US military could invest in Canadian mining projects
Washington wants to finance mining projects in the United States and Canada to develop the so-called “strategic minerals” sector.
The United States military has quietly launched tenders for Canadian mining projects that are seeking US public funding, as part of a major national security initiative.
A text by Alexander Pannetta, CBC News
It's all part of what's becoming an increasingly urgent priority for the US government: reducing reliance on China for strategic minerals. The latter are used in the manufacture of all kinds of goods ranging from electronic devices to batteries, cars and armaments.
The situation also illustrates the fact that the Canadian mining industry finds itself at the center of a gigantic geopolitical confrontation. Ottawa has just kicked Chinese state-owned companies out of critical and strategic minerals, and the US is now considering untying its own purse strings.
The US military has new funding to help private companies launch mining projects. These sums are intended for the financing of feasibility studies, the renovation of installations, the recycling of batteries and the training of workers.
The American President, Joe Biden, thus invoked the Defense Production Act of 1950 to develop the country's mining sector, and the army received several hundred million dollars for this purpose.
This increase in activity in this sector was fueled by a White House study, published last year. It warned that reliance on certain foreign-made products posed a risk to US national security, including semiconductors, batteries, drugs, and 53 different minerals.
A U.S. Department of Defense official gave a briefing about the program this week at a cross-border conference, and one thing was clear: Canadian companies are eligible.
This is because for decades Canada has been part of the industrial base of the US military, and the projects that are developed on Canadian territory are just as entitled to funding as those set up south of the border.
It's simple: it's a matter of law, says Matthew Zolnowski, a Defense Production Act portfolio manager, in an address to the Canada-United States Law Institute, in Washington.
“So an investment in Alberta, Quebec or Nova Scotia would be no different than a another in Nebraska, or elsewhere in the United States. It is a question of law.
—Matthew Zolnowski, Portfolio Manager
Also according to Mr. Zolnowski, the United States has reached out to companies here to explain the process, since many companies have no ties to the US government, and may not understand how it works. of the process.
We are actively engaging with these companies, he added.
The Canadian government is no exception. Federal officials said they have already provided US authorities with a list of 70 projects that may merit US funding.
Both countries describe this initiative as a joint process. spanning a generation, and which would only be in its infancy. For now, Canada remains a small player in the world of strategic mineral production, a term that includes lithium, cobalt and manganese, among others.
According to a Canadian official, however, the situation could change. At the conference, Jeff Labonté, assistant deputy minister at Natural Resources Canada, said western democracies are now engaged in industrial policy in a way not seen in decades. /p>
We have this potential in terms of resources… We also have a gigantic capacity, he said, referring to 200 mines and 10,000 potential products which are all in phase exploratory.
We have expertise in this area; we have the markets, we have the engineering expertise, we have businesses operating across the country and around the world.
Canada will pay also billions of dollars of public funds to this sector of the economy, over the next few years, through federal and provincial programs.
The enthusiasm for this sector of the economy can be explained in particular by the transition to electric cars. Complicating matters is China's dominance, which complicates matters. Beijing controls two-thirds of the world's lithium processing capacity, for example.
And the communist dictatorship has already signaled its readiness to blacklist rival nations and cut off exports to them, a threat carried out with Japan a few years ago as part of ;a dispute over commercial fishing.
More recently, the United States banned the export of semiconductors to China, in the context of a beginning of the digital cold war, a conflict in which Canada is increasingly involved.
During his speech, Zolnowski said several countries had been in a vulnerable position for decades. Solving this problem will not be done by shouting scissors, he judges.
Also according to Mr. Zolnowski, the American government has a four-pronged strategy to attack to this issue.
- The first component is to stimulate domestic demand for these products by designing new sustainable initiatives relating to these materials
- The second component aims to stimulate supply by financing new sources of production and recycling
- The third component is to accumulate reserves
- The final component is revolves around the idea of working with allied nations
Mr. Zolnowski noted that in 1984, Robert Gates, then a US intelligence officer who would eventually become Secretary of Defense for two presidents, described in a speech his fears that this aspect of intelligence would be dominated. #x27;mining industry by companies funded by foreign states.
This also worries the Pentagon for security reasons, whether it's economy or defense. For Mr. Zolnowski, these minerals form the building blocks for building a healthy economy.
And in times of war, he adds, industrialized nations that do not have assured access to these materials have suffered greatly: They have suffered major declines in productivity, which has contributed to their defeat. /p>
Always according to the American official, consumer products will dominate the market, in addition to receiving the lion's share of funding from the Pentagon. In fact, the contents of the Defense Production Act state that the funds may be used for non-military purposes, including the economic well-being of the United States generally.
Mr. Zolnoswki finally mentioned that the United States is primarily looking to provide direct money, not loans, and is open to funding projects that are in various stages of development, since Washington sees the whole thing as a long-term project. term.
According to an associate of an investment firm attending the conference, the role of the Pentagon is not to become a major investor .
What the private sector wants, he says, is help in fostering market confidence: once you demonstrate that a project has the favor of the Pentagon, it is easier to assure investors that it is a good idea.
Another participant in the event felt that there were still loose ends in the structure of Canada's strategic minerals program, including the $30 tax credit. % planned under Ottawa strategy.