Canada is rapidly developing its domestic lithium extraction and processing capabilities, with projects spanning hard-rock lithium mining in Ontario and Quebec and processing facilities designed to produce battery-grade lithium hydroxide. Canadian lithium companies are projected to contribute up to 20% of global EV battery-grade lithium supply, and the federal government is actively supporting downstream processing capacity to keep value-added manufacturing in North America.
This is significant because lithium processing has historically been dominated by China, which refines approximately 60% of the world's lithium regardless of where it's mined. Canada's effort to build end-to-end lithium supply chains — from mine to battery-grade chemical — directly addresses this strategic vulnerability. The US government's equity stake in Lithium Americas underscores the geopolitical importance of Canadian lithium to North American supply security.
The strategic challenge is competing on cost with established Chinese processors who benefit from scale, lower environmental standards, and government subsidies. Canada's counter-proposition is ESG-compliant, cleanly powered lithium production that meets the increasingly stringent supply chain requirements of European and North American automakers. The IRA's domestic content requirements for EV tax credits provide additional tailwinds.