US DoD expands EV battery supply chain with Canada by awarding $20M toward cobalt production

The United States Department of Defense announced it has allocated $20 million to Electra Battery Materials Corporation – a young but growing provider of sustainable raw materials for North America’s EV industry. Through the investment, Electra will finish its refinery plant in Ontario, Canada, to begin cobalt production to support a localized supply chain for US automakers.

Canada is quickly becoming a mecca for EV raw materials and a potential savior to North America’s supply chain goals as the US looks to incentivize OEMs to localize production through measures established in the Inflation Reduction Act under the Biden Administration.

Shortly after the IRA was signed in 2022, German automakers Volkswagen and Mercedes-Benz sealed agreements with the Canadian government to acquire raw materials for EV battery manufacturing at their US facilities. GM’s BrightDrop also moved electric van production up North.

Canada Nickel Co. has committed $1 billion to build a nickel processing plant in Ontario, which will be North America’s largest once it is completed. The US DoD’s Defense Production Act Investments (DPAI)  has also made several investments in Canadian companies to bolster the North American supply chain.

For example, the DPAI program has announced 35 investment awards across multiple areas totaling $445 million since the beginning of fiscal year 2024 – two of which were for projects to be executed in Canada. Today, the US Department of Defense has announced a third award of funds headed to Canada to help Electra Battery Materials Corporation finish its Ontario-based Cobalt plant and begin production of the vital EV battery material.

US DoD to help expedite cobalt production in Canada

A press release published by the US Department of Defense detailed its latest investment in Canada, totaling $20M for cobalt production – the department’s third and largest investment in the region since the IRA was signed.

The funds will go to Toronto-based Electra to help the battery materials producer complete an industrial-scale hydrometallurgical plant in Temiskaming Shores, Ontario, Canada, and establish production of cobalt sulfate.

The DoD relayed that by helping Electra expedite the construction of its Ontario Cobalt Refinery, the Canada-based company will be able to establish the first North American refinery to produce cobalt sulfate, an active material in lithium-ion batteries.

The award aims to establish a domestic processing facility capable of producing commercial-scale levels of critical precursor materials (cobalt and beyond) for large-capacity batteries to support DoD projects and the growing EV supply chain in the US and Canada. Jonathan Wilkinson, Minister of Energy and Natural Resources Canada, spoke to the investment:

From mining responsibly sourced critical minerals, to processing them here in North America, to building batteries for electric vehicles and other key technologies, and eventually to recycling them, there is enormous opportunity for both Canada and the United States from both an economic and a security perspective. Through our continued work with the United States, driven by the Energy Transformation Task Force and the Joint Action Plan on Critical Minerals Collaboration, and other allies, we are developing secure critical minerals value chains that will create good jobs in places like Temiskaming, Ontario and beyond, and will power prosperous economies and a future that works for everyone.

The $20 million from the US Department of Defense comes from the Ukraine Supplemental Appropriations Act of 2022 and supports the 2024 National Defense Industrial Strategy goal of expanding domestic production of critical minerals.

In addition to cobalt production, the Government of Canada has invested CAN 5 million (USD 3.6 million) in Electra to help advance the next phase of the company’s battery materials recycling project at the same Ontario facility.