2023-11-09 22:07:10
The Legault government considered, then gave up, requiring a minimum of Quebec content from companies in the battery sector, Radio-Canada learned from several sources. For fear of seeing projects slip away or being sued, Quebec instead relies on the goodwill of the companies. But there may be one last chance to influence Northvolt.
When announcing the Swedish company’s battery mega-factory project in Montérégie, Quebec Minister of the Economy, Innovation and Energy, Pierre Fitzgibbon, was pleased to finally complete the value chain, that is to say, to succeed in transforming the production of Quebec mines into factories in the province.
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Message published by Minister Fitzgibbon on the X platform (Twitter), September 28, 2023.
Photo: Radio-Canada / Account X (Twitter) of Minister Fitzgibbon
In reality, despite their good will, nothing prevents future factories from sourcing their supplies outside Quebec, explain several sources involved in the development of the battery sector.
Northvolt could, for example, hire a Swedish prime contractor to build its Quebec factory and buy its lithium in Chile and its graphite in China.
According to our information, the government considered imposing a minimum of local content, but it gave up, for fear of losing an advantage over other provinces or states which wanted to attract projects, but also for fear of prosecution under international trade agreements.
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François Legault, September 28, during the announcement of the Northvolt battery factory project.
Photo : Radio-Canada / Ivanoh Demers
Imposing such a clause in agreements with companies has proven to be all the more complex since most of Quebec’s mines for critical minerals, such as graphite and lithium, necessary for the manufacture of batteries, are still at the project stage and could enter production after the opening of the GM and Ford factories in Bécancour and Northvolt in Montérégie.
Northvolt wants to build the greenest batteries in the world by reducing carbon emissions linked to the transport of raw materials, but Quebec suppliers must still offer competitive prices. Our customers cannot pay any price for our cells, the company explained in the newspaper The Dutylast month.
Bombardier example not applicable, says Quebec
The Legault government has already imposed a minimum of Quebec content for the manufacturing of Bombardier trains, but the office of Minister Pierre Fitzgibbon explains that there are specific guidelines in trade agreements for the acquisition of rolling stock made by the public , which are not applicable in the context of financing industrial projects.
Confidential agreements
When looking for more details on the agreements signed with the companies, Investissement Québec referred us to the Ministry of the Economy, Innovation and Energy, which told us that the clauses of the agreements concluded between the government of Quebec and businesses are confidential in nature.
The ministry invited us to turn to Minister Fitzgibbon’s office. He claims to raise awareness among companies about the importance of sourcing from Quebec.
The minister has had numerous discussions with business leaders in the sector on the importance of local sourcing. Companies are well aware that short supply chains are a great advantage in Quebec. Obviously, the message seems to be well received.
The minister’s press secretary gives the example of the announcement ofa purchase agreement (New window) production contract signed by Ford with the mining company Nemaska Lithium.
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Construction of the Nemaska Lithium plant in Bécancour.
Photo: Radio-Canada / Francois Genest
Investissement Québec and the ministry are constantly asked by clients to put them in contact with local companies, says Minister Fitzgibbon’s office. We must understand the requirements of such projects to realize that local purchasing is a condition for success.
“No obligation”, confirms Northvolt
Our agreement with the Quebec government does not provide for an obligation strictly speaking to obtain supplies from Quebec suppliers, the spokesperson for the Swedish company, Laurent Therrien, confirms to Radio-Canada, but he adds that the choice of Northvolt establishing itself here is no coincidence: it allows us to reduce and continue to green our supply chains.
Discussions with certain suppliers in the sector have already begun and others are planned. For commercial reasons, we must keep these conversations confidential at this time.
The company points out that the value chains still need to be built and that this will take time, but that it intends to play a role in their development.
In the short term, in terms of construction and services in particular, we also have a strong interest in working with Quebec suppliers. We are already working on it, assures Northvolt.
Still possible to influence Northvolt
According to our sources, Investissement Québec is considering the idea of conditioning its forgivable loan of $436 million on the company promoting the Quebec value chain. This loan has not yet been completed and could take at least another year.
According to our information, it would be too late to use the same strategy with GM and Ford. We will not comment on this assertion, Minister Fitzgibbon’s office told us.
Two experts divided on the usefulness of Quebec content clauses
I would be in favor of imposing a minimum of local supply, says the professor of extractive metallurgy of critical and strategic elements at the University of Quebec in Abitibi-Témiscamingue, Jean-François Boulanger. We don’t want the metals [du Québec] are processed elsewhere, as much as possible.
However, the UQAT professor understands why this was not done. Any constraints that could have been imposed on them could have been perceived as less conducive to their coming.
I imagine that companies want to take advantage of the law of the market and be able to buy it [leur minerai] at a lower cost elsewhere, rather than restricting yourself there [au Québec]. But, sometimes, it’s up to us to stand up.
According to former Investissement Québec advisor on the battery sector Karim Zaghib, there is no point in forcing companies to consume locally, because they have every interest in doing so.
Such a company that sets up in Quebec does so for an ecosystem that is rare, explains the man who is today a professor of chemical and materials engineering at Concordia University and responsible for the Electrifying Society research project.
Electricity [du Québec], it is green, and the critical minerals are there, he recalls. And, as we know, the demand for critical minerals will increase significantly. It’s better to secure yourself in one place.
Why would I get a material from China when the material is near me?
Canada is already a major producer of critical minerals such as aluminum, cobalt, copper, graphite and nickel. On the other hand, lithium production is less advanced and more at the project stage.
Rare earth elements are not yet produced in Canada, but known reserves are significant in the territory, and some mining companies have launched exploration projects.
The office of Minister Pierre Fitzgibbon explains that, since last year, the American tax credit for buyers of clean vehicles takes into account the origin of battery components, including critical and strategic minerals from all over North America. North.
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