The manufacture of low-carbon transportation and energy products such as electric cars needs unique raw materials and minerals, which are usually processed and produced in China. Since these minerals aren’t mined in America, the Biden Administration is considering financing Canadian metal and mining firms.
Canada is said to hold vast wealth in untapped mineral potential, which government officials have invested considerable money and time into developing. The Canadian government is planning to invest billions into a critical minerals strategy, which officials believe will allow the country to launch its battery supply chain in the near term.
Figures show that more than one-half of the synthetic and natural graphite exports, along with 50% of copper exports, more than 40% of nickel exports and about 10% of cobalt exports from Canada are shipped to America.
Representatives of the mining industry in Canada stated that they expect interest in their nation from the auto sector to be boosted under the new climate law in the United States because of an expanded electric vehicle tax credit for consumers.
Large battery manufacturers and auto manufacturers have already announced battery projects in Canada. Earlier in March, General Motors revealed that it would construct a new cathode material factory in the province of Quebec. In the same month, Stellantis revealed its plan to construct a battery plant in partnership with LG Energy Solutions in the province of Ontario.
Earlier this year, President Biden moved to make financing from the Pentagon available under a military production act for various mining activities, including technical improvements at mine sites, the production of minerals as byproduct of a range of commodities and feasibility studies.
The act in question, the Defense Production Act, is a law that was approved in connection with the Korean War. Funding under this law was meant to be restricted to domestic sources. However, the Biden administration recently took on interpretation of sharing agreements from the ‘50s and ‘60s, which states that Canadian companies are domestic sources. This has paved the way for Canadian mining projects to be eligible for American financing.
Advocates believe that Canada may be a valuable ally in the administration’s mining strategy, noting that it may be helpful in the creation of a more secure and stronger supply chain for electric cars in America. Studies are yet to confirm the presence of economic mineral reserves for minerals such as nickel, graphite and cobalt in America at the suitable grades or quantities that meet the consumer demand for a low-carbon future.
Until companies such as Southern Copper Corporation (NYSE: SCCO) can supply the needed quantities of battery metals, the U.S. will have to rely on overseas suppliers as local supply chains are established.
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