What’s behind a historic, unusual U.S. military cash transfer to Canadian mines
The United States was growing desperate, months before its entry into the Second World War. It was gravely short of aluminum, and scrambling for suppliers.
Its solution: turn north to Canada.
American public money flooded into Quebec, building the aluminum industry that supplied raw materials for Allied planes and tanks.
“I would be willing to buy aluminum from anybody,” said Harry Truman, then still a U.S. senator, in 1941 hearings on the topic.
“I don’t care whether it is the Aluminum Company of America or Reynolds or Al Capone.”
Now, in an era of global tension, the Americans are looking north again.
The U.S. military has, for the first time in generations, spent public money on minerals projects inside Canada: nearly $15 million US to mine and process copper, gold, graphite and cobalt in Quebec and the Northwest Territories.
It might not be the last: Officials expect additional cross-border announcements under the more than half-billion-dollar U.S. program.
These minerals are vital ingredients in an endless array of civilian and military products — including medicine, batteries, electronics, engines, cars, planes, drones and munitions.
The context, this time, is China.
What’s driving it: U.S. fear of China
The U.S. has expressed escalating unease over its dependence on its biggest rival. China controls the global mineral supply, has cut off minerals exports in the past, and fears a potential standoff with the U.S. over Taiwan.
Washington said two years ago that it was weighing funding Canadian mining startups under the U.S. Defense Production Act (DPA). It promised funding last year, and this month, it formally revealed the first such initiatives.
The novel nature of the announcement was scarcely conveyed in the dry language of the press release, which referred to a Canada-U.S. co-investment.
What’s uncommon here isn’t Canada’s government funding Canadian mining companies. It’s the American military funding them, for what’s believed to be the first time in the 74-year history of the U.S. DPA, which created new powers for the president to fund or buy certain products as a national-security matter.
“It’s a historic move by the U.S. government,” said Ben Steinberg, who worked on energy-security issues for the U.S. government, and who now works for a coalition of battery-makers.
“The U.S. military needs these materials for combat and for national-security purposes.… It’s an important move.”
The U.S. started examining dozens of Canadian proposals in 2022. It requested product pitches, then more detailed applications, then it finally picked two winners, at which point the Canadian government contributed millions of its own.
What’s the catch?
The cash comes with no strings attached — for now. This is free money, in the form of grants, to help companies get through final feasibility studies and permitting.
But in a national-security crisis, the U.S. military could demand these supplies — say in the event of a severe trade war, or worse, a shooting war in the Asia-Pacific.
That’s made clear in a clause in Canada’s own version of the Defence Production Act, which gives the government the power to buy raw materials on behalf of a NATO ally.
In other words, the U.S. military could leap to the front of the customer line.
One recipient company said that, under its grant contract, the U.S. government would pay the going market rate if it became a customer.
That company, Ontario-based Fortune Minerals, says it’s already spent $137 million in preparatory work on a cobalt-gold-bismuth-copper mine in the Northwest Territories and a processing facility in southern Canada.
But lending markets froze two years ago, as Chinese-controlled mines ramped up production, causing global prices of critical minerals to plunge.
With prices low, feasibility studies incomplete and uncertain returns on investment, lenders shut their wallets to the sector.
“We’ve been living kind of hand-to-mouth for a fairly lengthy period of time,” said Robin Goad, president of Fortune Minerals.
“The money was not available from banks,” he said. “Because the capital markets, for junior mining, have been closed … for several years.”
A look at the two companies involved
He started asking U.S. federal departments for money several years ago, and learned most of them couldn’t fund a foreign project; but the military could, because of an old defence-industrial agreement, which the U.K. and Australia have just joined.
He underwent a preliminary screening, then an exhaustive request-for-proposals submission, and finally learned a few months ago that his project was tentatively approved. This month’s announcement made it official.
The funding will pay for the final feasibility studies, and Goad hopes to start construction on the mine within two years and start production in 2027, given that he already has key permits and an environmental assessment.
“We are a very advanced project,” Goad said.
He suspects what won the grant was his company’s plans to process, not just mine, at home, retaining control of these minerals entirely within North America. In addition, he’s working to potentially process materials for U.K. mining giant Rio Tinto.
“We have to go faster. It cannot take us 12 to 15 years to permit new mines in this country if we want to successfully advance the energy transition,” said Natural Resource Minister Jonathan Wilkinson as the federal government released its critical minerals strategy Friday.
The other winning bid belonged to a Quebec-based company, Lomiko Metals, seeking to develop what it describes as one of the world’s largest graphite deposits.
“We were very excited [by this news], as you can imagine,” said Gordana Slepcev, Lomiko’s chief operating officer.
“This is a very, very important step for us.”
