Canada’s Electra Battery Materials Corp. has secured a $20 million grant from the U.S. government to construct a cobalt plant near North America’s automotive hub. The funds will support the development of a cobalt sulfate facility in Ontario, which will become North America’s only refinery for the material essential for lithium-ion batteries in electric vehicles, Electra announced on Monday. The $250 million project is located about 500 kilometers (310 miles) north of Toronto in Temiskaming Shores. 

The U.S. Defense Department stated that the award would aid in developing North American production of a critical material for large-capacity batteries and, once completed, will strengthen the region’s expanding EV supply chain. This funding is the latest in a series of investments by the Pentagon aimed at securing metals necessary for EV manufacturing and the transition away from fossil fuels. 

Cobalt prices, primarily controlled by Chinese processing, have dropped significantly from their peak about two years ago, partly due to Chinese firms ramping up production more quickly than expected. Toronto-based Electra, with a market value of approximately $28 million, had halted construction on the project last year due to low prices and higher-than-anticipated costs. 

“We’re not operating in a free market, with China subsidizing producers and overproducing,” said CEO Trent Mell in an interview on Monday. “It’s crucial that if we’re going to build our own domestic supply chain, we have this financial support.” 

Mell also mentioned ongoing discussions to secure additional funding from the Canadian government, which granted the company C$5 million ($3.7 million) in June.