The Biden Administration continues to announce major funding deals for many of Canada’s critical minerals companies
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The United States government says it will provide a US$754-million loan to construct a synthetic graphite plant in Tennessee to Novonix Ltd., whose chief executive Chris Burns is based in Halifax, where it maintains its research labs, though it is publicly listed in Australia.
The loan is just one example of how U.S. President Joe Biden‘s administration’s focus on building out a North American critical minerals supply chain has often accrued to the benefit of Canadian-based companies, many of which have struggled to raise money on public markets in the face of moribund commodity prices.
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In total, such companies have received hundreds of millions of dollars in support from the U.S. government and many industry insiders say there could be more deals announced before Donald Trump takes over next month.
“Up until January 20, 2025, I think you’re going to continue to see the types of agreements we saw with Novonix yesterday,” Chris Berry, president of House Mountain Partners LLC, a strategic metals advisory firm, said. “Biden and his Department of Energy are incentivized to get as much money out the door as they possibly can.”
Congress has already approved legislation that sets aside funds for critical minerals projects, he said, but unless it is awarded to specific companies, the incoming Trump administration could decide to shift policy and simply not dole out the money for such purposes.
Many other critical minerals companies besides Novonix, which has ambitions to be a major player in the battery sector, have received commitments of various forms from U.S. government agencies during the past few years, sometimes even for projects located in Canada.
London, Ont.-based Fortune Minerals Ltd. in May announced an $8.7-million grant from the U.S. Department of Defense to support its efforts to develop a cobalt-gold-bismuth-copper deposit in the Northwest Territories, and Toronto-based Electra Battery Materials Corp. in August said it had received a US$20-million grant to help build a cobalt refinery in Ontario.
In another deal, the U.S.-based Export-Import Bank in October announced a potential loan of US$325 million to Vancouver-based Graphite One Inc. to support the development of a graphite deposit in Alaska.
Graphite is used in battery anodes, but China dominates that supply chain, refining around 90 per cent of the total supply.
“Critical minerals have been the flavour of the month for a couple of years now,” Berry said, “but it all boils down to commodity price … and so many of these metals have just been beaten up.”
With prices for such metals in decline, many companies have struggled to raise funds on public markets, he said.
The inability of many critical minerals explorers to raise money to advance their projects came to be viewed by the Biden administration as a national security threat because of China’s dominance, Berry said.
“The line between economic security and national security has been blurred, I would argue,” he said. “That is one reason why you see so much taxpayer money coming into this space.”
Burns, who founded Novonix in 2013 while studying lithium-ion battery chemistry at Dalhousie University, later worked at Tesla Inc. between 2015 and 2017, where he came to view China’s dominance of the graphite supply chain as a threat.
As a result, he began working on a way to manufacture synthetic graphite more efficiently when he left Tesla and returned to Novonix. The company previously said the U.S. Department of Energy (DOE) awarded it a US$100 million grant plus a US$103-million tax credit to build its first synthetic graphite plant. The US$754-million loan from the DOE this week would go towards constructing a second plant.
Between the two plants Novonix is building in Tennessee, Burns estimated the company could produce 50,000 tonnes of battery-grade synthetic graphite per year by 2028. By comparison, he said China will likely be producing nearly 10 million tonnes of battery-grade graphite per year by that time.
“The scale and balance of this sector is massive,” Burns said.
But he said investors stayed away from battery-grade graphite projects because China dominates the industry and the cost structures of other producers remained opaque. That’s in part why the U.S. government support for his projects was so helpful.
“We’re on the cusp of this huge transformation as a company,” Burns said.
After seven years of developing technology, such as a proprietary method for producing synthetic graphite, he said Novonix aims to begin production next year.
But it also has plans to commercialize a proprietary method of making cathodes that it developed at its labs in Nova Scotia.
“That’s going to be a really exciting part of the business over the next few years as we look at ways to commercialize and deploy that technology,” Burns said.
• Email: gfriedman@postmedia.com
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