A method of forming composite materials includes mixing a first metal precursor with a chelating agent to form a first metal-chelate complex. The first metal-chelate complex is added to a polymer binder having terminating hydroxyl groups to form a polymer binder-first metal-chelate. The polymer binder first metal-chelate complex is mixed with an aluminum precursor. The aluminum precursor decomposes forming aluminum nanoparticles dispersed in a continuous phase material having metallic aluminum cores. At least one of the first metal-chelate complex and the first metal is dissolved in the continuous phase. The aluminum nanoparticles can have a passivating coating layer thereon provided by the polymer binder, or can have a passivating coating layer formed by including an epoxide, alcohol, carboxylic acid, or amine in the adding that forms passivating compound(s) which add further protection that can provide complete protection from oxidation of the metallic aluminum cores by air.