Summary
Geopolitical tensions are reshaping the landscape for companies sourcing or processing critical minerals. From new sanctions regimes to retaliatory tariffs and rising ESG scrutiny, businesses must be prepared to navigate complex legal, reputational, and operational risks. This report outlines how threat intelligence, compliance tools, and ethical sourcing strategies can help firms anticipate disruption and secure long-term resilience.
What Businesses should know:
1. Operational Continuity – avoiding supply chain disruptions or sanctions violations.
2. Compliance & Risk Exposure – especially OFAC, CBSA, and export controls.
3. Reputation Management – ESG and stakeholder trust tied to sourcing decisions.
4. Early Warning Systems – intelligence on regions or sectors that may become high-risk.
5. Secure Partnerships – choosing compliant, low-risk partners and vendors.
6. Crisis Response Preparedness – being able to act quickly on policy shifts or enforcement actions.
Introduction
In a world rapidly transitioning toward renewable energy and advanced technology, critical minerals have emerged as geopolitical assets. Canada and the United States (US), historically strong allies, now face frictions over mineral access, sanctions enforcement, and trade remedies. As demand for minerals such as lithium, cobalt, and rare earth elements grows—fuelled by the electric vehicle (EV) industry and national defense needs—so too does the complexity of sourcing these minerals ethically and reliably. Against this backdrop, new tariffs, sanctions, and legal uncertainties are straining a relationship once defined by cooperation.
Sanctions, Legal Risks, and Supply Chain Disruption
Security Watch: Evasion Hubs in Europe & Offshore Jurisdictions
With demand for critical minerals surging, there is increased risk that suppliers may tap into high-risk regions under sanctions—such as Iran, Cuba, Venezuela, Russia, and Syria. While Canada and the US don’t rely directly on these sources, indirect exposure through global supply chains poses growing compliance and reputational risks for North American firms.
Sanctions violations often occur with striking regularity shortly after new restrictions are imposed, underscoring the need for real-time monitoring and dynamic risk profiling. Geographically, North-East Europe has emerged as a hotspot for evasion activity, particularly where cross-border operations can exploit legal ambiguity.
Moreover, non-EU jurisdictions with market access—such as the Western Balkans or the Caucasus—often function as satellite hubs, maintaining indirect business links with sanctioned market to circumvent sectoral sanctions which are restrictions targeting specific industries or sectors (like finance, energy, or defense) rather than entire countries such as Russia. High-risk jurisdictions with lax oversight, such as certain offshore financial centers, also serve as channels to obscure asset ownership and bypass freezing order via targeted sanctions (focus on specific individuals, companies, or entities).
Identifying these spatial and temporal patterns is crucial for strengthening predictive enforcement frameworks in both Canada and the US. This matters because sanctioned entities use tactics like setting up subsidiaries in these regions, creating complex shell companies offshore, relabelling goods through third countries, moving funds via informal networks, and using front companies—all to evade sanctions. Detecting and addressing these methods is key to effective enforcement and protecting both countries’ security and trade integrity.
Security Watch: Iran — Mineral Wealth Under Lockdown
In March 2025, Iran discovered 7,000 tonnes of antimony, a rare mineral crucial to renewable energy and defense technologies (including ammunition, night-vision equipment, and flame-retardant uniforms) —in Sistan and Baluchestan. With China dominating global antimony supply and prices soaring due to 2024 export restrictions, the find positions Iran as a potential strategic supplier amid a global mineral scramble.
This aligns with Iran’s broader but underdeveloped mineral wealth: Iran possesses some of the world’s most significant untapped reserves: it ranks sixth in zinc, seventh in copper, and ninth in iron ore globally, with vast deposits of gypsum, barite, coal, and uranium. However, this mineral wealth remains largely underdeveloped due to extensive US and EU sanctions. In January 2025, the US Treasury issued new sanctions targeting Iran’s largest steel, copper, and aluminium producers. Iranian state-owned entity The Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) has been sanctioned for its central role in mineral exports, leading to blocked copper shipments and a chilled investment climate.
As of 23 May 2025, the US and Iran concluded a fifth round of nuclear talks in Rome without a breakthrough. The impasse centres on uranium enrichment: the US seeks a total freeze, while Iran insists on its NPT-guaranteed rights. However, the recent US and Israeli attacks against Iran have led to a game-changing dynamic. On top of this, Washington imposed new sanctions on June 21, targeting Iran’s missile and UAV-related supply chains, further tightening pressure on its defence-industrial base just as Iran tries to leverage its mineral assets. This intertwining of resource competition, sanctions, and regional conflict is reshaping access to critical raw materials and may redefine regional power dynamics.