She said the public funding will cover half of everything the company needs before a decision on construction, meaning its late-stage feasibility and permitting work.
With the Pentagon backing, she’s not worried about being able to raise the other half over the next few years; she estimates the final plans will take between three and five years; shovels could be in the ground between 2027 and 2029.
“The reality is we can always speed up the timeline,” she said. “If capital comes right away, we can go [faster].”
A mood shift during the 1940s
In the 1940s, that capital came quickly.
The U.S. pumped tens of millions in that era’s currency into making an aluminum plant in Quebec’s Saguenay region the largest in the world, for decades to come.
The project was considered so vital to national security its location was kept secret for two years, with The New York Times eventually breaking news of the “hush-hush” plan.
In the meantime, Canada boasted of supplying the aluminum for thousands of Allied planes, in volumes large enough to equip a new army division every six weeks.
A few years later, with the Allies on the cusp of victory, the American mood turned.
Politicians and U.S. industry complained about these arrangements, even holding congressional investigations to address a question that had seemed self-evident amid the frenzy of a few years earlier: Why had U.S. money built an industry in another country?
This modern-day iteration has been launched with no clarity over whether the world is entering a phase anywhere near as dangerous.
Published at Sun, 26 May 2024 08:00:00 +0000
More than 670 people believed killed in Papua New Guinea landslide, says UN agency
More than 670 people are assumed to have died in Papua New Guinea’s massive landslide, the UN migration agency estimated on Sunday as rescue efforts continued.
Media in the South Pacific nation north of Australia had previously estimated Friday’s landslide had buried more than 300 people. But more than 48 hours later, the International Organization for Migration (IOM) said the death toll may be more than double that, as the full extent of the destruction is still unclear and continuing dangerous conditions on the ground are hampering aid and rescue efforts.
Only five bodies had been retrieved from the rubble so far.
The agency based its death toll estimates on information provided by officials in Yambali village in Enga province, who say more than 150 houses were buried in Friday’s landslide, Serhan Aktoprak, the chief of the agency’s mission in Papua New Guinea, said in an email statement.
‘Extreme risk for everyone’
“Land is still sliding, rocks are falling, ground soil is cracking due to constant increased pressure and ground water is running thus the area is posing an extreme risk for everyone,” Aktoprak said.
More than 250 houses nearby have been abandoned by the inhabitants, who had taken temporary shelter with their relatives and friends, and some 1,250 people have been displaced, the agency said.
“People are using digging sticks, spades, large agricultural forks to remove the bodies buried under the soil,” Aktoprak said.
The IOM said an elementary school, small businesses and stalls, a guesthouse, and a petrol station were also buried.
The UN’s Papua New Guinea office said five bodies were retrieved from an area where 50 to 60 homes had been destroyed, and a number of injured reported, including at least 20 women and children.
IOM said the community in this village was relatively young and it’s feared that the most fatalities would be children of 15 years or younger.
Remote, hilly terrain slowing efforts
Social media footage posted by villagers and local media teams show people clambering over rocks, uprooted trees and mounds of dirt searching for survivors. Women could be heard weeping in the background.
The landslide hit a section of highway near the Porgera gold mine, operated by Barrick Gold through Barrick Niugini Ltd., its joint venture with China’s Zijin Mining.
The Porgera Highway remains blocked, IOM said, and the only way to reach the Porgera Gold Mine and other localities cut off from the rest of Enga province is via helicopter.
The geographic remoteness and the tough, hilly terrain is slowing rescue and aid efforts.
The government and the PNG Defence Force engineering team is on the ground now, but heavy equipment like excavators, required for the rescue, are yet to reach the village. IOM said the community may not allow use of excavators until they consider they had fulfilled their mourning and grieving obligations.
“People are coming to terms with the fact that the people under the debris are now all but lost,” IOM said in an earlier status update by email.
The government plans to establish two care/evacuation centres, each on one side of the landslide-affected area to host the displaced who may need shelter.
A humanitarian convoy has started distributing bottled water, food, clothing, hygiene kits, kitchen utensils, tarpaulins, as well as personal protective equipment.
Aid group CARE Australia said late on Saturday that nearly 4,000 people lived in the impact zone but the number affected was probably higher as the area is “a place of refuge for those displaced by conflicts” in nearby areas.
At least 26 men were killed in Enga province in February in an ambush amid tribal violence that prompted Prime Minister James Marape to give arrest powers to the country’s military.
The landslide left debris up to eight metres deep across 200 square kilometres, cutting off road access and making relief efforts difficult, CARE said.
Marape has said disaster officials, the Defence Force and the Department of Works and Highways were assisting with relief and recovery efforts.
Published at Sun, 26 May 2024 13:59:24 +0000