By Penny Langford
The indefinite idling of Sherritt International’s Fort Saskatchewan refinery in Alberta this June marks a significant setback for North American mineral security. As the continent’s only facility capable of producing battery-grade cobalt, the refinery’s transition to a "shutdown state" highlights a harsh reality for the energy transition: refining capacity is only as resilient as the upstream supply chain that feeds it.
The closure was not triggered by a lack of demand or a failure of technology. Instead, it was the result of a geopolitical domino effect. U.S. sanctions targeting Venezuelan oil shipments to Cuba earlier this year led to severe fuel shortages on the island, forcing the suspension of mining at the Moa Joint Venture: the primary source of feedstock for the Alberta plant. With the pipeline of mixed nickel-cobalt sulphide precipitate empty, the refinery has been forced to cease operations, leaving Western markets further dependent on a global supply chain dominated by China.
The Geopolitical Chokepoint: From Havana to Alberta
The relationship between Sherritt and the Cuban government has long been a focal point of North American mining diplomacy. The Moa Joint Venture has historically been a reliable, high-quality source of nickel and cobalt. However, the 2026 escalation of U.S. sanctions on Cuba: specifically aimed at cutting off the Venezuelan oil that powers Cuban industry: proved to be the breaking point.
When mining operations at Moa were suspended in February 2026, the Fort Saskatchewan refinery began running on existing inventory. By mid-June, those stocks were exhausted. Sherritt has stated that it cannot provide a timeline for a restart, as the conditions require both a resumption of Cuban mining and the physical rebuilding of the feed pipeline.
For critical minerals observers, the situation serves as a cautionary tale. Even within the "Friend-shoring" framework promoted by Western governments, the intersection of legacy sanctions and modern energy needs can create unforeseen vulnerabilities.
Cobalt Refining: The Scale of Chinese Dominance
The loss of the Fort Saskatchewan output arrives at a moment of extreme market concentration. While the Democratic Republic of the Congo (DRC) and Indonesia dominate the mining of cobalt, the actual chemical processing and refining are overwhelmingly centralized in China.
According to current 2026 market data, China controls approximately 79% of the world’s refined cobalt production. In contrast, Canada’s contribution, while strategically vital for "traceable" and ESG-compliant supply chains, represents roughly 3% of the global total.
2026 Global Cobalt Market Snapshot
| Region | Share of Mined Production | Share of Refined Production | Key Role |
|---|---|---|---|
| China | < 2% | ~79% | Dominant refiner and consumer |
| DRC | ~73% | < 5% | Primary mining hub; export quotas in place |
| Indonesia | ~14% | Minimal | Rapidly growing mine source; by-product risk |
| Canada | ~1% | ~3% (Pre-shutdown) | Strategic "clean" supply for North America |
| Rest of World | ~10% | ~13% | Small-scale refining in Finland, Belgium |
Data Source: Skillings Mining Intelligence Research, July 2026.
With the Alberta refinery offline, the pool of non-Chinese refined cobalt available to North American battery manufacturers and defense contractors has effectively evaporated. This shift forces Western buyers back toward the "grey market" or complicates efforts to comply with strict domestic content requirements for electric vehicle (EV) subsidies.
Upstream Volatility: DRC Quotas and Indonesian Cuts
The Sherritt shutdown is occurring against a backdrop of tightening supply elsewhere. The DRC, which produces nearly three-quarters of the world’s mined cobalt, implemented strict export quotas in late 2025. These measures were designed to stabilize prices after a period of oversupply, but they have also introduced new administrative risks. In early July 2026, a failure in the DRC’s customs IT system reportedly stranded 10,000 tonnes of cobalt, threatening to let export permissions expire unused.
Similarly, Indonesia has begun to exercise its leverage as the world’s second-largest producer. Because Indonesian cobalt is primarily a by-product of nickel mining, it is highly sensitive to nickel production targets. The Indonesian government recently cut its 2026 nickel ore production target by 34% compared to 2025, a move that automatically constrains the volume of cobalt available for global refiners.
The Impact on Western Mineral Security
The idling of North America’s only battery-grade cobalt refinery creates a significant "missing link" in the domestic supply chain. While there has been significant investment in new mining projects in places like Idaho and Ontario, the mid-stream processing remains the primary bottleneck.
For investors and policymakers, several key risks have been exposed:
- Feedstock Rigidity: The Fort Saskatchewan refinery was technically optimized for the specific Cuban mixed sulphide precipitate. Unlike some generic refiners, it cannot simply "swap in" material from the DRC or Indonesia without significant capital investment and technical re-tooling.
- Regulatory Conflict: The conflict between U.S. foreign policy (sanctions on Cuba) and U.S. industrial policy (securing critical minerals) has created a scenario where a strategic North American asset was collateral damage.
- Refining Deficit: S&P Global analysts now anticipate a 15,000-tonne global cobalt deficit for 2026, exacerbated by the loss of Sherritt’s output.
Strategic Outlook for 2026 and Beyond
Sherritt International’s current predicament is indicative of a broader struggle to decouple Western supply chains from Chinese infrastructure. While Canada has recently introduced mining permit reforms and digital hubs to accelerate new projects, building and operating a refinery is a decades-long commitment that requires geopolitical stability.
The focus now shifts to whether the Canadian or U.S. governments will intervene to support the maintenance of the Fort Saskatchewan site or if the facility will remain a "stranded asset" until the sanctions environment shifts. Sherritt has disclosed that its ability to refinance debt is "uncertain" under the current operational constraints, adding financial pressure to the technical shutdown.
As the industry looks toward the second half of 2026, the focus remains on the copper deficit and other critical minerals. However, the cobalt story serves as a reminder that "security of supply" is an empty phrase without the refineries to process it and the diplomatic stability to keep the feedstock flowing.
Distribution Snippet for LinkedIn/X
The only significant cobalt refinery in North America just went idle. Sherritt International's Fort Saskatchewan plant is offline because of geopolitical tension, not technical failure. As China maintains ~79% control of refined cobalt, the West's "supply chain security" faces its toughest test yet. #MiningNews #CriticalMinerals #Cobalt #SupplyChain #EnergyTransition
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