The U.S. military is looking to provide funds for Canadian mining projects that want American public funding through a national security program as Washington seeks to decouple from critical mineral reliance on China, a U.S. official said.
Early this June, U.S. President Joe Biden
invoked the Defense Production Act (DPA) to advance his clean energy and climate change policies. The Act is the “primary source of presidential authorities to expedite and expand the supply of materials and services from the U.S. industrial base needed to promote the national defense,” says a
U.S. government website.
The U.S. military has thus received hundreds of millions of dollars to help private mining companies solicit new mining projects.
An official from the U.S. Department of Defense said Canada qualifies for U.S. military funding as it has long been part of the
U.S. defense industrial base, which provides products and services that enable the department’s war-fighting capabilities,
reported CBC News.
“It’s really quite simple. It’s a matter of law,” Matthew Zolnowski, a portfolio manager for the DPA program, said during a conference at the
Canada-United States Law Institute (CULSI), a forum for Canada-U.S.-related legal discussions.
“So an investment in Alberta or Quebec or Nova Scotia would be no different than if it was in Nebraska or anywhere else in the United States. As a matter of law.”
The U.S. government has been reaching out to companies to explain the process and attract participation, according to Zolnowski. Canada is also active, with officials saying that they have given the United States a list of 70 projects that could warrant U.S. funding, CBC reported.
Decoupling From China
The potential increase in Canada-U.S. collaboration came after a
White House study published last year that warned about national security risks for the United States due to reliance on certain foreign-made products, including semiconductors, batteries, medicines, and 53 types of materials.
What has particularly raised concerns is China’s dominance in the market of minerals, such as Beijing’s share of
two-thirds of the world’s lithium-ion batteries production, compared to the United States’ 5 percent. China also controlled over 90 percent of the global supply of rare earth metals, according to a
2017 report from the U.S. Department of Energy.
Beijing has already shown a willingness to
“weaponize” mineral exports to gain leverage in disputes with rival states. In 2010, China
cut off exports of the minerals to Japan during a conflict over a fishing boat collision incident. At the height of the U.S.-China trade dispute in 2019, Beijing also sought to use rare earth exports as a “counter-weapon” against the United States.
Canada has also toughened on foreign investment in Canada’s critical minerals sector, with Industry Minister Francois-Philippe Champagne
ordering three Chinese companies to divest in Canadian lithium companies.
Speaking at the CULSI conference, Zolnowski said Western democracies have left themselves in a vulnerable position and change will take time to occur, pointing to a four-stage strategy for the U.S. government to implement this, CBC reported.
The strategy includes stimulating domestic demand for the goods, stimulating supply by funding new production, building stockpiles, and increasing collaboration with allies.