Security Watch: Syria — Phosphate Diplomacy & Sanctions Relief
Meanwhile, Syria—long considered a pariah state, may be inching back toward Western economic engagement. In February 2025, Canada issued a General Permit under the Special Economic Measures (Syria) Regulations, temporarily easing some sanctions for six months. This permit allows Canadians until August 2025 to transfer funds and provide services through sanctioned banks to support humanitarian aid. According to the Canadian government, this initiative is intended to support a peaceful transition after the end of the Assad regime.
Similarly, on May 23, 2025, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued General License 25 (GL 25), granting immediate sanctions relief for Syria. In a notable policy shift, the US will be easing select sanctions on Syria after overtures from President Sharaa, who proposed granting US firms access to large phosphate reserves in exchange for diplomatic normalisation and investment.
Though Syria lacks rare earths, its phosphate rock—critical for fertilisers and food security—is among the largest in the region. Syria’s proposal to allow the US to exploit its resources (phosphate could also be used for military purposes – e.g. explosives and electronics) is reportedly inspired by a “Ukraine-style mineral” framework, aligning with efforts to roll back Iranian influence in Damascus and link Syria to broader Abraham Accords dynamics. In 2024 Canada imported 44% of its phosphate from US (mines from Florida specifically) after reaching a near total dependence 2022-2023. There is a realistic possibility that Canada could be impacted by any change in phosphate trade dynamics resulting from any future US-Syria deals. While Syrian phosphate is currently blocked from global markets, a USSyria deal could shift supply priorities—either stabilising prices through increased availability or tightening North American access if the US curtails exports to build strategic reserves, potentially affecting Canadian buyers.
Security Watch: Cuba — Offshore Maneuvers & Rising Risk for Mining
The ever-changing US legal and sanctions landscape poses direct challenges for Canadian firms operating in or sourcing from sanctioned jurisdictions. Some Canadian and international mining giants active in Cuba use offshore hubs like the Cayman Islands and Barbados to legally navigate US sanctions while producing mixed hydroxide precipitate for EV batteries. In February 2025, The US Department of State re-imposed the Cuba Restricted List, limiting transactions with military and government-linked entities. Affecting the mining industry is Cuban’s most powerful military company Gaesa which is likely to get involved soon. With Trump-era sanctions tightening and a domestic financial rebellion, driven by the rise of informal banking—Cuban military officials, who heavily rely on remittance income, are facing severe economic pressure.
This shift is expected to drive Cuba’s military-financial elite toward more profitable sectors—such as mining. This significantly raises the risk that mining firms could find themselves indirectly working with sanctioned entities, even if unintentionally, increasing exposure to US enforcement actions and reputational harm. But such structures face increasing scrutiny from OFAC, raising enforcement risks and threatening longterm viability. Even jurisdictions not formally blacklisted—such as the British Virgin Islands and Switzerland—face reputational and legal exposure for indirect dealings with sanctioned entities. Risk indicators flagged in compliance tools now often include beneficial ownership structures, transshipment hubs, and red-flagged intermediaries tied to sanctioned regions like Donbas (Ukraine), Iran, and formerly isolated Syria.
Tariffs, Border Controls, and Trade Remedies: A Fraying Partnership
Canada’s imposition of an 25% tariff on US vehicle imports in April 2025 marked a significant escalation in bilateral trade tensions. This retaliatory measure followed new US protectionist rules targeting Chinese-origin battery components, many of which are routed through Canadian firms. Parallel trade remedy investigations by both governments into Vietnamese and Indian steel strapping further expose diverging enforcement priorities, even when mutual interests align. On the Canadian front, the Canada Border Services Agency (CBSA) launched new investigations in May 2025 into the alleged dumping and subsidization of steel strapping from China, South Korea, Turkey, and Vietnam.
