Wed. Apr 17th, 2024

The government offers state shares in Nemaska ​​Lithium and negotiates the price of transformed lithium.

Québec bargains for lithium to attract a Honda factory

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Since 2021, Honda has set itself the ambitious goal of becoming 100% electric in its automobile segment by 2040 and has planned colossal investments to achieve it. (Archive photo)

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Quebec is rolling out the red carpet to attract a battery materials factory from the car manufacturer Honda, and not just with the promise of subsidies. Radio-Canada has learned that the Legault government is ready to sell state shares in the Nemaska ​​Lithium mining company to the Japanese company and to sell it at an attractive price lithium hydroxide, the essential component of batteries.

Discussions between the two parties are well advanced, according to three sources involved in the matter, who are not authorized to speak publicly about the ongoing negotiations.

We knew that other projects in the battery sector had yet to be announced in Quebec. The Legault government has mentioned, according to declarations, between 5 and 15 billion dollars of remaining private investment, potentially as much as the projects already revealed (Northvolt, Ford, General Motors…).

According to our information, if Honda comes to an agreement with Quebec, it will settle in the Bécancour sector, close to its partner POSCO.

But Ontario also wants to attract the Japanese manufacturer, which already has an automobile production plant in this province, in Alliston, since 1986.

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Honda already has a production plant in Alliston, Ontario. (File photo)

The battery sector

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The battery sector

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Investments planned by Honda in Canada would total $18.4 billion, according to the daily Japanese Nikkei. This includes a new factory, for electric vehicles, and another for battery production, by 2028. In January, a meeting was held between Honda and senior Canadian officials.

In Quebec, Honda declared lobbying activities with the Ministry of Economy and Investment Quebec with a view to obtaining financial support ( grant, loan or other financial benefit) to support potential projects in Quebec affecting the electric vehicle sector.

They want more money than what we are offering, explains a source familiar with the project. They are greedy.

It's certain that they will want a discounted price of lithium hydroxide, explains another source, especially if they take a stake in the shareholding of Nemaska ​​Lithium. […] It's a form of subsidy.

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Nemaska ​​Lithium is building a production plant in Bécancour, powered by its Whabouchi mine . (Project model)

Nemaska ​​Lithium is 50% owned by the Quebec state and 50% by the company Arcadium Lithium.

Part of his production has already found a buyer. The automobile manufacturer Ford, which is also building a cathode factory in Bécancour, has already reached an agreement with Nemaska ​​Lithium for 11 years.

One of the advantages of Quebec compared to Ontario is the lower price of electricity. There remains around 500 megawatts of power to be allocated to companies by the Minister of the Economy, Innovation and Energy, Pierre Fitzgibbon. The lucky ones should be known in the days to come.

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Prime Ministers Justin Trudeau and François Legault as well as Ministers François-Philippe Champagne and Pierre Fitzgibbon, during the announcement of Northvolt's investment , in Quebec, in September 2023. (Archive photo)

It was not possible to know how many shares we have and at what price Quebec wants to sell its assets and its lithium production. The minister will not comment in the media on rumors about this type of strategic discussion, responds Minister Fitzgibbon's office.

Honda Canada also declined our interview request. Unfortunately, we cannot discuss this topic at this time, explained the company's director of communications, Ken Chiu. The company Arcadium Lithium, which owns the other half of the mining company, was not aware of these negotiations for a stake in Honda, despite the existence of the existence of the company. a shareholders' agreement.

Arcadium Lithium has not participated in the conversations between the Quebec government and Honda and therefore cannot comment at this time on any proposed transaction that could involve Investissement Québec's investment in Nemaska ​​Lithium , unless the details are disclosed to us, the company writes to us by email.

Arcadium Lithium's analysis of any proposal presented to it will focus on what is in the best interests of Nemaska ​​Lithium as well as the interests of Arcadium Lithium shareholders, spokesperson adds of the company.

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Volkswagen employees remove a module that includes lithium-ion battery cells at a factory in Salzgitter, northern Germany. (File photo)

Automotive industry specialist Yan Cimon, professor of strategy at the Faculty of Administrative Sciences at Laval University, is not surprised that Honda is negotiating closely with the government . Governments are in a global race for the development of the battery sector.

Quebec and Ottawa must be very generous, in the context of the Inflation Reduction Act in the United States, the major American climate plan which provides billions of dollars in subsidies for green industries.

Japanese manufacturers like Honda or Toyota also have a reputation for wanting to control the entire supply chain, explains Yan Cimon.

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Professor Yan Cimon is not surprised by Honda's tight negotiations with the government. (Archive photo)

Quebec has advantages, in the context where the entire battery value chain is present in the province, from mining to recycling, and where manufacturers want to reduce their dependence on China.

Is it a good idea to sell state shares in Nemaska ​​Lithium? It's not black or white, says the professor. It's a choice that the government makes for society.

It We must attract them, but we must do it well to ensure that the wealth created benefits the prosperity of Quebec in general. It will have to be a win-win.

A quote from Yan Cimon, professor of strategy at the Faculty of Administration Sciences at Laval University

The question of availability of labor will have to be considered, recalls the professor. But it's rather positive that we manage to have the attention of players of this quality. It shows the seriousness of the process that is underway, he said.

The government must be well advised to know what is too much or not enough to attract Honda here, adds Jean-François Boulanger, professor of extractive metallurgy of critical and strategic elements at the University of Quebec in Abitibi-Témiscamingue.

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Jean-François Boulanger, researcher at the University of Quebec in Abitibi-Témiscamingue (Archive photo )

Concerning the sale of shares in Nemaska ​​Lithium, we will have to see how much we will sell it for and if it will affect intellectual property, since x27;they have important patents at Nemaska.

Is this going to be a flagship of which we will sell part to someone' another one? […] Will lithium hydroxide go elsewhere to make batteries?

A quote from Jean-François Boulanger, professor of extractive metallurgy of critical and strategic elements at UQAT

Minister Fitzgibbon recently congratulated himself on having attracted Americans, Koreans and Europeans to the Quebec battery sector. The Japanese were missing. As for the Chinese, they already have everything they need and are leaders in the field.

It's good to diversify the people who buy these products so as not to find themselves dependent, explains Jean-François Boulanger.

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The development of the battery sector will be the legacy of the Minister of the Economy, Innovation and of Energy of Quebec, Pierre Fitzgibbon.

In recent years, the Coalition Avenir Québec (CAQ) government has managed to build an ecosystem across the entire battery value chain, from mining to recycling, including components, assembly and integration into the vehicle.

  1. Mining (Sayona Quebec, Glencore, Nouveau Monde Graphite, Ariane Phosphate…)
  2. Refining (Example: Nemaska ​​Lithium, Vale, Silicium Québec…)
  3. Active materials (GM-POSCO, Ford-EcoPro BM, Nano One…)
  4. Battery components (Volta Énergie, Calogy)
  5. < li>Cells (Northvolt, VoltaXplore…)

  6. Modules and assembly (Lion Électrique)
  7. Integration in the vehicle (Novabus, BRP, Taiga Motors…)
  8. Recycling (Northvolt, Lithion Technologies)

Our government is the first to promote our resources and promote their transformation here in Quebec, welcomes Minister Fitzgibbon's office. The $16 billion in projects announced to date in the battery sector demonstrate this.

Including the amounts devoted to Northvolt, the public support offered up to here by the government of Quebec and Investissement Québec in projects belonging to different links in the sector totals more than 3.29 billion dollars.

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