Canada Pitches Stability to Japan as China Tensions Persist

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(Bloomberg) — Canada is positioning itself as a trusted energy and critical minerals partner for Japan, as turbulence in the Strait of Hormuz disrupts global energy flows and Beijing curtails rare earth exports to its Asian neighbor due to diplomatic tensions.

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“It’s important for our economic security that we work together with partners and allies to get those out of the ground and stabilize our industries, and really make sure that we all benefit from some of these transactions,” Canada’s International Trade Minister Maninder Sidhu told Bloomberg Friday after closing out a trip with a trade delegation that saw $1.7 billion in newly signed deals. 

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The trip came as resource-poor Japan seeks to diversify its supply of energy after the Middle East conflict disrupted energy supplies, and amid simmering political tensions between Beijing and Tokyo that have spilled over into trade restrictions targeting Japan. On Monday, Beijing expanded a general ban on Chinese exports that have both commercial and military use. 

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Sidhu said that he had a wide-ranging discussion on economic security, supply chains, and food security with Japan’s Foreign Minister Toshimitsu Motegi during his visit, adding that they had agreed to seek further avenues of cooperation. 

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Energy has long been a strategic vulnerability for Japan, which does not have a wealth of resources and has depended almost entirely on imports to power its economy. The Albertan government is talking with Japanese counterparts to look into the export of crude oil to Japan.

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Japanese trading company Mitsubishi Corp. has also invested in Canada’s first large-scale LNG export project. Earlier this year, Mitsubishi said it was in talks with partners on expanding output at LNG Canada.

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“We don’t have any choke points — we can get our energy to Asian markets in 10 days. If you look at the Gulf of Mexico, it’s double that time,” Sidhu said. “It’s leading to a lot of calls to Canada saying, how can we lock in supply, because of volatility. Who knows when it’s going to happen again?”

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The minister didn’t mention specific cooperative projects between Japan and Canada on critical minerals in the interview, but touted how Canada can be a stable partner in providing such materials through frameworks including the Group of Seven (G7). 

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“What can we do collectively together — stockpiling agreements, off-take agreements, joint projects — these are part of the conversations we’re having,” he said. “Because there are certain countries, unfortunately, that will turn the switch off and on, and that does not present a lot of certainty to industry that are manufacturing some of these advanced goods that we need.”

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