Canada plans to include an investment of at least $1.6bn (C$2bn) in its federal budget to boost production of critical minerals for the electric vehicle (EV) battery supply chain, reported Reuters citing two senior government sources.

The federal budget is due to be released by Prime Minister Justin Trudeau’s government on 7 April.

Expected to spread over more than one year, the investment in the mineral strategy would help accelerate the production and processing of critical minerals, including nickel, lithium, cobalt and magnesium, according to sources.

The country’s critical mineral strategy will focus on innovation and exploration, driving research, among other things, one of the sources was quoted as saying.

Canadian Natural Resources Minister Jonathan Wilkinson was cited by the news agency in a recent telephone interview: “There are some particular projects that we are looking at and working on at the present time.”

Wilkinson added that all the potential projects, ‘whether they’re extraction or processing, need to be accelerated significantly, and that’s what the critical mineral strategy will be about.’.

There has been no official confirmation on whether the country’s investment in the mineral strategy would be included in the budget plan.

Freeland press secretary Adrienne Vaupshas said: “Canada has an abundance of valuable critical mineral deposits, and with the right investments, this sector can create thousands of new good jobs, grow our economy, and make Canada a vital part of the growing global critical minerals industry.”

In a separate development in Canada, Avalon Advanced Materials reached an agreement with India’s Essar Group unit RenJoules International to jointly fund and develop a lithium refinery in Thunder Bay, Ontario.

Estimated to cost $400m (C$500m), the lithium refinery will be operated by a newly established Avalon subsidiary, called Avalon Lithium Inc., in which Essar will become co-owner.

It will have an initial production capacity of 20,000tpa of lithium hydroxide and/or lithium carbonate.

Construction on the lithium refinery is planned to start this year, with completion scheduled by 2025.