On Thursday, the U.S. government expanded its onerous sanctions on Cuba, continuing a mission by the second Trump administration to choke the communist island into submission.
The campaign kicked into high gear in January when the White House signed an order threatening tariffs on any country that shipped fuel to Cuba, exacerbating an ongoing energy crisis in the country. Another major move came in May when, looking to further isolate Cuba’s economy, the U.S. extended the threat of sanctions to anyone doing business in Cuba’s metals and mining, energy, defence, financial services, and security sectors.
While the primary outcome of these two actions has been an extended humanitarian crisis in Cuba, there have been other unforeseen ripple effects — like job losses in Alberta and a critical mineral bottleneck… let us explain.
This week, Canadian critical minerals company Sherritt International announced it was temporarily laying off 47% of its workforce at its nickel and cobalt processing plant in Fort Saskatchewan, Alberta — some 280 employees. The furloughs are expected to last 90 days, but considering the plant hasn’t been operational since June and there’s no timeline for it restarting, it could end up being much longer. Why hasn’t the plant been operational? In short: the Cuban sanctions.
Since 1991, Sherritt’s Fort Saskatchewan refinery has received nickel and cobalt feed — the intermediate stage where critical mineral particulate has been separated from the ore but still needs further processing to be made into an actual metal — from the Moa Mine in eastern Cuba. The joint venture had been fruitful for decades, even if the company did run afoul of the U.S. (in 1996, its then-CEO was barred from entering the country). However, the company’s valuation has plummeted in recent years due to heavy debts and subdued nickel prices. Then, these new sanctions arrived and made things even worse.
First off, the fuel embargo meant that Moa didn’t have enough energy to run and suspended operations in February. Already reeling from reduced supply, the company found itself unable to import any feed from Moa in May, running the risk of getting sanctioned through the new U.S. measures. By June, the refinery ran out of feed and was forced to pause operations. And while Sherritt is in the process of getting an exemption on working with Cuba, even if it does get the go-ahead, it might not have the financial capacity to fully restart its operations.
Now, this is all a big deal because Sherritt’s plant plays a big part in the continent’s nickel supply chain and a particularly outsized one in its cobalt supply chain. It is just one of three large-scale nickel refineries in North America and the only significant cobalt refinery. As is, Canada accounts for just about 3% of the world’s refined cobalt — if Sherritt can’t recover then, obviously, that number is going to go down.
Mining consultant and researcher Patricio Faúndez succinctly summarized the lesson of this situation in a research note from July: “Mineral security does not depend only on having plants, technology, or political allies, but also on having supply chains that are traceable, financeable, and legally viable. Restrictions do not come only from the East. They can also emerge from within the Western regulatory architecture itself.”
In conclusion, there are a lot of moving parts to building a sovereign critical mineral supply chain. And right now, one of them is broken.
