Feds to pump $400 million into B.C. smelter to boost critical mineral production

Teck said its smelter profits at Trail rose to $258 million in the first quarter from $80 million in the same period a year ago Photo by Government of British Columbia

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The federal government says it intends to make a $400-million “equity-like” investment in Vancouver-headquartered Teck Resources Ltd.’s smelter in Trail, B.C., to boost production of critical minerals.

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The agreement in principle, which involves the Canada Growth Fund, Natural Resources Canada and Export Development Canada, also includes a provision for the government to establish offtake rights to a portion of the future germanium, antimony and gallium produced in Trail.

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All three metals are considered critical for modern high-tech electronics, clean energy and military hardware applications and have supply chains that are heavily controlled by China, which has implemented export restrictions on them at times in recent years.

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The 130-year-old Trail smelter is one of Canada’s largest and mainly produces zinc and lead from ores mined at Teck’s Red Dog mine in Alaska. It produces 19 products in all, and Teck has said it wants to invest $850 million into the smelter to expand critical mineral production, in particular germanium.

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“CGF’s investment will support the advancement of the expansion of Canada’s only germanium-producing smelter, a critical mineral essential to applications related to national security,” Yannick Beaudoin, chief executive of Canada Growth Fund Investment Management Inc., said.

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Germanium has emerged as a key element in fibre-optic communications and possesses properties that enable faster data transmission.

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Canada supplied 20 per cent of the United States’ germanium imports in 2023, but the relatively small size of the overall market, estimated at $457 million, has made it difficult to draw private investment from larger mining companies, according to Royal Bank of Canada.

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Antimony is a flame retardant used in munitions and gallium is used to manufacture semiconductor chips for radar, telecom and solar technologies.

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In April, Teck said its smelter profits at Trail rose to $258 million in the first quarter from $80 million in the same period a year ago

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The Canada Growth Fund said in a press release that its potential investment “reflects the intent of both parties to work towards an investment by CGF … that could double Trail’s existing production capacity for germanium and antimony and potentially add new gallium production capacity.”

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The agreement has not been finalized and the release did not specify what equity-like investment means, but the Canada Growth Fund has been making investments in other mining projects, including a $113-million investment in Montreal-based Nouveau Monde Graphite Inc. in April.

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Natural Resources Canada said the deal with Teck represents the inaugural transaction under its newly established Canada Critical Minerals Accelerator initiative, which is managed by Export Development Canada.

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Analysts have been calling for Canada to make more investments in midstream processing so the country can add value to the mined products it exports.