U.S. Military Invests $35 Million in Canadian Mining Venture

Last week, Vancouver-based Trilogy Metals announced a significant agreement with the U.S. Department of Defense. The military arm of the United States plans to purchase a 10 percent stake in the mining company, amounting to more than $35 million. This investment is aimed at developing a 2,000-square-kilometre mineral deposit located in remote northern Alaska, highlighting the strategic importance of the Upper Kobuk Mineral Projects.

Tony Giardini, president and CEO of Trilogy, stated that the deal underscores the project’s potential to support U.S. energy, technology, and national security priorities. Following the announcement, Trilogy’s stock values experienced a notable surge, tripling in response to the news. Attempts to secure a comment from Trilogy were unsuccessful.

This is not the first time the U.S. government has invested in a British Columbia mining company. On October 1, the Department of Energy revealed a 5 percent stake in Lithium Americas, which includes a stake in its Thacker Pass lithium mine in Nevada. Earlier this year, the Pentagon also made headlines by investing in MP Materials, which operates the only active rare earth elements mine in the United States.

According to Werner Antweiler, an associate professor in strategy and business economics at the University of British Columbia Sauder School of Business, government investment in companies is relatively rare. He explained that while governments often support industries deemed crucial through loans or guarantees, direct ownership is uncommon in Western nations.

The mining companies targeted by the U.S. government share a common focus on critical minerals, which play a vital role in the global energy transition. These materials are essential for a range of technologies, from electric vehicle batteries to renewable energy infrastructure, and are also crucial in military applications. The current geopolitical landscape, marked by trade tensions and conflicts in regions such as Ukraine and the Middle East, has intensified U.S. interest in securing a domestic supply of these materials.

China’s dominance in critical mineral production—accounting for approximately 90 percent of global rare earth elements—has raised alarm in the U.S., particularly as the country has restricted exports in recent months. This situation has prompted U.S. officials, including former President Donald Trump, to pursue various strategies to secure critical mineral supplies, including controversial discussions about annexing Canada and acquiring Greenland.

The rising military expenditure, which reached an unprecedented $2.7 trillion globally last year, has also fueled interest in critical minerals. The United Nations noted that this figure represents a 10 percent increase from the previous year, marking the steepest rise since the Cold War. In light of this, Canada has pledged to boost its defense spending to 5 percent of its GDP over the next decade, reflecting a shift towards increasing military capabilities.

This surge in military spending has been a boon for the natural resource sector, particularly for companies involved in mining critical minerals. These materials are integral to the production of advanced military equipment, including F-35 fighter jets manufactured by Lockheed Martin. In a recent interview, Scott Eldridge, CEO of Vancouver-based Military Metals, emphasized the influx of capital into the mining sector, particularly from the U.S., and predicted that greater investments from Canada and the European Union are on the horizon.

Simultaneously, Canada has enhanced its support for the critical minerals industry, launching the Critical Minerals Infrastructure Fund two years ago to provide up to $1.5 billion in funding. In March, the government allocated $50 million specifically for critical minerals developers to bolster energy security by reducing reliance on authoritarian regimes.

One notable project gaining attention is the Wicheeda project in British Columbia, which boasts one of the richest rare earth deposits globally. Mark Tory, who recently became president and CEO of Defense Metals, highlighted the project’s potential to contribute significantly to the critical mineral supply chain. The Wicheeda site is particularly valuable for its neodymium and praseodymium content, which are essential for manufacturing permanent magnets used in both renewable energy technologies and military equipment.

Defense Metals has also engaged with the U.S. government, bringing on strategic advisers with strong ties to national defense. Tory indicated that the company is open to any potential funding opportunities from the U.S. and is currently preparing to enter the environmental assessment process by early 2026.

Despite the optimistic outlook for the mining sector, there are growing concerns about the ethical implications of critical minerals. Activists, including Nikki Skuce, co-chair of the BC Mining Law Reform network, have raised alarms about the lack of transparency in the critical minerals supply chain. She emphasized the need for clarity on whether the mined materials are contributing to renewable energy or military conflict, noting that the environmental assessment process does not account for the end-use of critical minerals.

In conclusion, while U.S. investments in Canadian mining companies raise questions about the motives behind securing critical minerals, experts like Antweiler caution that the relatively minor stakes do not pose an immediate threat to Canadian sovereignty. Nonetheless, the growing focus on these resources amid a turbulent geopolitical landscape highlights the complexities of balancing energy security, military needs, and ethical considerations in resource extraction.