U.S. military announces $20M US grant to build cobalt refinery in Ontario

The U.S. military has made its largest move so far in a novel national-security effort to fund mining initiatives in Canada. 

The Pentagon on Tuesday announced a $20 million US grant to create a cobalt refinery in northern Ontario’s Temiskaming Shores. The money will go to the Toronto-based Electra Battery Materials Corporation; the government of Canada is adding $3.6 million US ($4.9 million Cdn) of its own to the project.

This is the third and, by far largest, in a series of Washington’s grants to Canadian projects as part of an initiative announced when U.S. President Joe Biden visited Ottawa in 2022.

The effort is a first of its kind since the Second World War, when the U.S., desperate for aluminum to power its military arsenal, helped fund the expansion of Quebec’s aluminum industry. 

The motivation this time is escalating fear in the U.S. that it is deeply dependent on China for minerals necessary to build a litany of civilian and military goods: from electric-vehicle batteries, to electronics, to weapons systems. Washington is scrambling to develop new sources for these kinds of products in the event of a crisis, such as an interruption in trade with China amid tension over Taiwan.

The first two U.S. announcements earlier this year went to mining and processing projects for copper, gold, graphite and cobalt in Quebec and the Northwest Territories; those two earlier grants were for a combined total of less than $15 million US.

In interviews, officials at the companies that received those two earlier grants described them as coming with no strings attached, meaning they do not have to repay the money nor have they committed to selling their minerals to the U.S. military. 

It is possible, however, that the U.S. military could become a customer in the event of a war or other crisis: Canadian law gives Ottawa emergency powers to buy raw materials on behalf of a NATO ally.