Canada’s federal government is investing a potential $400 million as part of an $850-million total investment in Teck Resources’ (TSX: TECK.A, TECK.B; NYSE: TECK) Trail processing facility in British Columbia to boost production of the critical metals germanium and antimony, and add the capability to produce gallium.
The Canada Growth Fund is to provide the $400 million in equity-like financing for the Trail plant and comes alongside an agreement with the company under the new Canada Critical Minerals Accelerator, a $2-billion fund to be led by Natural Resources Canada, NRCan Minister Tim Hodgson said Tuesday afternoon at the Trail plant. The Accelerator funds are also administered by the Export Development Corporation (EDC).
“It’s designed to give companies the certainty they need to make major investments in Canadian critical mineral mining and processing projects, even when global markets are volatile, as we see today,” Hodgson said in a speech broadcast over Zoom.
“The fund will make strategic investments in critical mineral projects and companies, leveraging modern investment tools like equity, debt, loan guarantees and off-take agreements.”
The announcement is the latest in a string of major federal mining investments over the past several weeks as Ottawa rolls out an increasingly assertive industrial strategy centred on critical metals and building integrated supply chains. Last week, the government announced a $500-million investment in Newmont’s (NYSE, ASX: NEM; TSX: NGT) proposed Red Chris copper-gold Block Cave expansion, as well as $3.9 billion towards BC Hydro’s North Coast Transmission Line. In late June, Hodgson said road initiatives in the Far North that could advance major mines might be given national interest status.
Capacity doubling possible
The investment in the Trail plant could double its output capacity for germanium and antimony and support the potential start of gallium output, Hodgson said. China dominates the global production of all three metals. Germanium and antimony, used for fibre optic systems and alloys, respectively, are both currently produced at Teck’s facility which is one of the world’s largest integrated zinc and lead smelters.
The U.S. has limited domestic production and processing capacity, highlighting the importance of securing new supply sources.
The Vancouver-based Teck is North America’s largest germanium producer, recovering the mineral as a byproduct of its zinc-mining operations in Alaska. The company is Canada’s only supplier of germanium dioxide to the United States.
Teck’s first gallium
Gallium, used in semiconductors and defence applications is often produced as a by-product of aluminum and zinc smelting, however, Canada has no gallium mines and few primary gallium projects.
Asked by The Northern Miner about when the plant would produce its first gallium, Teck CEO Jonathan Price said there’s not yet a timeline for the metal’s output. While the funding would certainly help with the plant’s expansion, Price said, he couldn’t specify the timing of production milestones.
In May, Titan Mining (NYSE-A: TII) said it was evaluating potential germanium production from its U.S.-based zinc mining in partnership with Teck. Titan and Teck envision recovering 13,000 kg a year of germanium from Titan’s Empire State zinc mine in New York state, according to a cooperation agreement signed May 14. U.S. pricing for germanium now tops $6,000 (C$8,520) per kg, Titan CEO Rita Adiani said Tuesday in a statement.
Canada and the U.S. are among the Western countries that have been seeking to diversify critical mineral supply chains following China’s 2024 decision to impose export restrictions on germanium and antimony sales to the U.S.
Offtakes with Ottawa
The deal with Teck also establishes an off-take structure with Ottawa, including rights for a share of the future germanium, antimony, and gallium produced at Trail.
“It’s a hybrid equity investment,” Hodgson said. “It’s structured so that we take a return off the margins of the expansion, and it’s specifically designed to not get in the middle of the capital structure of Teck [to ensure] taxpayers benefit from the opportunity that’s being created here.”
A similar model is at play with Australia’s Elevra Lithium (ASX: ELV; Nasdaq: ELVR) and its North American Lithium (NAL) project, where in May a funding package included a fully underwritten A$275-million ($270.5 million) institutional placement and a maximum $145-million convertible note investment from the $15-billion Canada Growth Fund. It also included a share purchase plan of up to A$20 million.
It was difficult to offer further details as they are commercially confidential, Hodgson said.
The Teck investment follows the EDC and Canada Infrastructure Bank’s joint commitment of $459 million in senior debt to fund Nouveau Monde Graphite’s (NYSE: NMG, TSX: NOU) Matawinie project in Quebec through its construction.
- with files from Blair McBride
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