U.S. Department of War Invests $35 Million in BC Mining Firm

Trilogy Metals, a Vancouver-based mining company, has secured a significant investment from the U.S. Department of War. The deal, announced last week, entails the acquisition of a 10 per cent stake in the company, amounting to more than $35 million. This funding is earmarked for developing a vast 2,000-square-kilometre mineral deposit located in remote northern Alaska.

According to Tony Giardini, president and CEO of Trilogy, this investment highlights the strategic importance of the Upper Kobuk Mineral Projects in supporting U.S. energy, technology, and national security priorities. In response to the announcement, Trilogy’s stock value experienced a remarkable surge, tripling shortly thereafter. The company did not provide further comments when approached for an interview.

This is not the first instance of U.S. government investment in a British Columbia mining company. Earlier this month, the Department of Energy disclosed a five per cent stake in Lithium Americas, alongside a similar investment in its Thacker Pass lithium mine located in Nevada.

The Pentagon has also previously made headlines by investing in MP Materials, the only operational rare earth elements mine in the United States. Werner Antweiler, an associate professor at the University of British Columbia Sauder School of Business, noted that government investments in companies like Trilogy are rare. Typically, such support comes in the form of loans or guarantees rather than direct ownership.

“Historically, governments have always invested in industries deemed of national importance,” Antweiler stated. “But most of the time, they did not take direct ownership, particularly in Western countries.”

The mining companies receiving U.S. investments share a common focus on critical minerals. These minerals are considered vital for the global energy transition, as they are integral to the manufacturing of electric vehicle batteries, solar panels, and military equipment. Current geopolitical tensions, including trade disputes and conflicts in Ukraine and the Middle East, have intensified U.S. interest in securing these resources.

China, which dominates global production of critical minerals, has limited exports to the U.S. over recent months, raising concerns about potential shortages. Former President Donald Trump has made several remarks hinting at securing U.S. mineral supplies, including comments about Canada and Greenland.

Antweiler suggested that the U.S. government’s interest appears to focus more on military needs rather than advancing a climate agenda. “The only explanation I have is that, since they’re not interested in the electrification aspect, they’re interested in safeguarding what the military needs,” he said.

The rise in global military expenditures has been significant. The United Nations reported that military spending reached an unprecedented $2.7 trillion last year, marking a nearly 10 per cent increase from the previous year and the steepest rise since the Cold War. UN Secretary-General António Guterres emphasized the need for a shift in priorities, stating, “A more secure world begins by investing at least as much in fighting poverty as we do in fighting wars.”

In light of this, Canada has also pledged to increase its defense spending to five per cent of GDP over the next decade. Brent Patterson, executive director of Peace Brigades International Canada, highlighted that this commitment represents a nearly fivefold increase in military spending, from about $33 billion a year to approximately $150 billion by 2035.

The increased military spending is benefiting the natural resource industry. Critical minerals are essential for military applications, including the production of F-35 fighter jets and other military hardware. Companies like Military Metals, which shifted focus from gaming to mining last year, are positioning themselves to capitalize on this trend. CEO Scott Eldridge noted a “tsunami of capital” flowing into the sector, particularly from the U.S.

In addition to military spending, Canada is enhancing support for its critical minerals industry. The federal government launched the Critical Minerals Infrastructure Fund two years ago, providing up to $1.5 billion in funding. Recently, an additional $50 million was allocated to support critical minerals developers, aiming to bolster energy security and reduce reliance on authoritarian regimes.

Attention is also focused on the Wicheeda project, spearheaded by Defense Metals. Mark Tory, the company’s president and CEO, relocated to Vancouver to lead the development of one of the richest rare earth deposits globally. The Wicheeda project is recognized for its potential to strengthen the rare earth element supply chain within Canada, a move supported by the government and research institutions.

Defense Metals has initiated collaborations with the U.S. government, bringing on advisers with strong ties to national defense. Tory emphasized that the company is open to any potential funding from the U.S.

As Canada navigates its role in the global arms trade, it faces growing pressure to halt arms exports to nations accused of human rights violations. The implications of critical minerals mining are complex, as there are concerns about whether materials mined in Canada are contributing to renewable energy or military conflicts.

According to Nikki Skuce, co-chair of the BC Mining Law Reform network, the lack of transparency in the critical minerals supply chain raises critical questions about the end-use of these materials. She urged for greater accountability in understanding the implications of mining operations.

In summary, while U.S. investments in Canadian mining companies may not currently pose a significant threat, the context of these dealings raises concerns about the future direction of U.S.-Canada relations and the broader implications for global security and environmental sustainability.