Canada made a significant move on Friday by issuing an important critical minerals announcement at the close of the G7. The key innovation here is the use of direct government offtakes by the Government of Canada. Let’s break it down.
First, why is the use of price mechanisms significant?
As Canada’s Minister of Energy and Natural Resources Tim Hodgson said on Friday, “We need to create the certainty of demand and the certainty of pricing so that those mines and processing facilities can get built.”
This is exactly what we argued in Getting Prices Right last year: “Why, despite Canada’s ambitions and strong position, has development been hampered? In short, the problem is the uncertainty surrounding demand, which creates price uncertainty.”
As I wrote in the Globe and Mail in September: Canada’s critical minerals policy has until now depended on “various funds, tax incentives and infrastructure commitments, but nothing that directly addresses the fundamental investment challenge: price uncertainty.”
I further argued that the U.S. Department of Defense’s MP Materials deal showed the way forward with its use of a ‘contract for difference’ pricing mechanism.
And I think that is exactly what Canada has done with its Nouveau Monde Graphite offtake deal here.
So, second, how has the government deployed demand-side offtakes and price tools here?
Here are the key points Canada announced regarding Nouveau Monde Graphite and Rio Tinto’s scandium project:
- These are direct Government of Canada offtakes, in which the government is agreeing to buy 15,000 tonnes of graphite for 7 years and 9 tonnes of scandium (~30% of the global market).
- Both have marketing agreements in which the GOC will work with the firms to find buyers.
- Canada is guaranteeing demand through the offtake, but is not necessarily going to hold or use the materials itself.
- This is an important policy innovation: the creative use of a term sheet to have catalytic effect.
The Nouveau Monde Graphite deal appears to be an offtake operating as a contract for difference. Here are the key points from their press release:
- “The Government of Canada is set to secure 15,000 Tonnes per Annum (tpa) of graphite concentrate on a take-or-pay basis at a fixed North American market price”
- “A marketing term sheet in relation to the Government of Canada’s committed volume allows NMG to market their volume and includes a 50-50 profit split above the agreed upon fixed price.”
What does this mean?
- The government is guaranteeing a minimum price per tonne and agreeing to split upside above that price 50/50.
- This is an offtake operating as a contract for difference: they’ve agreed to a strike price (not publicly stated) and the government will effectively cover any gap below the strike and share benefits above it.
- The 15,000 tpa is just a portion of the offtake. The announcement Friday also included offtakes by Panasonic, Traxys (a metals trader), and ongoing discussions with GM.
- The deal is supported by the Canada Growth Fund’s 2024 equity stake (~$35m).
- With all this, NMG must be close to FID. The Growth Fund has warrants to take another ~$65m in equity at FID.
It is natural to wonder if the Rio Tinto term sheet has the same mechanism built in—though they would not likely need it and would be less likely to agree to a 50/50 split above the strike.
The metals are well chosen: Scandium is a rare earth used in clean energy and defence in which China controls 85% of refined supply, while graphite is a dual-use mineral in which China controls 95% of supply but prices fell rapidly in 2025. Clearly, these are targeted interventions designed to diversify supply in two of the highest concentration metals.
Also on the demand-side, the government has also signaled that it will create stockpiles for critical minerals and has initiated the legal-technical steps to put this in place. This would provide another demand-side tool.
Two pieces of the announcement will create new midstream assets in Canada:
- Ucore Rare Metals is getting $36.3m from the GOC for its Kingston rare earths separation project. They have MOUs with firms from G7 countries. Great news.
- Vianode (Norway) will set up a synthetic graphite facility in St. Thomas, supported by letters of interest from EDC and CIB. The company has an offtake with GM.
Two other interesting pieces:
- Torngat’s rare earths, previously supported by EDC and the CIB, has a 10-year offtake from a French rare earths separation startup, Carester (France), which aims to start production at the end of 2026.
- Northern Graphite gets some good news in the form of a letter of interest from Alkeemia, an Italian graphite purification startup.
Friday’s announcement is hopefully just the opening salvo in Canada’s counter-offensive.
China’s stranglehold on critical minerals wasn’t built overnight—it was constructed through decades of strategic state procurement and patient capital deployment. Canada finally has a credible answer: offtake contracts that provide pricing certainty without the fiscal burden of direct subsidies.
Canada can become the democratic world’s critical minerals arsenal. The geological endowment is here. The mining expertise is here. The missing ingredient was always the policy tool to make it happen.