Shifting Alliances in Mineral and Energy Supply: What Canada Must Do to Stay Competitive
Introduction
The global resource landscape is changing, driven by shifting geopolitical alliances and strategic economic moves. The United States, historically reliant on Canada for energy and mineral needs, is now looking to diversify its supply chain through agreements with Ukraine and the Democratic Republic of Congo. This presents both challenges and opportunities, especially in terms of market positioning, workforce demand, and investment flows.
At Intelligenciia, we are more than recruiters. We are industry specialists with extensive knowledge of the mining and natural resources sectors. Our passion for this field drives us to track global developments, ensuring our clients stay ahead of industry changes. We work closely with companies to secure the talent they need, offering insights that help them adapt to emerging challenges and opportunities. As the demand for skilled professionals grows in Ukraine and the Democratic Republic of Congo, our expertise in placing top-tier talent becomes even more crucial.
The United States-Ukraine Mineral Agreement: A Strategic Move
A recent agreement between the United States and Ukraine to develop Ukraine’s mineral resources, including oil and gas, could have far-reaching effects. This deal, which strengthens ties between the two nations, allows Ukraine to monetize its natural resources to fund recovery after the war while ensuring future energy supplies for the United States (1).
One key aspect is the shift in energy dependency. With the United States providing support for Ukrainian resource development, questions arise about how Canada’s long-standing position as America’s primary energy supplier might be affected. If Ukraine boosts production, the United States could begin relying less on Canadian oil and gas, especially in natural gas exports (2).
Recent estimates indicate that Ukraine could increase its natural gas production by as much as 25 percent over the next five years if infrastructure projects progress as planned (2). Even a partial achievement of these goals would affect North American energy trade dynamics.
Reports suggest that the current United States administration is finalizing an economic agreement with Ukraine, granting the United States a 50 percent share of Ukraine’s mineral and natural resource revenues. This arrangement is intended as compensation for previous United States military support during Ukraine’s conflict with Russia. The deal emphasizes Ukraine's sovereignty and security but does not include explicit United States security guarantees or commitments for continued weapon supplies (14).
Deepening Engagement with the Democratic Republic of Congo: Existing and Potential Agreements
Beyond Ukraine, the United States has been strengthening its involvement with the Democratic Republic of Congo, a country rich in critical minerals like cobalt, copper, and rare earth elements. Due to the global need for these materials in batteries, electric vehicles, and high-tech manufacturing, the Democratic Republic of Congo is becoming an increasingly vital link in the supply chain for critical minerals (3).
In December 2022, the United States signed a trilateral Memorandum of Understanding with the Democratic Republic of Congo and Zambia to jointly develop a supply chain for electric vehicle batteries, drawing on the Democratic Republic of Congo’s cobalt, copper, and other important minerals. Although this does not explicitly tie security assistance to mineral extraction, it reflects a broader strategy by the United States to find diverse sources of essential resources for clean energy and technology (3).
Canada has traditionally been a top supplier of many of these critical minerals to the United States. However, with an increased focus on diverse sourcing, the United States government could bring in more Democratic Republic of Congo imports, reducing reliance on Canadian production. This is significant, given Canada’s ambition to become a leading name in responsible and sustainable mining (4).
The Democratic Republic of Congo currently produces more than 70 percent of the world’s cobalt, a crucial component in lithium-ion batteries, putting it at the center of the green energy transition (3).
Possible “Minerals for Peace” Proposal
Recent reporting shows that Congolese officials, including President Félix Tshisekedi, have suggested offering Western nations better access to the Democratic Republic of Congo’s mineral reserves if they assist in fostering stability in the region (13). Although this has not been finalized as an explicit minerals-in-exchange-for-peace arrangement, it underlines how the Democratic Republic of Congo is leveraging its resource wealth to secure peace and development.
Security Concerns: Conflict in eastern Democratic Republic of Congo persists, undermining infrastructure, discouraging foreign investment, and causing humanitarian crises.
International Outreach: By pointing to its vital minerals, the Democratic Republic of Congo hopes to attract greater foreign involvement and investment that could help stabilize conflict areas and boost growth.
Western Interest: The United States and Europe, eager to secure stable and diversified supplies of cobalt and other key minerals, may be receptive to projects that also tackle governance and security issues in the Democratic Republic of Congo (13).
Implications for Canada’s Resource Sector
Overall, these developments create multiple concerns for Canada:
Energy Market Competition
If Ukraine expands oil and gas output, Canada could see greater competition in providing fossil fuels to the United States, especially given ongoing pipeline debates and carbon policies (5).Reduced Investment in Canadian Mining
As the United States increases its focus on critical minerals from the Democratic Republic of Congo, Canada risks losing significant investment in its own mining industry (6).Effects on Canadian Exports
The Democratic Republic of Congo’s mineral resources could fill gaps in United States supply chains, lowering demand for Canadian cobalt, nickel, and rare earth elements (7).Higher Demand for Skilled Talent
As mineral and energy ventures expand in Ukraine and the Democratic Republic of Congo, they will require more geologists, engineers, and mining executives. This competition for expertise could create new opportunities for Canadian workers while also intensifying the global talent race (8).Urgent Policy Measures
Canada must introduce better incentives for domestic resource development, such as improving liquefied natural gas infrastructure and adding more capacity to process critical minerals onshore (9).
References
"Ukraine and United States Finalize Minerals Agreement," Financial Times.
"Impact of Ukraine’s Resource Development on Global Energy Markets," Reuters.
"United States Expands Mineral Sourcing from Democratic Republic of Congo," The Wall Street Journal.
"Canada’s Position in the Critical Minerals Market," Mining Weekly.
"Pipeline Disputes and Canada’s Energy Future," Canadian Broadcasting Corporation News.
"Investment Shifts in North American Mining," Bloomberg.
"Critical Minerals and United States Supply Chain Strategy," The Guardian.
"Skilled Workforce Needs in Mining Growth Areas," Mining.com.
"Policy Recommendations for Canada’s Resource Sector," The Globe and Mail.
"Trade Agreements and Canada’s Future in Energy," The Economist.
"Recruitment Trends in the Mining Industry," Human Resources Reporter.
"Strategic Response to Shifting Global Supply Chains," Forbes.
"Democratic Republic of Congo Offers United States and Europe Minerals in Exchange for Peace," Mining.com.
"United States and Ukraine Finalizing Resource Revenue Agreement," The Atlantic.