Company halts construction of $2.7B battery project in eastern Ontario

After breaking ground in 2023, the company building a plant to produce battery components for electric vehicles in a municipality near Kingston, Ont., says it’s delaying construction of the plant citing a slowdown in EV sales.

In a statement to CBC News, Umicore Rechargeable Battery Materials Inc. said Friday that its project in Loyalist Township is impacted by the “significant worsening of the EV market context and the impacts this has on the entire supply chain.” 

The project carried a total price tag of up to $2.76 billion and was projected to create 600 jobs in the region back in 2023. According to a news release at the time from Innovation, Science and Economic Development Canada, the federal government was slated to invest up to $551.3 million. 

The province was to pay up to $424.6 million, but a source familiar with the project said that as of Friday, no provincial money has flowed to Umicore.

Umicore cited a situation on June 12 when it announced that a contract with a Chinese manufacturer would not materialize. The company said its legacy contracts were tailing off faster than anticipated and there’s a delay in the “ramp-up of contracts” in Europe.

“For Umicore, customers’ demand projections for our battery materials have steeply declined recently,” the statement reads. 

The company said it’s realigning its operations “to the new market reality,” adding that a part of accomplishing this involves a “thorough review” of its battery materials business. 

It’s planning to present the conclusion of that review on its capital markets day during the first quarter of 2025.

Greig Mordue, an associate engineering professor at McMaster University, says both federal and provincial governments wanted to be early in the market. 

“They wanted to be first, and that’s fine if you’re making a market but the reality of it is Canada’s auto industry is made up of suppliers or affiliates of globally owned companies,” Mordue said.

Mordue stated that the government has spent or committed tens of billions of dollars but the industry is simply not there yet.

He said Umicore is not the only company taking a pause to evaluate its standing and wait for the market to catch up, referencing Ford which also recently scaled back its EV production.