Announcements are multiplying in the battery sector, but some Quebec players are struggling to convince local investors to support them. To continue to have a say at the decision-making table, the industry believes that a change of direction is necessary.
Although the challenges are numerous for start-ups in the electrification niche, that of access to capital tops the list. And when money is found, it often comes from outside Canada’s borders. The issue was raised earlier this month at the International Electric and Intelligent Transportation (TEI) Summit taking place in Montreal.
Result: it is sometimes difficult to maintain a Quebec presence in the shareholding of a company that needs money to finance its growth, illustrates the president and chief executive officer of Recyclage Lithion, Benoit Couture.
“We still have Canadian control, that’s good news,” he said. But following the next round, it will be difficult to announce the same thing at the end. If we don’t have weight at the table, it will become very difficult. I can be persuasive, but at some point money talks. »
The Quebec company founded in 2018, which specializes in the recycling of lithium-ion batteries for electric vehicles, estimates that it will need to find up to 1 billion to achieve its ambitions in Quebec territory. So far, it has received 22.5 million from Investissement Québec (IQ), its third largest shareholder. The financial arm of the Quebec state cannot do everything alone.
PHOTO FRANÇOIS ROY, LA PRESSE ARCHIVES
Benoit Couture, President and CEO of Lithion Recycling
“In the United States, a competitor [Ascend Elements] obtained 480 million US in loans, says Mr. Couture. We are going to play on the same field. I’m not saying the game is lost in advance. I’m just saying wake up. We can be proud of what we manage to do with little money in Quebec. But factories are not only made with good will and know-how. It takes money. »
In its infancy
The manager of Recyclage Lithion finds it hard to understand the timidity of private firms and certain institutional investors in getting on board the sector. The Quebec ecosystem is still in its infancy, points out Hubert Bolduc, who heads the international arm of IQ – which has played a role in convincing giants like General Motors (GM), Posco, BASF and Vale to deploy projects in Quebec.
We are talking regarding a nascent industry. Are institutional investors going to commit from the start with large amounts? No. But as the technology is confirmed, I think we will be able to attract financiers who did not respond before.
Hubert Bolduc, President, Investissement Québec International
The founder and president and CEO of Nouveau Monde Graphite, Eric Desaulniers, was able to count on the support of the Caisse de depot et placement du Québec (CDPQ) and IQ during the exploration phase. But the company also turned to Groupe Pallinghurst for financing. The London firm is the largest shareholder in the Quebec company, ahead of IQ and the CDPQ.
“We are among the few mining companies of a certain size capable of saying that we still have our head office in Quebec,” says Mr. Desaulniers. It’s the same for the battery sector. The risk is if our shareholding becomes more and more diluted. There, it might move. »
Nouveau Monde Graphite wants to transform the graphite extracted at its Saint-Michel-des-Saints mine – a project that divides the local population – into a product used by manufacturers of anodes, one of the components of the lithium-ion battery that the found in electric vehicles.
expected turn
The CDPQ is one of the investors who might fill a need when it comes to access to capital among Quebec players in the battery industry. The woolen socks of Quebecers confirms that they have set up a “working group” to “follow this market closely”.
“We are on the lookout for interesting opportunities in this promising sector and we regularly meet with players in the […] whether for the manufacture of batteries and their components, recycling and mining,” said Caisse spokesperson Kate Monfette.
The latter, however, did not give details on when investments might be announced.
Although its net assets are not comparable to those of the CDPQ, the Fonds de solidarité FTQ has begun to get involved in rounds of financing, in particular by supporting the manufacturer of batteries for industrial vehicles UgoWork last fall.
Learn more
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- 402 billion
- Size of CDPQ’s net assets at the end of 2022
Source: CAISSE DE DÉPÔT ET PLACEMENT DU QUÉBEC
- 17.8 billion
- Net assets of the Fonds de solidarité FTQ as of November 30
Source: Solidarity Fund QFL
