The United States Department of Defense has awarded a subsidiary of Vancouver-based junior miner Graphite One Inc. a grant of $37.5 million to develop a mining project in Alaska, with the aim of lessening America’s dependence on China for metals needed to transition away from fossil fuels.
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While a number of Canadian miners have applied to the Department of Defense (DOD) for funding, Graphite One, through its subsidiary in the U.S., is the first to receive such a grant, the company’s chief executive Anthony Huston said. It’s also the first graphite miner to receive a fund from the department, he added.
The demand for graphite is expected to increase in the coming years, largely due to its use in electric vehicles. Graphite One’s strategy includes mining from its Graphite Creek property in Alaska and processing the material through a manufacturing plant expected to be built in Washington State. The company also plans to build a recycling facility to reclaim the mineral.
The United States is completely dependent on China for natural graphite. As such, Graphite One made the case that the development of a U.S.-based graphite project met its “key national security priorities,” Huston said.
“The U.S. simply cannot maintain a 21st-Century tech-driven economy without critical minerals like graphite,” he added.
The agreement “advances the Defense Department’s strategy for minerals and materials related to large-capacity batteries,” a DOD spokesperson said in a press release on July 17.
According to analysts from Benchmark Mineral Intelligence, just six per cent of the global supply of natural flake graphite is expected to originate from North America by 2025.
The United States and Canada have been using their spending and regulatory powers to ensure electric vehicle production occurs close to home, or at least in places where they wield influence, in the last year. The effort is a response to the growing animosity between Beijing and the United States and its allies.
Washington passed the Inflation Reduction Act last year which offers a US$7,500 subsidy meant to encourage the production of EVs in North America. Ottawa ordered three Chinese companies to divest their investments in three Canadian junior lithium miners in November.
Some other Canadian miners who have had talks with the DOD include Toronto-based Electra Battery Materials Corp. and Ontario-based Fortune Minerals Limited. Both the companies are still awaiting to hear back from the U.S. department.
Fortune’s spokesperson Troy Nazarewicz, expects the Defense Department to make funding announcements for Canadian domiciled projects in the near future, after covering U.S.-based critical minerals projects.
Graphite One’s Huston said he didn’t have the insight to comment on the direction the DOD might take about some of the other Canadian miners, but said that the grant was a great example of how a government can help build the supply chain that is “so badly required.” He urged the Canadian government to “follow this lead.”
Shares of Graphite One were trading at $1.57, up 20 cents or 14.6 per cent in Toronto. The company has a market cap of about $198 million.
• Email: nkarim@postmedia.com | Twitter: naimonthefield
