US Investing $20 Million Into Canadian Cobalt Refinery

The US Military has announced a groundbreaking $20 million grant to build a cobalt refinery in Ontario, Canada, marking its largest investment in Canada’s mining sector in decades.

At a Glance

The US military’s grant comes as the US attempts to diversify the cobalt supply chain from Chinese control.
The $20 million investment is to build a cobalt refinery in Ontario.
Electra Battery Materials will operate the refinery.
The Canadian government contributes an additional $3.6 million to the project.
Electra has agreed to supply 80% of its production to South Korea’s LG Energy Solution.

Significant Investment Announced

The US military has announced a $20 million grant to help build a cobalt refinery in Ontario. This significant investment is reportedly intended to diversify the supply chain currently dominated by China, which controls nearly 80% of the worldwide cobalt market. Creating this refinery is a strategic move aimed at securing a stable supply of cobalt, a critical component for batteries in electric vehicles, electronics, and military hardware.

This grant was issued through the Defense Production Act to expand domestic production capability. It represents the largest investment in Canada’s mining sector from the US military in decades. Aimed at creating a robust industrial base for both defense and commercial sectors, this effort includes a $3.6 million contribution from the Canadian government.

The United States Department of Defense (DoD) has awarded $20 million to Electra Battery Materials Corporation, a Canadian company, to help expand its cobalt refinery in Ontario. https://t.co/pWOeIF98k7

— EV.com (@EVcom) August 21, 2024

Electra Battery Materials to Lead Operations

Electra Battery Materials Corporation, based in Toronto, will operate the refinery. This facility will be North America’s sole cobalt sulfate refinery. Electra has secured an agreement with South Korea’s LG Energy Solution, committing 80% of its production for the first five years. Notably, there are no requirements for Electra to send any production to the US despite the Pentagon’s investment.

According to Dr. Laura Taylor-Kale, Assistant Secretary of Defense for Industrial Base Policy, the investment is expected to “create a more robust industrial base capable of meeting growing demand across both the defense and commercial sectors.”

Electra Battery Materials CEO Trent Mell hopes to begin operations in 2026 and create 60 full-time jobs, with an estimated additional 240 jobs in the region. It will have the capacity to produce 6.5 kt/a of cobalt annually, supporting over one million electric vehicles per year. The facility aims to have the lowest carbon footprint of any cobalt refinery in the world.

Diversification and National Security

The investment is part of a broader national-security effort by the US to fund mining initiatives in Canada. This move is compared to a WWII-era initiative to fund Quebec’s aluminum industry, reflecting the urgency and strategic importance of diversifying supply chains for critical minerals. Earlier US funding for similar projects in Quebec and the Northwest Territories totaled less than $15 million, highlighting the scale of this new investment.

In times of crisis, Canadian law allows Ottawa to buy raw materials on behalf of NATO allies, strengthening the strategic partnership. The facility will also bolster Northern Ontario’s role in the North American battery supply chain, ensuring long-term operations and significant economic impacts in the region.