The Legault government considered, then gave up on requiring a minimum of Quebec content from companies in the battery sector, Radio-Canada learned from multiple sources. Fearful of projects escaping its control or being sued, Quebec relies instead on the goodwill of companies. But there may be one last chance to influence Northvolt.
Announcing the Swedish company’s battery mega-factory project in Montérégie, Quebec’s Minister of Economy, Innovation and Energy, Pierre Fitzgibbon, was pleased with the final completion of the value chain, i.e. factories in the province.
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Message posted by Minister Fitzgibbon on the X Platform (Twitter), September 28, 2023.
Photo: Radio-Canada / Account X (Twitter) by Minister Fitzgibbon
In fact, despite their goodwill, nothing prevents future factories from sourcing their supplies outside Quebec, explain several sources involved in the development of the battery sector.
For example, Northvolt could hire a Swedish prime contractor to build its factory in Quebec and buy its lithium in Chile and its graphite in China.
According to our information, the government considered mandating a minimum of local content, but gave up for fear of losing an advantage over other provinces or states that 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
Enforcing such a clause in agreements with companies has proven all the more complex because most of Quebec’s mines for critical minerals such as graphite and lithium, needed to make batteries, are still in the project stage and could go into production after they open the GM and Ford plants in Bécancour and Northvolt in Montérégie.
Northvolt wants to build the world’s greenest batteries by reducing carbon emissions associated with transporting raw materials, but Quebec suppliers must continue to offer competitive prices. Our customers cannot pay a price for our cells, the company explained in the newspaper Le Devoir last month.
The Bombardier example is not applicable, says Quebec
The Legault government has already mandated a minimum share of Quebec content for the manufacture of Bombardier trains, but Minister Pierre Fitzgibbon’s office explains that there are specific guidelines in trade agreements for the purchase of rail vehicles by the public that are not applicable are related to the financing of industrial projects.
Confidential agreements
Looking for more details on the agreements signed with the companies, Investissement Québec referred us to the Ministry of Economy, Innovation and Energy, which informed us that the clauses of the agreements concluded between the Quebec government and companies are confidential in nature.
The Ministry invited us to contact Minister Fitzgibbon’s office. He claims to raise awareness among companies about the importance of sourcing from Quebec.
The Minister has held numerous discussions with business leaders in the sector about the importance of local sourcing. Companies are aware that short supply chains are a huge advantage in Quebec. Apparently the message seems to have been well received.
The minister’s press secretary cites as an example the announcement of a production purchase agreement (New Window) that Ford signed 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 continually asked by clients to connect them with local businesses, according to Minister Fitzgibbon’s office. We need to understand the requirements of such projects to recognize that local purchasing is a prerequisite for success.
“No obligation,” confirms Northvolt
Our agreement with the Quebec government does not strictly speaking impose any obligation to source supplies from Quebec suppliers, the Swedish company’s spokesman Laurent Therrien confirms to Radio-Canada, but adds that the choice for Northvolt to locate here , no, it’s a coincidence: It allows us to shorten our supply chains and make them more environmentally friendly.
Discussions with some of the industry’s suppliers have already begun, and more are planned. For commercial reasons, we currently have to keep these discussions confidential.
The company points out that the value chains still need to be built and that this will take time, but it intends to participate in their development.
In the short term, particularly in the construction and services sectors, we also have a strong interest in working with Quebec suppliers. We are already working on it, assures Northvolt.
There is still the possibility of influencing Northvolt
According to our sources, Investissement Québec is considering the idea of tying its $436 million forgivable loan to the company that promotes Quebec’s value chain. This loan is ongoing and could take at least another year.
According to our information, it would be too late to apply the same strategy to GM and Ford. We will not be commenting on this claim, Minister Fitzgibbon’s office told us.
Two experts disagreed about the usefulness of content clauses in Quebec
“I would be in favor of enforcing a minimum of local supply,” says Jean-François Boulanger, professor of extractive metallurgy of critical and strategic elements at the University of Quebec in Abitibi-Témiscamingue. We don’t want the metals [du Québec] processed elsewhere as far as possible.
However, the UQAT professor understands why this did not happen. Any constraints that could have been placed on them could have been viewed as less conducive to their coming.
I imagine that companies want to take advantage of the laws of the market and buy [leur minerai] go elsewhere at a lower cost instead of limiting yourself there [au Québec]. But sometimes it’s up to us to stand up.
According to Karim Zaghib, Investissement Québec’s former adviser on the battery sector, it makes no sense to force companies to consume locally because they have every interest in doing so.
Such a company setting up shop in Quebec does so for an ecosystem that is rare, explains the man who is now a professor of chemical and materials engineering at Concordia University and responsible for the Electrifying Society research project.
electricity [du Québec], it was green and the crucial minerals were there, he remembers. And as we know, demand for critical minerals will increase significantly. It’s better to secure yourself in one place.
Why should 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 is still at the project stage.
Rare earths are not yet mined in Canada, but known deposits in the area are significant and some mining companies have begun exploration projects.
Minister Pierre Fitzgibbon’s office says that since last year, the American tax credit for clean vehicle buyers has taken into account the origin of battery components, including critical and strategic minerals from across North America.