Another 300 million for Northvolt worries

(Quebec) Quebec will have to inject $300 million more into Northvolt when the plant is under construction, a “calculated risk” according to François Legault. But the opposition parties fear they will never see the money already invested in the struggling company again.

“When you want to do economic development, you have to take calculated risks,” the premier justified himself to the National Assembly on Tuesday. He added that an additional $300 million will have to be injected into Northvolt when construction of the Quebec plant begins, as provided for in the initial agreement concluded with the company last year.

Another condition, “financing [doit être] attached, which is not the case at present,” he said. According to our information, Quebec may also refuse to pay the sum if Northvolt’s order book is not deemed satisfactory.

Mr. Legault and his government have been the target of crossfire from opposition parties over investments of some $700 million in the battery cell manufacturer, which is going through dark times.

This difficult context also led to a meeting in the afternoon between the Minister of Economy and Energy, Christine Fréchette, and the CEO of Northvolt North America, Paolo Cerruti. At the end of the day, she indicated that she had been reassured by the company, and that she no longer feared its bankruptcy at all.

“They are not at all in this scenario. They are in an exercise to redefine the calendar for Quebec,” indicated Mr.^me Frechette.

In short, the project could be delayed, but its nature must not change.

The company must communicate its new schedule to the Quebec government this fall. At that time, the Ministry of Energy could possibly “use a block of energy for the benefit of other companies” if “room for maneuver” appears.

This responds to another criticism made of Northvolt, which was promised a 354-megawatt energy block while other local companies were refused expansion or decarbonization projects.

The opposition parties, for their part, are more circumspect about the chances of success of the Swedish company, and made this known to the Coalition avenir Québec during question period.

The interim leader of the official opposition, Marc Tanguay, asked François Legault if he was reassured, “when we know that Northvolt lost $1.6 billion last year, and that we learned from the Swedish media that they need $730 million US to pay their suppliers in the coming weeks.”

As for PQ MP Pascal Paradis, he wondered “how much we put into the government’s bet, into the affair, into the Northvolt project, and what guarantee we have of being able to recover the money if the project goes badly.”

A sum of 300 million which is worrying

And the famous 300 million dollars that must be added to what has already been invested in the company are not going down well.

“I would have said no to investing the additional $300 million. Today, we have no transparency, we don’t know what’s happening with that,” Liberal MP Frédéric Beauchemin said at a press briefing on Tuesday morning.

Québec solidaire has asked that “not one more cent of additional public money be invested in the Northvolt company and its various projects.” And PQ leader Paul St-Pierre Plamondon has asked for more information before taking a position, but stressed that “the Swedish government itself has said that it will not invest.”

Everyone is worried about not seeing the $710 million already invested by the Quebec government, Investissement Québec and the Caisse de dépôt et placement du Québec again.

To which the government responded, through Minister Christine Fréchette, that “the financial structure is done very skillfully, and it protects public funds.” The land where the plant is to be built is put up as collateral, and in the event of a “catastrophe,” the Quebec government has “a truly privileged status” to recover $270 million invested in the parent company in Sweden, she said.

Not an automatic check

As for the payment of the 300 million tranche, according to our information, Northvolt will not receive this money automatically. Several boxes will have to be checked. Otherwise, Quebec can wait or take a step back. The company is notably obliged to redirect the sum received to its North American subsidiary – which could be difficult to guarantee while it is in the midst of a weight-loss regime. In addition, the composition of Northvolt’s order book – which received a cancellation of 3 billion Canadian dollars from BMW in the spring – must be deemed satisfactory by Quebec.

The Legault government must also have received a detailed plan of Northvolt’s financial structure to advance the construction of its mega-factory on the South Shore of Montreal. And this construction site is behind schedule.

Northvolt is still completing preparatory work. According to the schedule set out in a presentation released in the spring, the company is already several months behind schedule for the start of construction of the first part of its battery cell factory.

The Swedish manufacturer, which took longer than expected to obtain certain permits, was due to begin construction in the middle of the second quarter of next year – around May. Quebec is anticipating delays of up to 18 months.

On Monday, the Parti Québécois had requested that an emergency debate be held in the National Assembly to discuss the Northvolt situation, but President Nathalie Roy rejected the request.