“This tells you how precarious a situation we are in in the current market,” he said, speaking during a visit to the mine, located 150 kilometres northwest of Montreal, by a European delegation working on hatching a new strategic industrial partnerships with Canada. Graphite is high on Ottawa’s priority list of 34 critical minerals — a group of metal, minerals and rare earth elements key to energy transition and defence technologies — as it seeks to reindustrialize Canada’s mining sector while pivoting away from an overreliance on trade with the US in the wake of the Trump administration's tariffs and annexation threats. Prospects could hardly appear more bullish. The global market for natural graphite, such as is hauled out of Lac des Îles, and synthetic versions derived from polluting coking coal, stood at US$30 billion ($41 billion) last year, according to Precedence Research. That figure is forecast to more than double to US$65 billion by 2034. Macquarie, an investment advisory group, in a recent market outlook calculated that six million tonnes a year of graphite alone would be needed globally for EV and electricity grid batteries by the end of this decade. For perspective, Northern Graphite's mine produces 10-15,000 tonnes of graphite ore a year and is ramping up to 25,000 tonnes. “We need to scale this mine to be much bigger than it is and start building new mines,” Jacquemin said. “We need to develop the industrial supply chain that will take these raw materials and turn them into a finished product and then to market.” But the company — and wider Canadian graphite mining sector — faces a formidable challenge: China. The Asian superpower monopolizes the global market for so-called “black lead,” producing and processing nearly 80 per cent of total supply. This gives Beijing the ability to control prices at will and with it, affords it huge geopolitical influence on countries that are in desperate need of the material — including the US, which yesterday levied anti-dumping duties of 93.5% on imports of Chinese graphite. Chinese market manipulation and slowing growth in sales for EVs in North America made 2024 “a year to forget”, said GraphiteHub, a market research site, noting that global trade tensions and international efforts to break China’s chokehold on graphite — such as the high-level critical mineral “action plan” agreed at the recent G7 summit — would be narratives to watch. ‘Broader geopolitical context’ Commercializing Canada’s graphite resource — along with that of other critical minerals such as lithium, cobalt, nickel and rare earth metals central to the emerging clean economy — is an extraordinary challenge at a time of uncertainty over international trade, politics and financing, sector observers say. “The broader context for graphite, like so many critical minerals, is now geopolitical,” said Bentley Allan, lead author on a new report on critical minerals from the Transition Accelerator, a Canadian think tank. “China has been driving down prices in a very explicit strategy to deter Western investment in the critical mineral supply chains — and it has been working,” he told Canada’s National Observer. After hitting highs of $1,000-plus a tonne in early 2023, graphite’s price chart has since looked like a worrying EKG monitor, dropping to lows close to $400/tonne at the end of 2024. “We have been talking about critical minerals for years and there has been a loss of investor confidence because it hasn’t translated into an economically viable price,” Jacquenin said. Allan believes Ottawa could foil Beijing’s tactics by employing a pricing mechanism like a so-called Contract for Difference, which has a “floor” and “ceiling” for critical minerals mined in Canada. This way, he said, the government could provide price certainty for investors, covering the difference if market prices fall below the band and sharing any profit above it. Canada's been talking about critical minerals for years and there has been a loss of investor confidence because it hasn’t translated into an economically viable price. “Otherwise, graphite is not going to move forward in Canada,” said Allan, an associate professor at Johns Hopkins University's Sustainable Energy Institute in the US. A pricing policy is currently not part of Canada’s critical minerals strategy launched in 2022 with $3.8 billion in federal support for exploration, processing, manufacturing, and recycling of these key metals and minerals, and another $1.5 billion for mine-related infrastructure aimed at giving projects an early boost. Only a handful of critical mineral projects have progressed meaningfully since, with early-stage mine developments in British Columbia, Manitoba, Ontario and Quebec. “The government’s strategy aims to build a resilient, sustainable sector that delivers results across the country and furnishes Canada’s economy and national security,” Marie Martin, a spokesperson for Natural Resources Canada, told Canada’s National Observer. She said miners can use “a range of tools including tax incentives, funding programs and other financing mechanisms” to get projects into production. But the economics of a mine hinge heavily on ‘downstream’ customers — a battery or EV maker, in the case of graphite — to secure the supply they need through offtake agreements with the mine operator, said Chris Williams, an analyst with Adamas Intelligence, a market intelligence company. Downstream buyers in North America and Europe are “not committing in sufficient numbers” to support new graphite projects, he said, adding that the Canadian government will most likely have to bridge the funding gap to develop a critical mineral ecosystem — from mining through processing to recycling — here that can help the West curb its dependency on Chinese graphite. “China’s strategy of supporting loss-leading mining operations creates a competitive barrier around its more valuable midstream supply chain, a model that the West would benefit from emulating,” Williams said. Northern Graphite’s Lac des Îles graphite mine may be the only one producing product today, but another 10 projects are in early development in Quebec stretching along a mineral-rich southwest-to-northeast axis starting near Notre Dame de Pontmain, 140 kilometres north of Ottawa. Capturing the graphite ‘corridor’ Moving a mine from discovery to production can take on average 17.9 years in Canada, compared to 15.7 years globally, 14.5 years in Australia and 13 years in the US, S&P Global Market Intelligence, a research firm, said in 2023. “If permitting was streamlined to be less red tape heavy, we could get moving very fast,” Jacquemin said. The industry has long laid blame for slow-rolling regulatory processes for the time it takes to open a new mine, but market factors and financing can impact a project as well. Prime Minister Mark Carney’s Liberal government has pushed through legislation empowering his cabinet to override regulations, guidelines and laws to speed up energy, mining and infrastructure projects. A new Major Projects Office is being set up with the aim of fast-tracking “national interest projects” to two years from five years. But mining executives say it’s not clear how the new federal office will coordinate with provincial regulators and First Nations. The challenges, however, don’t end once the ore is out of the ground. Canada’s lack of critical mineral processing plants (known as the ”midstream”) remains a significant obstacle to the country’s export ambitions. Northern Graphite aims to lead the charge into this key industrial link of the supply chain. The miner recently partnered with BMI, a Canadian investment group, that last December bought a 2,800-acre former pulp and paper complex in Baie-Comeau, Quebec to turn it into a “multimodal” industrial hub — including a graphite processing plant. The huge $2 billion project, called Norderra, would be built-out in four stages, eventually powered by up to 400 megawatts of hydroelectricity, with first graphite shipments from the site’s deep water port as early as “late 2027 or early 2028.” Financing for the lead-off phase has yet to be finalized. Norderra, Jacquemin said, could one day anchor a graphite mining and processing corridor with Quebec’s deposits developed into mines producing 500,000 tonnes of graphite concentrate annually, for export to global markets via the Great Lakes-Atlantic Seaway. “We have to reindustrialize for different types of materials,” Jacquemin said. “Once we used forestry products to produce paper, now we will be using graphite to produce batteries.” Northern Graphite’s five-year plan for the Lac des Îles mine — assuming analysts’ forecasts are right and graphite gets a boost from demand for energy transition technologies — is still waiting on the $10 million expansion that would gear up production to 213,000 tonnes of graphite ore a year. “The government, financial institutions, and industry need to get moving together to seize this opportunity now,” he said. “Canada needs to put its stamp on this, to say ‘We are a leader in critical minerals, and to back that up with high-quality Canadian products. It is time to show we are serious.”