US Invests Heavily in Canada to Bolster Critical Supply Needs

The US military’s $20 million investment in a Canadian cobalt refinery highlights the importance of securing critical mineral supply chains.

At a Glance

The US military’s largest investment in Canada’s mining sector in decades.
The Pentagon’s $20 million grant is for a cobalt refinery in Ontario.
Cobalt is crucial for batteries used in electric vehicles, electronics, and military hardware.
The investment aims to decrease US reliance on China for cobalt.
No requirement for Electra Battery Materials to send production to the US.

Significant US Military Investment in Canadian Mining

The US Department of Defense has announced a $20 million grant to establish a cobalt refinery in Temiskaming Shores, Ontario. This marks the largest US investment in Canada’s mining sector since World War II. The grant underscores the critical need to diversify America’s cobalt supply chain, dominated by China, which controls nearly 80% of the global market.

The cobalt refinery will be North America’s only cobalt sulfate refinery, operated by Electra Battery Materials. Despite the significant funding, there is no requirement that Electra sends any of its production to the US. Electra has an agreement with South Korea’s LG Energy Solution for 80% of its production over the next five years.

Electra Battery Materials Corp. has secured US $20 million from the U.S. Department of Defense (DoD) to support construction of the company’s partially built cobalt refinery in Northern Ontario.https://t.co/eJdud1qoJa

— AutoNewsCanada (@AutoNewsCanada) August 20, 2024

Strengthening Industrial and Strategic Ties with Canada

Both the US and Canadian governments are keen to bolster economic and strategic relations. The Canadian government is contributing an additional $3.6 million to the project. This development aligns with the objectives set out during Joe Biden’s visit to Ottawa in 2022, marking the third such investment since then.

“This award will develop North American production of a key precursor material for large capacity batteries, helping to create a more robust industrial base capable of meeting growing demand across both the defense and commercial sectors,” said Dr. Laura Taylor-Kale, Assistant Secretary of Defense for Industrial Base Policy (ASD(IBP)).

The project is part of broader strategic moves to create a secure and reliable supply chain for critical minerals within North America. By investing in this refinery, the US aims to reduce dependency on China while promoting industrial growth in the region.

US military announces $20m grant to build cobalt refinery in Canada https://t.co/Xwa803abk7

— Guardian US (@GuardianUS) August 21, 2024

Economic and Technological Advancements

Electra Battery Materials plans to use cobalt feed material ethically sourced from mines in the Democratic Republic of the Congo. The refinery aims to have the lowest carbon footprint in the world and produce 6.5 kt/a of cobalt, supporting over 1 million electric vehicles annually.

“Electra is committed to strengthening the resiliency of the North American battery supply chain,” said Electra Chief Executive Officer Trent Mell. “We are grateful to the U.S. Department of Defense for its support. On issues of national security, there are no borders between Canada and the United States. We are proud to partner with the U.S. government to build a strong North American supply chain for critical minerals.”

The completed refinery project will enhance technological advancements in critical mineral refining. Electra is also considering additional facilities in Bécancour, Quebec, and a North American nickel sulfate plant, further diversifying the supply chain for battery materials.