Another $20M in federal funds for northern Minnesota Talon nickel mine

The company planning a high-grade nickel mine in Minnesota has received its second federal grant, a $20.6 million award from the U.S. Department of Defense.

The defense department (DOD) announced Tuesday that it's providing the money specifically for Talon Metals' nickel exploration efforts in Michigan and Minnesota.

"This award exemplifies the DOD's commitment to strengthening the resilience of critical supply chains and lessening our reliance on foreign sources of vital materials," Anthony Di Stasio, director of the Defense Department's manufacturing expansion office, said in a press statement.

Talon plans a nickel mine in Tamarack, Minn., which would feed a proposed processing plant in Mercer County, North Dakota. The company also is exploring for nickel in Michigan's Upper Peninsula.

Last fall, the U.S. Department of Energy awarded Talon a $114 million grant for the processing plant. Separately, Tesla has agreed to buy half of Talon's processed nickel for electric vehicle batteries.

Talon, based in the British Virgin Islands and operated from Canada, has no active mines. The firm's partner in the Minnesota and North Dakota venture is global mining giant Rio Tinto.

Environmental groups and Ojibwe tribes have raised concerns about water pollution from Talon's proposed mine.

The Defense Department invoked the Defense Production Act for its Talon grant. The 1950 law authorizes government intervention in the civilian economy for national security purposes, particularly to ensure supplies of scarce materials.

The Talon award is funded with money appropriated by Congress to help Ukraine fight Russia's invasion.

The Defense Department's award to Talon requires a $21.8 million contribution from the company. The money is targeted for exploration expenses such as drill rigs and employees.

"In our research, the U.S. government hasn't invested in mineral exploration like this since World War II," said Todd Malan, a Talon spokesman. "It's a new era of looking for supply-chain security."

While some of the grant will be used in this state, "it won't mean a lot for new exploration in Minnesota," Malan said. Talon's $600 million project in Minnesota and North Dakota is already before regulators.

But in Michigan, Talon has just begun exploring for nickel.

The U.S. Geological Survey has deemed nickel a critical mineral, and the Biden administration has targeted building a nickel supply chain in the U.S.

Nickel is a key ingredient in electric vehicle batteries, and it's essential for stainless steel and metal alloys used by the aerospace industry.

The U.S. relies on nickel imports, except for the Eagle Mine in Michigan's Upper Michigan, which is expected to be exhausted in 2027. Talon's exploration efforts in Michigan are near the Eagle Mine.