U.S. Military Invests Millions of Dollars in Canadian Mines

A Strategic Shift in U.S. Military Investments: Historic Cash Transfers to Canadian Mines Amid Global Tensions

Editorial Team (ET)July 7, 2025

The United States recently made headlines with a historic decision: the U.S. military has, for the first time in generations, invested public money into Canadian mineral projects. This move, involving nearly $15 million USD, aims to mine and process critical minerals such as copper, gold, graphite, and cobalt in Quebec and the Northwest Territories. This decision marks a significant shift in U.S. strategy, reminiscent of a similar turn to Canada during World War II when aluminum supplies were desperately needed.

The WWII Parallel

Back in the 1940s, the U.S. faced a dire shortage of aluminum essential for its war efforts. To address this, American public money flowed into Quebec, building an aluminum industry that would supply raw materials for Allied planes and tanks. During 1941 hearings, then-U.S. Senator Harry Truman famously declared, "I would be willing to buy aluminum from anybody... I don't care whether it is the Aluminum Company of America or Reynolds or Al Capone." This desperation led to a robust cross-border collaboration that proved pivotal for the Allied forces.

Modern-Day Context

Fast forward to today, the world faces new global tensions, and the U.S. finds itself once again looking north. The U.S. military's recent investment in Canadian mines is driven by a pressing need to secure a stable supply of vital minerals used in a wide array of civilian and military products, including medicine, batteries, electronics, and munitions. This investment is part of a broader effort to reduce reliance on foreign mineral supplies, particularly from China.

Driving Forces: U.S. Fear of China

China's dominance over the global mineral supply chain has increasingly become a point of concern for the U.S. With China's past behavior of cutting off mineral exports and the looming threat of a potential standoff over Taiwan, Washington has expressed escalating unease over its dependence on its biggest rival. Two years ago, the U.S. began considering funding Canadian mining startups under the Defense Production Act (DPA), and this month, it formally revealed the first such initiatives.

The Defense Production Act (DPA)

The Defense Production Act, a U.S. law that grants the president the authority to direct private companies to prioritize and produce goods necessary for national defense, has been a critical tool since its inception in 1950. Historically, it has been used during times of national crises, such as the Korean War and the COVID-19 pandemic, to ensure the availability of essential materials. The recent funding of Canadian mineral projects under the DPA marks the first time in its 74-year history that U.S. military money has been used to fund foreign mineral projects.

The New U.S.-Canada Mineral Initiative

This initiative involves co-investments between the U.S. and Canadian governments, with the American military funding projects that are crucial for both civilian and military applications. The announcement, while novel, was made in a rather understated manner through a press release referring to a Canada-U.S. co-investment. However, the significance of this move cannot be overstated, as it reflects a historic shift in U.S. policy and a strategic realignment in response to global supply chain vulnerabilities.

Why Canada?

Canada's abundant mineral resources and stable political environment make it an ideal partner for the U.S. in securing critical minerals. The proximity of Canadian mines to the U.S. market further enhances the strategic importance of this cooperation. By investing in Canadian mineral projects, the U.S. aims to ensure a reliable supply chain that can withstand geopolitical tensions and market disruptions.

The Selected Projects

Two Canadian companies, Fortune Minerals and Lomiko Metals, have been selected to receive funding under this initiative. Fortune Minerals is working on a cobalt-gold-bismuth-copper mine in the Northwest Territories and a processing facility in southern Canada. Lomiko Metals is developing one of the world's largest graphite deposits in Quebec. These projects are expected to play a crucial role in supplying essential minerals for various industries.

Implications for National Security

The minerals involved in these projects are vital for a range of civilian and military products. In a national-security crisis, such as a severe trade war or a shooting war in the Asia-Pacific, the U.S. military could demand these supplies. Canada's version of the Defense Production Act even allows the government to buy raw materials on behalf of a NATO ally, highlighting the strategic importance of these investments.

Economic and Environmental Considerations

The investment in Canadian mines is expected to have a significant impact on the Canadian mining industry, potentially leading to job creation and economic growth. However, these projects must also navigate environmental assessments and sustainability concerns. Ensuring that mining activities do not harm the environment will be crucial for the long-term success of these projects.

Historical Lessons

The collaboration between the U.S. and Canada during WWII offers valuable lessons for today's initiatives. The success of the aluminum industry built in Quebec with U.S. funds demonstrates the potential benefits of cross-border cooperation. However, it also serves as a reminder of the challenges that can arise, such as the political and economic debates that followed the war regarding the use of U.S. funds to build an industry in another country.

The Future of U.S.-Canada Mineral Cooperation

Looking ahead, there is potential for further investments and deeper cooperation between the U.S. and Canada in the mining sector. Such collaborations could provide long-term strategic benefits, ensuring a stable supply of critical minerals and enhancing the resilience of supply chains against geopolitical risks.

Challenges and Risks

Despite the potential benefits, these initiatives face several challenges and risks. Market volatility and funding uncertainties could hinder the progress of these projects. Additionally, political and economic risks, such as changes in government policies or trade disputes, could impact the feasibility and success of these investments.

Conclusion

The U.S. military's investment in Canadian mines marks a historic and strategic move to secure essential minerals critical for national security and economic stability. By looking north once again, the U.S. is leveraging a reliable partner to build a resilient supply chain in an era of global uncertainty. This initiative not only strengthens U.S.-Canada relations but also underscores the importance of cross-border cooperation in addressing contemporary challenges.

USA

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