By Scott Taylor
In mid February Prime Minister Mark Carney unveiled the Liberal government's new 'Defence Industrial Strategy' which promises to spend nearly half a trillion dollars on defence and security within the next decade.
While the official thrust is to 'Build, Partner, Buy' the emphasis is essentially to prioritize Canadian defence companies for that massive investment. So, where Canada has the capability, we would 'build' the weapon systems.
Where we do not currently have the capability we would 'partner' with a foreign firm. And only when absolutely necessary, would we simply 'buy' from a foreign supplier. Given that we currently spend approximately 75% of our defence acquisition budget on US supplied weapon systems, and Carney's stated goal is to change that to 70% of defence dollars spent domestically instead, that is bound to impact the Canada US trade balance.
While US President Donald Trump has been chastising all NATO member states, and Canada in particular, to increase defence spending, it seems he is bent on that strictly benefitting US arms manufacturers.
Late last month the US State Department and US Defence Department quietly warned the European Union (EU) against implementing their new defence policies directives which urge member states to essentially 'Buy European.' It seems as though the Trump administration is worried that Europe's collective agreement to seriously increase their domestic defence capability will be a threat to future US arms sales.
If the true purpose of the NATO alliance is the collective defence of Western Europe, then Trump should be delighted that the Europeans are making a serious effort to beef up their militaries.
Instead we see the true nature of badgering allies to boost their defence spending is strictly aimed at increasing US arms exports.
Canada has yet to receive a similar warning from the US State department regarding Carney's 'Build, Partner, Buy' or 'Buy Canadian' defence industrial strategy.
However, knowing Trump's track record, one can bet that it is in the offing in the near future.
The truth is that the numbers of defence dollars being promised by the Carney Liberals is jaw-dropping. According to the new Defence Industrial Strategy Canadian defence companies will have access to $180 billion in defence procurement opportunities, another $290 billion in defence related capital investment opportunities in Canada over the next decade, which they estimate will generate an additional $125 billion in downstream economic benefits by 2035.
That milestone is worth noting because Carney has promised to bring the defence budget up to 5% of Gross Domestic Product (GDP) by that date. Economists project that 5% of GDP in 2035 will be an estimated $150 billion. For comparison, Canada is struggling to spend 2% of GDP on national defence this fiscal year, and it is unlikely they can do so in the less than one month remaining. The original defence budget for 2025-2026 was around $40 billion.
Now one of the caveats in NATO's new collective goal of 5% of GDP spent on defence is that only 3.5% is strictly for military costs. The remaining 1.5% of GDP can be budgeted for those 'defence related capital investments'. Canada has already outlined plans to spend some of that capital in developing transportation infrastructure in the Arctic.
The commander of the RCN, Vice Admiral Angus Topshee has tabled a request for an ice-capable amphibious ship which could act as a mobile logistic and aviation base in the Arctic.
While these are temporary military measures that would have dual role advantages in improving civilian infrastructure and transportation, there is another opportunity which I believe needs to be explored.
Canada is estimated to have roughly 20% of the world's tungsten deposits. For those not familiar with this rare mineral it is an extremely dense metal which has all sorts of applications in producing things such as armour, armour piercing munitions and turbine blades for military aircraft.
At present China supplies roughly 80% of the global tungsten market and that includes many NATO countries. There is a ghost town in the Northwest Territories called Tungsten which from 1962 until 1986 was the home of the Cantung mine. It is seasonally accessible by a single road from Watson Lake and it has a small, single runway airstrip. The mine closed due to low tungsten prices and high transport costs.
However much of that has changed. China is restricting exports and tungsten just hit an all time high value of $1,125 per metric ton unit (up from $315 last summer).
Why do I think this would be a wise place to sink some of our new bundle of defence dollars? Because the US department of Defense (DoD) is doing exactly just that.
The DoD is notably providing US 15.8 million to accelerate the Mactung project in the Yukon under what is known as the Defense production Act.
If the US goal is to secure a reliable, non-Chinese source of this rare metal for their arms industry, why would Canada not invest in securing a supply for all of our NATO allies? Instead of working with the indigenous communities around the Cantung mine in Tungsten, we should be working with those same communities to re-open the mine.
