U.S. looks to Canada for minerals to build electric vehicles -documents

Electra Battery Materials

18/03/2021 22:29

(Adds details from meeting)
    By Ernest Scheyder and Jeff Lewis
    March 18 (Reuters) - The U.S. government is working to help
American miners and battery makers expand into Canada, part of a
strategy to boost regional production of minerals used to make
electric vehicles and counter Chinese competitors.
    On Thursday, the U.S. Department of Commerce held a
closed-door virtual meeting with miners and battery
manufacturers to discuss ways to boost Canadian production of EV
materials, according to documents seen by Reuters.
    A source who attended the meeting said there was no
indication that the Commerce Department would offer financial
incentives for new mines or other supply chain components in
Canada.
    But department officials did stress the need to act now to
build a U.S.-Canada EV supply chain, much like Europe has been
doing and Asia has already done, according to a second source
who attended the meeting.    
    The move comes as demand for electrified transportation is
set to surge over the next decade.
    Conservationists have strongly opposed several large U.S.
mining projects, leading officials to look north of the border
to Canada and its supply of 13 of the 35 minerals deemed
critical for national defense by Washington.  urn:newsml:reuters.com:*:nL3N2KZ50D    
    Tesla Inc  TSLA.O , Talon Metals Corp  TLO.TO  and Livent
Corp  LTHM.N  were among the more-than 30 attendees at
Thursday's meeting who discussed ways Washington can help U.S.
companies expand in Canada and overcome logistical challenges,
according to the documents.
    The U.S. Department of Commerce did not respond to requests
for comment.
    The event comes after U.S. President Joe Biden and Canadian
Prime Minister Justin Trudeau committed last month to building
an EV supply chain between the two countries.  urn:newsml:reuters.com:*:nL1N2KT32O
    Since Biden's election, three U.S. mining companies have
invested in Canada, where mining accounts for 5% of the
country's gross domestic product, versus roughly 0.9% in the
United States.
    Canada's Fortune Minerals Ltd  FT.TO , which is developing a
cobalt mine in the Northwest Territories, has also held funding
talks with the U.S. Export/Import Bank, its chief executive told
Reuters. 
    "The United States is really taking this seriously," CEO
Robin Goad said.      
    Lithium-ion batteries are dangerous to transport over long
distances, so automakers prefer to have them built near assembly
plants. That should aid efforts by Ontario and Quebec to develop
their own battery cell plants with both provinces close to U.S.
automakers in Michigan and Ohio, industry executives said. 
    "The border between Canada and the U.S. is inconsequential
with respect to EVs and EV minerals," said Arne Frandsen, CEO of
mining investment group Pallinghurst, which is the largest
shareholder in Nouveau Monde Graphite Inc  NOU.V , which is
building a graphite mine and an anode plant in Quebec.
    Pallinghurst joined Livent last November to buy the Nemaska
lithium project in Quebec, in what will be North America's
largest lithium mine. Both projects are slated to open by 2024
just as automakers launch dozens of new EV models.
    "We do see Canada as a natural fit for expansion as the
whole battery supply chain is going through a huge
self-reckoning about sourcing," said Livent CEO Paul Graves. 
    Livent has supply deals with BMW  BMWG.DE  and Tesla. 
 urn:newsml:reuters.com:*:nL1N2HR3CO    
    
    '51ST STATE'
    To be sure, the United States is also trying to boost
domestic production of EV metals, which the Biden administration
has said is critical.  urn:newsml:reuters.com:*:nL1N2L72PX
    But Washington is increasingly viewing Canada as a kind of
"51st State" for mineral supply purposes and plans to deepen
financial and logistical partnerships with the country's mining
sector over time, according to a U.S. government source.
    Both countries are members of the Energy Resource Governance
Initiative, a pact to share mining experience and resources.
    Canadian firms are also able to apply for U.S. government
grants under the U.S. Defense Production Act and other U.S.
funding programs. There are no U.S. tariffs on Canadian EV
battery metals or EV parts.   
    "You're beginning to see Canada become an important part of
the North American EV supply chain," said Keith Phillips, CEO of
Piedmont Lithium Ltd  PLL.AX , which in January bought 20% of
Sayona Mining Ltd  SYA.AX , a developer of a Quebec lithium
project. 
    Canada's First Cobalt Corp  FCC.V  is building the
continent's only cobalt refinery, part of an effort to wean the
EV industry off supplies from the Democratic Republic of Congo,
where child labor has been used. Cobalt is used to make battery
cathodes.
    Adding to the appeal of Canada, some of the country's mines 
bill themselves as environmentally friendly and promise to use 
hydroelectric power to reduce their carbon emissions. 
    The United States knows "that we are the most-secure and
most-resilient source of metal imports for them," Canadian
Natural Resources Minister Seamus O'Regan told Reuters. 
    Last week, privately-held USA Rare Earth invested in Search
Minerals Inc's  SMY.V  rare earths project in Newfoundland in
eastern Canada.
    While USA Rare Earth already controls a rare earths deposit
in Texas, executives said they wanted access to more of the
minerals used to make electronics and weapons.
 urn:newsml:reuters.com:*:nL5N2CA8MT urn:newsml:reuters.com:*:nL1N2K834R
    "You can't just rely on projects in the U.S. for supply,"
said Pini Althaus, USA Rare Earth's CEO. "You have to
collaborate with Canada."

 (Reporting by Ernest Scheyder in Houston and Jeff Lewis in
Toronto; Editing by Amran Abocar, Aurora Ellis and Marguerita
Choy)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net;
jeff.lewis@tr.com; +1 647 200 7236))