Look over here, everyone, a monster!
Last week, François Legault wanted the entire nation to turn its gaze toward the Bloc in Ottawa. And since humans, unlike chameleons, can only look in one place at a time, this prevented us from seeing what was happening elsewhere. In Saint-Basile-le-Grand, more precisely, where the Northvolt plant is accumulating delays and worrying investors. Including Quebec, which has already committed nearly $240 million to the construction of the first plant.
Let’s specify that Mr. Legault did not call his leader Yves-François Blanchet a monster. He more modestly called him a traitor, in veiled terms, towards Quebec. The reason: Mr. Blanchet did not support the Conservative motion that would have overthrown the Trudeau government, to which the Coalition avenir Québec (CAQ) blames the massive increase in immigrants.
As they say in bowling, Mr. Legault wanted to make a split — hitting two things at once. By attacking the Bloc Québécois, he hoped to harm its sister party, the Parti Québécois (PQ). But that’s not all. The maneuver also helped to divert attention from Northvolt…
On Thursday, Bloomberg reported that Northvolt’s creditors are worried. They have hired the firm PJT Partners to evaluate their options.
In serious liquidity shortage, Northvolt announced at the beginning of September that it was putting its cathode plant in Skellefteå on hold and abandoning its operations in Borlänge, two cities in Sweden. Its production in California will also be repatriated to the Scandinavian country. Finally, in Poland, it is still looking for investors to “consolidate its activities”.
Earlier in June, BMW cancelled an order worth nearly $3 billion due to delays.
For Mr. Legault, Northvolt is not a project like any other. It is the symbol of his adventure in the battery industry.
Of course, it is not the only construction site in Quebec – the list includes Volta, Ford, GM, BASF, Recyclage Lithion, Vale and Lion. But it is the biggest. And the one in which he has invested the most political capital.
When he resigned, Pierre Fitzgibbon anticipated a delay of “12 to 18 months” for the first phase of Northvolt in Quebec.
PHOTO MARTIN TREMBLAY, LA PRESSE ARCHIVES
The site of the future Northvolt mega-factory in Saint-Basile-le-Grand
The state plans to invest no less than 1.3 billion to launch the plant. This includes a guaranteed loan of 240 million, as well as 270 million injected into the parent company. The Caisse de dépôt et placement has invested 200 million in this same company.
If the project fails, a large part of these sums would be at risk.
In Quebec, we are reassuring. The production rate of the young shoot has tripled in Sweden since the beginning of the year, we learned Friday. But this rate remains well below the production potential.
In short, the concern remains, as evidenced by the reaction of creditors such as Goldman Sachs and Volkswagen. And Mr. Legault has no interest in letting it become the hot topic in the National Assembly.
The PQ brandished a brochure in which Quebec attracts foreign investors by reminding them that salaries are lower here than in the United States. This is not a scandal, it is a fact. And it is not a contradiction with the CAQ objective either: to create jobs that pay better than the average. This is precisely what Northvolt would do.
The question is rather whether the project will take place, and whether it will be profitable or loss-making for the state. For the moment, there is only one certainty: the risk is enormous.
It was taken by Mr. Legault, heir to Bernard Landry’s economic interventionism, and by the resigning Pierre Fitzgibbon. In the private sector, the former minister could afford to make losing bets knowing that he would make up for it with his good moves, or even home runs. But with public funds, the risk tolerance is different.
When electricity fails, large factories will wonder why they gave priority to a young foreign company instead of betting on those who already keep the regions alive.
But to withdraw the promised energy from Northvolt, as the Quebec Liberal Party (PLQ) is demanding? The state’s word would no longer be worth much.
The danger posed by Northvolt, however, seems minor compared to another that will mark the end of the CAQ mandate: the pressure on public services because of the fight against the deficit.
If Mr. Legault is banking so much on Northvolt, it is also to increase government revenues. Spending has soared under his reign. Even though he has postponed the return to a balanced budget until 2027-2028, pressure is mounting in ministries in Quebec. Everywhere, people are looking for savings. The effects are already being felt in CEGEPs and hospitals, where work is being postponed and hiring is being cancelled. And this is just the beginning.
This brings us back to Mr. Legault’s statement about the Bloc, which refuses to overthrow the Trudeau government.
In this case, be wary of black and white analyses. Things that seem contradictory may be true at the same time.
Immigration worsens the existing lack of services in health and education, in particular. And the frustration of patients and parents is the main threat to the CAQ.
By focusing the spotlight on the federal government and on immigration, Mr. Legault is looking for a diversion and a culprit. But at the same time, he is trying to alleviate the problem.
It is already very, very difficult to improve public services while tightening spending. If immigration causes demand to surge, it looks like an impossible mission.
And just scary enough to want to scream monster.