The U.S. Department of Defense (DoD) has announced a $20 million grant to fund the construction of a cobalt refinery in Canada. Situated in Temiskaming Shores, Ontario, this facility will be operated by Electra Battery Materials. The initiative addresses both economic and strategic needs, aiming to establish a more resilient supply chain for cobalt, a mineral essential for various technologies, including electric vehicle batteries and military hardware.
This substantial investment marks the largest involvement of the U.S. military in Canada’s mining sector in decades.
The Pentagon’s grant will not only fund the construction but also support the development of local infrastructure, thereby boosting both economic and technological advancements in critical mineral processing areas. The project receives additional financial support from the Canadian government, contributing $3.6 million.
Why Cobalt Matters
Cobalt is integral to the production of batteries for electric vehicles, electronics, and various military applications. Despite its importance, the global cobalt market is heavily dominated by China, which controls nearly 80% of the supply. The U.S. seeks to cut down its reliance on international sources, particularly China, by diversifying its supply sources.
“We’ve got a problem; we’re over reliant on China,” said Trent Mell, CEO of Electra Battery Materials. “Electra is premised on being the answer to our overreliance on China.”
US military announces $20m grant to build cobalt refinery in Canada https://t.co/O43RTrUeRT
— Guardian news (@guardiannews) August 21, 2024
Economic and Strategic Benefits
This investment, taking place through the Defense Production Act (DPA), is the Pentagon’s third major effort to strengthen North American mining capabilities since President Joe Biden’s visit to Ottawa in 2022. Previous U.S. funding for similar projects in Quebec and the Northwest Territories collectively amounted to less than $15 million. This latest grant underscores a significant escalation in efforts to develop a robust industrial base capable of meeting the growing demand for critical minerals.
“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 cobalt refinery project aligns with the 2024 National Defense Industrial Strategy, which focuses on expanding domestic production capabilities for critical minerals. This move will not only enhance supply chain resilience but also create job opportunities and stimulate local economies. The facility is expected to have one of the lowest carbon footprints globally and produce 6.5 kilotons of cobalt annually, which can support over a million electric vehicles each year.
Future Prospects
Electra Battery Materials plans to channel its initial production towards an agreement with South Korea’s LG Energy Solution, which will receive 80% of the cobalt sulfate output for the first five years. While there are no explicit requirements for Electra to supply cobalt directly to the U.S., the partnership fortifies North American industrial and economic ties.
“Electra is committed to strengthening the resiliency of the North American battery supply chain,” stated 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.”
The ongoing investment in Electra includes potential future expansions, like constructing a second cobalt sulfate facility in Bécancour, Quebec, and a nickel sulfate plant elsewhere in North America. Electra also aims to restart a mothballed refinery near Cobalt, Ontario, requiring an additional $60 million for machinery and equipment.
