Belgian battery materials company Umicore will build a 35GWh equivalent battery material facility in Ontario with the help of material subsidy from the Canadian government.
Construction is set to begin later this year, with the plant expected to be commissioned at the end of 2025 and ramping production as of 2026. The new facility will produce not only cathode active material (CAM) but also precursor CAM.
The plant promises the most advanced high-nickel technologies and is prepared for future battery chemistries, including high lithium, manganese (HLM) and solid-state batteries, Umicore says.
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The firm welcomed the subsidy dollars it will receive from both national and provincial government for the project, saying that “their readiness to co-fund the investment of €1.27bn ($1.35bn) translates into €0.58bn in non-refundable capital expense grants”.
It is also considering a potential second stage to the project which could amount to an additional investment of up to €500mn by the end of the decade. For this, Umicore would expect to receive additional non-refundable capital expense grants of close to €100mn, as well as additional tax credits estimated at c.€100mn.
Canada is emerging as a prime location for companies to establish their place in the North American battery value chain. On taking its decision, Northvolt identified its Quebec location as ideally situated owing to its “unique access to renewable power and raw materials”.
Umicore also references the opportune location of its Ontario plant, not only for the availability of raw materials but also its proximity to large OEM vehicle assembly locations in Michigan. It hails the upcoming project as the “final step” towards “local-for-local, sustainable EV battery material value chains” and a “regionally integrated battery value chain”.
“The plant in Loyalist, ON will be at the heart of Canada’s automotive technology cluster. Its location offers critical advantages such as customer proximity, access to a highly skilled workforce, key infrastructure, and renewable energy,” Umicore says.
Canada also claims to be the only Western Hemisphere country with a domestic supply of all the raw materials required in the EV battery supply chain, including cobalt, nickel, lithium, and copper.
Subsidies
Canadian national and state governments are also dolling out subsidy dollars to lure in projects for the battery supply chain.
Canada concentrates a proportion of its subsidies into upstream portions of the supply chain, including mining and processing of critical minerals. According to law firm Denton’s, Canada is expected to spend C$4.5bn ($3.3bn) in subsidies for mining projects over the next five years.
But, under a law called the Investment Tax Credit for Clean Technology Manufacturing, firms can also qualify for a refundable investment tax credit of 30pc of the capital cost of factories or facilities which produce batteries or charging systems.
In April, the Canadian government and German OEM Volkswagen together committed more than C$20bn for a battery gigafactory in St Thomas, Ontario, the biggest single investment ever in the country's EV supply chain.
Franco-Italian OEM Stellantis paused construction a plant in Ontario in May, on concerns that better subsidies might be available over the border in the US under the Inflation Reduction Act. However, following a further commitment of up to C$15bn in incentives, Stellantis recommitted to the plant.
“The auto industry is a very integrated economy across the US and Canada, but the Inflation Reduction Act was a game-changer, and to some extent Canada needed to figure out how we would respond to it and bring forward a thoughtful package of mechanisms to be able to compete,” Laurel Broten, CEO of Invest in Canada tells EV inFocus.
“On some files that had just begun construction, I think it was particularly imperative for those companies to determine how they would remain competitive in Canada and we have successfully done that,” Broten continues. “It is never going to be dollar for dollar but we are very clear and transparent with clients and companies that we are working with.
“You are not going to be able to say, ‘Well this is what I get [in the US], this is what I want in Canada.’ The economies are different. But the opportunity to secure a strong workforce that will be committed, that will not move, that will stay with you, that will be trained, that is highly educated, all of those factors — as well as clean electricity — have, I think, been critical components in a number of those conversations.
“We have had a strong and successful history in Canada not being the same as the US, and we are going to continue to be that way, and find ways to be complementary. Both countries are building two strong economies, one beside the other,” Broten says.
Crossing the border
And Umicore is already taking advantage of that cross-border complementariness, signing a ten-year agreement with battery maker AESC to supply high-nickel battery materials for production of EV batteries at AESC’s US manufacturing facilities.
The agreement “secures an annual volume offtake equivalent to 50GWh of CAM” by 2030, Umicore says, and through the deal Umicore will access OEMs such as BMW, to whom AESC supplies batteries. The company now says it has an order book of 190GWh in 2027 and trending towards 270GWh in 2030.
“The contract and its firm commitments give Umicore secured access to an important part of North American demand for EV battery materials and further diversify its exposure to major players in the EV value chain,” Umicore says.
The company predicts that, with the new deals, “adjusted Ebitda margins above 25pc are anticipated from 2026 onwards”.
Ciaran has written about finance, politics and culture. He is passionate about e-mobility and what it means for our way of life.
Ciaran has a Masters in Ancient Philosophy from Oxford University.