Meanwhile, the U.S. Department of Commerce has already taken substantial action: on April 5, 2025, it imposed preliminary anti-dumping duties on Vietnamese galvanized and coated steel products—ranging from 39.84% to 88.12%—and on April 10, 2025, issued a preliminary determination confirming both dumping and subsidization of corrosion-resistant steel from Vietnam. These timelines illustrate the U.S.’s more assertive and accelerated approach, in contrast to Canada’s more deliberative, staged process, despite similar trade objectives. Simultaneously, global trade disputes—particularly between the US and China—are further straining the Canada-US partnership. In early 2025, China imposed export controls on critical minerals such as graphite, rare earth elements, and lithium processing technologies, which are essential to electric vehicles, defence equipment, and electronics. These restrictions, which include licensing requirements and targeted bans, are widely viewed as retaliation against US sanctions and export bans.
The North American automotive sector has been hit particularly hard. China supplies about 90% of global rareearth elements like dysprosium and terbium— materials vital for EV motors and high-performance magnets. As Beijing delays export approvals, carmakers face the real possibility of production halts. Ford, for example, has already temporarily shut down an EV production line. Automakers are now exploring workarounds, including shipping unfinished components to China for final assembly, or reverting to older motor technologies with lower rare-earth reliance. Some even consider eliminating non-essential vehicle features, such as adjustable seats, to conserve magnet inputs. Adding to this turbulence are newly imposed inspections along the Canada-US frontier. Once the world’s most open border, it now experiences tighter scrutiny of goods containing “foreign entity of concern” (FEOC) inputs. US Customs and Border Protection (CBP) has expanded enforcement under Section 307 of the Tariff Act to screen for forced labour and sanctioned suppliers—causing delays, contract losses, denied entries, and heightened compliance costs for Canadian exporters.
In response, Canadian authorities have enacted reciprocal screening under the Customs Act, especially targeting US exports that incorporate offshore-processed components from Chinese or sanctioned-state supply chains. These frictions, initially designed to uphold national security and ethical sourcing, are undermining shared goals—like reducing dependency on China or coordinating a North American critical minerals alliance.
Resource Nationalism and Ethical Dilemmas
Beyond foreign policy, internal resistance to mineral development is intensifying. In the US a proposed lithium project in Nevada faces stiff opposition from Native American communities who deem the land sacred. In Canada’s mineral-rich Ring of Fire, First Nations continue to challenge projects extracting cobalt and nickel due to environmental and treaty violations.
This scenario highlights the following paradox: the global green transition hinges on materials often extracted from contested or contested lands. Indigenous rights and environmental justice are not side issues—they are core to the legitimacy of critical minerals strategies. As of 2025, the US (unlike Canada) targets severe environmental destruction (EO 13818, under the Global Magnitsky Act) and the state-owned companies behind it such as Minerven within the Orinoco Mining Arc in Venezuela (only the ones involved in broader crime such as transnational crime, illicit mining and corruption). Beyond the limitations of implementing sectoral sanctions, it is highly likely that operating in perceived contravention of international treaties such as(Aarhus Convention (1998), Convention of Biological Diversity (1992), Basel Convention (1989) even when not a signatory; and participating in activities with sanctioned individuals and companies results in protest activity inside Canada and the US and potential diplomatic tensions between the North American giants.
Still, the impacts of mining disproportionately harm poorer producing countries –mostly emerging and developing countries – which accounted for nearly 90% of all protest and violence-related incidents. A sustainable Canada-US minerals partnership must prioritise community engagement and FPIC (Free, Prior, and Informed Consent), or risk backlash at home and abroad.
Strategic Path Forward
Global production of key transition minerals is expected to surge by 2028 — with lithium up over 300%, cobalt over 100%, nickel by 75%, and copper by more than 25%. This steep growth trajectory is reshaping the global sourcing map, driving companies into high-risk jurisdictions and increasing exposure to sanctions evasion, ESG violations, and supply chain opacity. As competition intensifies, effective threat intelligence and predictive compliance tools will be critical to identifying hidden risk and maintaining operational integrity. Equally critical is the development of ethical sourcing frameworks. These must reconcile industrial policy with Indigenous rights, ensure environmental safeguards, and maintain supply chain legitimacy in a multipolar world.
The Canada–US approach to Syria sanctions relief highlights their ability to coordinate policy—albeit differently: the U.S. taking a broader approach, including state-linked entities, and Canada focusing narrowly on humanitarian channels. Still, to reduce friction and enhance mutual security, both countries must move beyond reactive tariffs and unilateral sanctions. Joint export control regimes, harmonised compliance screening powered by AI, and deeper public-private coordination could protect trade flows without compromising national security.
