The Joint Declaration of Intent, signed yesterday, said the two countries would “promote and strengthen cooperation and trade in the critical minerals value chain,” “coordinate and intensify existing exchange,” and encourage collaboration on new projects. 

Canada’s government will also expand trade infrastructure like ports and pipelines to increase its exports to Europe, said Carney. This is expected to see critical minerals and metals exports increase almost immediately, while trade in energy – mainly hydrogen and natural gas – will increase in the medium term once more infrastructure is in place.

The agreement will also bring European and Canadian institutions closer together on research, and potentially use Canadian government funds to build the necessary infrastructure for trade. 

It should result in increased supply chain integration between producers, processors, and manufacturers across both countries. 

Europe is a net energy importer, with its only significant domestic energy sources being renewables and some oil reserves in Norway. Europe imports about 63% of its energy, much of it in the form of liquefied natural gas (LNG), which it stores throughout the year to use for heating in winter. 

After the outbreak of the Ukraine conflict, fears of a “cold winter” brought on by a stop in Russia’s natural gas exports – which provided nearly half of Europe’s foreign LNG supply before the war – led Europe to look for alternate sources of energy.

Canada has ample stores of LNG, which it started exporting in June this year via a new facility on the country’s Pacific coast. It is also rich in a range of critical metals and minerals like lithium and potash, which make up about 20% of its total exports. 

Critical minerals – sometimes also called rare earth minerals or metals – are a group of about 30 minerals present in the Earth’s crust and used for a range of critical technologies, from medical equipment to defence systems and smartphones.

As critical minerals become increasingly crucial to the development of new technology and sophisticated defence infrastructure, countries are looking to secure their domestic or foreign sources. 

After China, by far the world’s biggest producer and refiner of rare earth minerals, restricted exports in April as a response to US tariffs, supply chains around the world were disrupted, with producers scrambling to find alternative stable suppliers. 

Critical minerals were a centrepiece of Trump’s recent deal with Ukraine, which saw strengthened economic collaboration between the two countries and US financing for Ukrainian post-war reconstruction in exchange for the US securing a steady supply of the minerals. 

Now, Europe may be looking to do the same: Canada, which has also been turning away from the US due to tariff tensions over the last few months, is the perfect candidate to provide a stable export source and trading partner.