The Canadian government has announced that it has initiated one of the largest investments in clean energy worth CAD 70 billion. This investment will support the development of high-quality iron ore mines and combine it with clean energy for green iron production. Additionally, the clean energy and critical minerals corridor in the Labrador region has been referred to the Major Projects Office, aimed at facilitating permitting processes and financing, as well as supporting engagement with Indigenous communities.
Pre-Development Projects in the Labrador Region
The Canadian government is also supporting pre-development projects in the Labrador region, including the Kami iron ore project, which is one of several projects in Canada with the potential to produce high-quality iron ore feed. Major Japanese steel companies such as Nippon Steel, alongside Champion Iron and Sojitz Corporation, are involved in this project. Labrador has been recognized since 1954 as a center for high-quality iron ore production in Canada, producing approximately 50 million tons of iron ore annually.
Canada's Strong Position in the Iron Industry
Canada continues to develop its capacities as a major producer and exporter of direct reduced (DR) iron ore, which is a key feedstock for green iron production. The country is one of the largest exporters of DR pellets alongside Brazil, Sweden, and Bahrain. In contrast, Australia has never been a major supplier of high-quality iron ore and has built its iron ore industry on low-cost, large-scale production for blast furnaces in Asia.
Producers like ArcelorMittal and Champion Iron are investing in upgrading their operations from BF iron ore to DR iron ore so that Canada can respond to the anticipated supply shortfall in DR iron ore over the next decade. This transition is also strongly supported by government financing, exemplified by ArcelorMittal's pelletizing project in Port Cartier, which is expected to commence by 2029.
Recognition of Iron Ore as a Critical Mineral
In 2024, Canada classified high-quality iron ore as a critical mineral, highlighting its strategic importance for the country's industrial and energy transition. This move may be influenced by South Africa, which introduced iron ore as a high-importance mineral in 2022. This action gives Canadian iron ore and green iron projects access to a broader range of policies and financing mechanisms, such as the Critical Minerals Infrastructure Fund.
On the other hand, iron ore (especially high-quality iron ore) is not on Australia's list of critical minerals, despite being the highest value export. Given the severe decline in Australia's export outlook, further support for the iron ore sector, including adding high-quality iron ore to the critical minerals list, may be prudent.
Facilitating Permitting Processes
Canada has recently introduced the "Building a Strong Canada" Act, which focuses on the concept of "one project, one review, one year." This law is designed to facilitate project assessment and permitting processes alongside economic benefits, investment, and job creation, while also protecting the environment and Indigenous rights. The government has described this initiative as "the most comprehensive and ambitious reform in Canada's ability to build major projects in a generation."
The Major Projects Office of Canada is designed to facilitate the permitting process for strategic projects and accelerate their development. Australia has also undertaken similar actions, including granting major project status to the Riserback magnetic project to help facilitate the permitting process for mining licenses. These actions are aimed at reducing lengthy permitting times for new mineral developments.
Ultimately, by investing in infrastructure and access to clean electricity, Canada is laying the groundwork for domestic green iron production and becoming a major exporter of green iron.
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