Torngat Metals has secured C$165 million ($120 million) in government funding for pre-construction work at its Strange Lake rare earth project straddling northern Quebec and Labrador.

Export Development Canada is supplying a C$110 million bridge loan while the Canada Infrastructure Bank is offering a C$55 million infrastructure loan, both firsts for the institutions. The financing is to advance engineering, environmental studies, permitting applications, road and infrastructure upgrades, and airstrip rehabilitation.

Torngat aims to begin construction in late 2026 and the start operations by 2028.

The announcement for the C$2 billion capex project aiming to produce roughly 15,000 tonnes per year of rare earth oxides arrives at a pivotal moment for Canada’s role in mineral supply chains, CEO Yves Leduc said on Tuesday.

“This financing comes at a critical juncture, as the Chinese monopoly of heavy rare earths drives the global permanent magnet shortage,” Leduc said in a news release. “Our partnership with these two renowned Canadian institutions will help us achieve key project milestones towards unlocking the largest supply by far of dysprosium and terbium outside China.”

Strange Lake stands out among North American rare earth projects for its heavy rare earth content, particularly dysprosium and terbium—elements critical to permanent magnets used in electric vehicles, wind turbines and defence technologies. Unlike many of its peers, Torngat plans to build a rare earth separation plant at Sept-Îles, Quebec, producing finished oxides domestically rather than exporting concentrates.

Heavy producer

With more than of half Strange Lake’s output to be classed as heavy rare earths, this would make it the largest heavy rare earth producer in North America and one of the largest outside China. The company has stated that its production cost per kilogram of rare earth oxide would be competitive with global producers, though final figures will depend on engineering studies now underway.

Strange Lake’s production plans would surpass North America’s current heavy rare earth output. It places Torngat in a stronger position than other advanced projects such as Vital Metals’ (ASX: VML) Nechalacho project in the Northwest Territories, which focuses on light rare earths, and Ucore Rare Metals’ (TSXV: UCU) Bokan Mountain project in Alaska, which is smaller in scale and heavy rare earth content.

Compared to China’s state-backed operations, Strange Lake would be modest in scale but significant strategically. China currently accounts for more than 90% of global heavy rare earth production, with state-owned enterprises controlling most separation capacity. Torngat’s planned annual output could supply a meaningful portion of North American demand for dysprosium and terbium, helping reduce reliance on Chinese imports.

Indigenous engagement

The company also highlights its commitment to Indigenous partnerships and community engagement. Strange Lake’s location requires permitting and approvals in both Quebec and Labrador, as well as agreements with Indigenous governments and organizations in the region.

Torngat has stated that meaningful Indigenous equity participation and co-management of environmental monitoring will be core components of its development strategy. The company expects to submit initial permit applications later this year, following further consultation.

Torngat’s financing is notable as the first early-stage bridge loan provided by Export Development Canada to a mining project, and the first critical minerals investment by the Canada Infrastructure Bank. Both agencies have described the Strange Lake project as aligned with Canada’s critical minerals strategy and the federal goal of developing resilient, low-carbon supply chains.