Northvolt in the battery sector | Aid could exceed 7 billion… and it’s not over

The billions offered by Quebec and Ottawa to finance the Northvolt mega-factory and subsidize its production will be insufficient to allow the company to achieve all of its Quebec ambitions. Governments will once again have to loosen their purse strings if they want the second phase of the complex to become a reality.

Overshadowed by the scale of loans, subsidies and equity investments – which could reach 7.3 billion – from which the young Swedish company will benefit, this aspect of the project was practically not discussed on Thursday during the press conference. in which Prime Ministers François Legault and Justin Trudeau participated, formalizing the project.

All this only concerns the first phase.

“Absolutely,” confirmed the Minister of the Economy, Innovation and Energy Pierre Fitzgibbon, in an interview with The Presswho was asked if it would eventually be necessary to sit down with Northvolt to negotiate other financial support.

On the South Shore of Montreal, the company will manufacture cathode materials (the positive pole of the battery), as well as cells, the last step before assembling the batteries. It will also recycle batteries. With a capacity of 60 gigawatt hours, the project will be capable of powering the equivalent of one million electric vehicles.

What was presented on Thursday constitutes only half of this target.

“The calculations have not been made [pour la phase 2]but the investment will be a little less than 7 billion and more than 5 billion, let’s say,” agreed Mr. Fitzgibbon, adding that we are “speculating a little” for the moment.

Another public financial effort should therefore be necessary, admits the Federal Minister of Innovation, Science and Industry, François-Philippe Champagne. The bill is likely to be less steep for governments, explained the minister in an interview. In this scenario, there would likely be no production subsidies.

“With phase 1 in place, the context will be a little different,” he says. We had to take another step today, but once they [Northvolt] are there, it’s no longer the same. What’s difficult is attracting them the first time. »

Imitate the Americans

By establishing itself on the former site of the Canadian Industries Limited (CIL) explosives factory, which straddles the municipalities of McMasterville and Saint-Basile-le-Grand, Northvolt will add the missing link in the Quebec sector batteries. The land has an area of ​​170 hectares.

The complex, a project estimated at 7 billion, is presented as the largest private investment in the history of Quebec. The “one more step” that both levels of government had to take to convince Northvolt not to establish itself in California? Imitate the Americans withInflation Reduction Act (IRA), with an envelope of US 370 billion to subsidize a range of projects, such as the manufacturing of batteries.

This means that the Legault and Trudeau governments will subsidize, up to 4.6 billion, the production of the Quebec Northvolt factory, which should begin around 2027. Quebec will pay up to 1.5 billion, while Ottawa could offer 3.1 billion.

Governments will also finance the construction of the first phase of the factory. Quebec puts 1.37 billion through a loan (367 million), a grant (436 million) and an equity investment (567 million) in Northvolt. For its part, the Trudeau government grants 1.34 billion. Mr. Champagne did not provide the details, but the aid mechanism is similar to that of Quebec.

Mr. Legault acknowledged that the sums on the table catch the imagination. To defend his government’s approach, he drew a parallel with the James Bay dam project launched by former Liberal Prime Minister Robert Bourassa.

“There were some who found it crazy,” said Mr. Legault. This [dont] we realized that it was a stroke of genius. »

Conditional

Asked about the extent of the treatment reserved for Northvolt, all the politicians present at the press conference insisted on the conditional nature of the 4.6 billion subsidy. It will be necessary to wait for the delivery of the first cells to customers before starting to pay the money, they argued. The subsidy is in effect until 2032. Additionally, any changes that make the IRA less generous will also be applied on this side of the border. If this American strategy were to disappear, the Canadian subsidy would do the same.

MM. Fitzgibbon and Champagne also argue that with the anticipated tax benefits, particularly with the creation of 3,000 jobs, governments should obtain a return on their investment within nine years following the start of production, expected around 2026.

The first phase of the Northvolt complex is expected to require nearly 200 megawatts of power, or about half that of an aluminum smelter. Furthermore, Northvolt did not obtain preferential treatment from Hydro-Québec. The company will pay the rate applicable to companies that consume large amounts of energy (rate L).

Meetings to reassure

Northvolt co-founder Paolo Cerruti, who will move to Quebec to head the company’s North American branch, which will be in Montreal, wants to quickly reassure South Shore citizens concerned about the construction of a mega-factory . With his team, Mr. Cerruti will meet residents of McMasterville and Saint-Basile-le-Grand on October 4 and 5. “It can be very intimidating and we recognize that. To understand well [le projet], we must make an effort to provide information. We must meet local communities, with mayors, on the ground, to answer questions and their concerns. » An online petition opposing the company’s arrival has collected some 770 signatures. The signatories are particularly concerned about noise and the proximity between the complex and residences in the area.