotal for the manufacturing of defence equipment ranging from aircraft to ammunition and armour. Securing these resources is essential for minimizing defence supply chain risks and for the broader green energy transition. For NATO and Canada, defence supply chains have become increasingly complex and vulnerable due to global disruptions like the COVID-19 pandemic and coercive economic tactics, particularly from resource-rich Chinese mining companies. This realized vulnerability has pushed Canada, the US, and Europe to develop legislation to safeguard these critical resources, build supply chain resiliency, and protect domestic defence industry by friend-shoring with Allies. 

Strategies to Secure Critical Mineral Supply Chains 

In 2022, the Canadian government launched its $4 billion Critical Mineral Strategy to bolster domestic industry, identifying six critical minerals as pivotal to the green energy transition. To complement this strategy, the government also laid out provisions to limit foreign investments in Canada’s mining sector, particularly from Chinese companies, under the Investment Canada Act. In May 2024, the EU launched its own Critical Raw Materials Act to secure the supply of essential critical minerals, identifying 17 strategic raw materials that are at risk of disruption and in which demand could increase exponentially.  

At the international level, the G7 published its Critical Minerals Action Plan in June 2025 to build resiliency in critical mineral supply chains and ensure that they are traded in a standards-based market. And in December 2024, NATO released its list of 12 defence-critical minerals that are essential for manufacturing all types of defence equipment. Importantly, all 12 critical minerals identified on NATO’s list are found in Canada, with 10 out of the 12 produced and refined in Canada. 

Canada’s Evolving Critical Mineral Trading Relationships 

Canada’s abundant supply of key critical minerals has allowed it to become a strategic exporter of these resources to the US and European partners. During the 2025 NATO Summit, Canadian Prime Minister (PM) Mark Carney stated that expenditures related to critical minerals will be considered a military contribution towards reaching the NATO target of 5 percent for annual defence spending. This spending will also involve building mining infrastructure, ports, and railroads to ensure these resources are accessible for Canada’s partners. While Canada has tremendous potential in mining reserves, numerous projects in this sector have recently struggled to become operational due to regulatory challenges, inadequate infrastructure, and problems acquiring sufficient upfront capital and equipment; however, the Canadian Government has announced new measures and funding to reduce the impact of these issues.  

The US is Canada’s most important partner in the critical minerals trade, with 56 percent of Canadian mineral exports sent to the US in 2023. In addition, many of the minerals mined in Canada are refined in the US, signifying that a substantial number of mining companies in Canada are dependent on a healthy US-Canada trade relationship for their own success. Thus, the impact of Trump’s tariffs has raised significant concerns about the economic and security risks of this dependency, including the effects of tariffs on the costs of such minerals and how disruptions in these supply chains could lead to reluctance to engage in future partnerships among Allies over the long term. Chinese companies with advanced mineral processing and refining equipment and expertise could take advantage of the rising costs of these minerals by selling them at discounted prices.   

While the US will remain Canada’s top partner for trading and financing critical mineral projects into the future, Canada’s tumultuous trade relationship with the Trump administration and recent drive to diversify its trade partnerships has created opportunities to build joint supply chains with the EU. Canadian mining companies are currently able to export critical minerals to the EU under the 2017 Comprehensive Economic and Trade Agreement (CETA). This partnership further expanded in 2021 when Canada and the EU announced the Canada-EU Strategic Partnership on Raw Materials to integrate critical mineral supply chains. 

Although the US is also an important trading partner for the supply of select critical mineral products for the EU, various European leaders have expressed interest in accessing Canada’s abundant mineral reserves as a way to bolster their own supply chains. Most recently, both sides have expressed the need for enhanced cooperation in this sector through the EU-Canada Security and Defence Partnership and through the EU-Canada Industrial Policy Dialogue. With the US-EU Critical Minerals Agreement still being in the negotiation stage, EU-Canada cooperation in this area looks to have a significant opportunity for continued expansion. 

Potential Areas of Cooperation in Critical Mineral Supply-Chains for Canada 

Most recently, the European Investment Bank recently announced new funding for mineral exploration and financing of defence-critical minerals for which Canada is eligible. However, there are still additional opportunities for Canada and the EU to build supply-chain resilience. One important area of potential collaboration is the stockpiling of critical minerals, given the EU’s recent announcement to prepare emergency stores due to geopolitical instability. To assist the EU in building its stockpiles, Canada could export some of its critical minerals on the EU’s strategic raw minerals list, such as cobalt, after domestic production ramps up. 

A recent report by the Business Council of Canada also recommends that Canada establish its own critical mineral stockpile, potentially composed of the 12 strategic minerals from NATO’s list. Creating these reserves in Canada could boost its credibility among NATO Allies while simultaneously contributing to NATO’s 5 percent military spending target.  

Lastly, to meet NATO’s 5 percent GDP spending target and contribute to supply chain resiliency, several analysts have noted that Canada could develop financing laws equivalent to the US’s Defence Production Act (DPA) Title III, which could provide a signal to mining companies that the Canadian government will place a greater stake in financing new mining projects. Such a move could also incentivize various types of public and private partnerships to fund such resource extraction and processing projects and to encourage stockpiling.  

In conclusion, Canada’s vast critical mineral reserves have the potential to supply the growing demand from NATO Allies. However, Canada must still develop its domestic capacity and the necessary infrastructure to mine these critical minerals, as projects can take up to 15 years from initial project planning to extraction. Despite the unpredictability in Canada’s current trade relationship with the US, the potential environmental, economic, and security benefits of strengthening this sector domestically and building resilient supply chains will remain significant for years to come.