Canadian locals leery of U.S. military investment in Lomiko Metals graphite project in Quebec.

Initially, when Lomiko Metals Inc., a mining company based in Surrey, British Columbia announced plans to build a graphite mine in Quebec's Laurentides region, there were fears regarding potential environmental harm, especially to nearby lakes, but objections increased after locals found out the Pentagon was also involved in the project.

In May, Lomiko Metals received a grant of $8.35 million (C$11.4 million) from the U.S. Department of Defense and another $3.6 million (C$4.9 million) from Natural Resources Canada to convert graphite into battery-grade material for powering electric vehicles.

Building a North American supply chain

Graphite is a key mineral for manufacturing lithium-ion batteries and steelmaking. Both these uses have wide applications for the clean energy transition and military hardware.

Today, China is far and away the leader in graphite production, controlling 66% globally, while in 2022 Canada was ranked sixth, mining about 1% of global production, according to Natural Resources Canada. China also has implemented export restrictions on certain graphite products.

The Pentagon's announcement described Lomiko's graphite as bolstering North American energy supply chains and use in "defense applications," words that have made locals wary of where their green graphite is going.

The Department of Defense has increased funding for tech metals sourcing, research and development across many sectors, with North American and European governments investing heavily in critical minerals like graphite as part of a policy of establishing trade relationships with allies to secure supplies and break free of dependency on Chinese exports.

These joint grants arise from the "Canadian-American Action Plan for Collaboration in the Field of Critical Minerals" launched in January 2020 between the two governments with the aim of "strengthening North American production of critical minerals needed by important sectors, including defense, aerospace, clean energy and communications."

Quebec forges ahead

Opportunities for Quebec to become a strong supplier of critical minerals to the North American economy are supported by a favorable jurisdiction for mining, already established infrastructure, and inexpensive hydroelectric power.

In an emailed statement, the Quebec government said mining projects must meet high standards to earn social acceptance from people who live nearby. Meanwhile, Lomiko Metals said in its own statement that it supports conversation and transparency regarding the proposed project.

According to Belinda Labatte, CEO of Lomiko Metals, obtaining this simultaneous funding from the Canadian and American governments represents an "exceptional opportunity to build a collaborative approach to the transition energy and supply chain resilience in North America."

"The funding is at the heart of the research and scientific needs of Quebec and Canada's critical minerals strategy, and reflect our intentions and actions to pursue our commitment to harmonious development in the region." Labatte said. "Lomiko has reconfirmed the suitability of La Loutre's graphite as a battery anode material with several tests, and we are enthusiastic about continuing this work with experts and consultants primarily based in Quebec to develop the battery industry in Quebec and Canada."

Listening to the people

"Mining projects must go hand in hand with social acceptability," Minister of Natural Resources Blanchette Vézina wrote in a statement, emphasizing that mining proposals have to be accepted by locals to go forward.

The type of purified graphite Lomiko Metals plans to produce is indeed used for batteries, while non-purified graphite can be used for a host of other applications. The company says the proposed mine would produce enough graphite concentrate to supply approximately 10% of North America's current battery demand.

In a press release Lomiko Metals stated its team "will be present in the region to participate in several engagement activities with citizens, with the purpose to share the vision of the company and to provide accurate information about the project. Lomiko's role as a corporate citizen is to help communities understand the project, answer questions, receive and discuss concerns in a transparent and open manner, and collaborate in the exchange of ideas and recommendations to develop a successful, sustainable net zero climate project for future generations."

The company plans to begin construction by 2027 and will be conducting feasibility and metallurgical studies over the next few years, subject to a review by Quebec's environment consultations office.