Defense Department awards $20.6 million to support nickel prospecting in Minnesota and Michigan

MINNEAPOLIS (AP) — The Department of Defense on Tuesday awarded $20.6 million to developers of the proposed Talon nickel mine in Minnesota under a program to strengthen domestic supply chains for critical minerals.

The defense funds will support prospecting work in Michigan and Minnesota, and follow a $114 million grant by the Department of Energy last year to help build Talon Metals’ ore processing plant in North Dakota. The federal support stands in contrast to the Biden administration's efforts to block two other copper-nickel mining projects in Minnesota.

Nickel is an essential component of high-temperature alloys used in aerospace, as well as stainless steel and lithium-ion batteries, the Defense Department noted in its announcement. The U.S. has only one operating nickel mine, the Eagle Mine on Michigan's Upper Peninsula, which is slated to close around 2026 unless it secures more ore. Talon hopes to make its proposed mine near Tamarack in northeastern Minnesota the second.

“This award exemplifies the DoD's commitment to strengthening the resilience of critical supply chains and lessening our reliance on foreign sources of vital minerals,” Anthony Di Stasio, director of the Pentagon program, said in the statement.

Talon said it will contribute $21.8 million in matching funds over about a three-year period — and use the money to buy more equipment and hire more employees to accelerate its efforts to find more high-grade nickel deposits, primarily in Michigan. Last month, Talon announced that it is acquiring the mineral rights formerly owned by Ford Motor Co. to approximately 400,000 acres (162,000 hectares) near the Eagle Mine and its processing facility.

“This funding makes clear that domestic supply of nickel is a national security priority,” Henri van Rooyen, CEO of Talon, said in a statement. “Congress and the Biden Administration have created powerful new tools to build-up domestic supply of critical minerals required for clean energy systems and national defense."

The Defense Department on Tuesday also announced a similar $90 million agreement to help reopen the Kings Mountain lithium mine in North Carolina. In another recent administration move, the Department of Energy said last week it was investing $150 million to promote domestic production of critical minerals needed for the transition to cleaner energy.

Talon's proposed underground mine in Aitkin County of Minnesota, which has a contact to supply electric carmaker Tesla, is in the early stages of environmental review. The project is a joint venture with the Anglo-Australian company Rio Tinto, the world’s second-largest metals and mining corporation.

The mine got a boost when the Department of Energy agreed to help fund its proposed ore processing plant in Mercer County of western North Dakota. But the Mille Lacs Band of Ojibwe and other tribal and environmental groups have expressed concerns about the potential negative impacts to lakes, streams and wetlands that support important stands of wild rice and other resources near the mine site, about 115 miles (185 kilometers) north of Minneapolis.

While the Biden administration has so far backed the Talon project, it is trying to kill another proposed mine in northeastern Minnesota, the Twin Metals copper-nickel mine near Ely, which is just upstream from the pristine Boundary Waters Canoe Area wilderness. A federal judge last week dismissed a company lawsuit that sought to regain the critical mineral rights leases that the Biden administration cancelled. And the federal government in June raised a new obstacle to the long-delayed NewRange Copper Nickel mine near Babbitt, formerly known as PolyMet, when the Army Corps of Engineers revoked a crucial water quality permit.