$2.7B eastern Ontario EV battery plant still on hold after review (2025)

Umicorestill doesn't know when construction of its electric vehicle(EV) battery plant near Kingston, Ont., will resume, despite releasing its promised review of the business.

Thegreen tech companybroke ground on the plantin Loyalist Township in October 2023and planned for itto start production in 2026.

The entire projecthad a price tag of up to $2.76 billion and receivedfinancial support from the federal and provincial governments to the tune of almost $1 billion.

It was expected to create 600 jobs for the region manufacturingcomponents for EV batteries calledcathode active materials (CAMs) andprecursor cathode active materials (pCAMs).

But construction stopped less than a year laterin July 2024.

Umicore cited a slowdown in EV sales to explain the decision, saying there had been a"significant worsening of the EV market context [which impacts] the entire supply chain."

Umicore needed to conduct a "thorough review" of its battery materials business, it said in a statement at the time.

That review was released Thursday, but a Umicorespokesperson told CBCtheystill could notprovide an update about when construction will restart, as the company's "first focus" is on its existing plants.

Adjusted business model

Umicore's revenue before interest and taxes fell 29 per cent in 2024 compared to 2023, its annual reportshowed.

In a "sobering and intense year,"the companyhas "prioritized maximizing the use" of itsbattery materials plants in Poland and Korea, rather than build the new project in Ontario, according to its CEO Bart Sap and ChairmanThomas Leysen.

Officials posed with shovels on Oct. 16, 2023 to mark the new plant to build electric vehicle batteries. (Dan Taekema/CBC)

At the same time,Umicore announced agreements with two companies that would provide pCAMs, one of the components that would be manufactured at the Loyalist township plant.

When given the opportunity to comment on these new agreements, aspokesperson said that Umicoreis"actively exploring partnership options that will accelerate value recovery, including for our investment in Loyalist."

A spokesperson for the office of the minister of economic development, job creation and trade for Ontario did not reply to a question about whether the ministry had received an update from Umicore, but confirmed by email Thursday that "to date, no provincial funding has flowed to Umicore."

The federal ministry of innovation, science and economic development said Friday its discussions with Umicore are confidential and none of its funding has gone to the company yet,

Industry attitude

Umicore's choices make sense in the wider context of the industry, said Greig Mordue, the chair of advanced manufacturing policy at McMaster University's school of engineering and a former Toyota executive.

He's spoken to CBC throughout Umicore's changing plans in eastern Ontario.

"Frankly anybody's that's looking at [the industry and] their Canadian investments is thinking, we're going to have to slow down, and we're going to have to revisit this," he said, noting three major factors at play.

First, he agreed that the electric vehicle industry had been starting to slow— or more accurately, it was growing, but "it just wasn't growing as quickly as the most optimistic prognosticators had forecast," he said.

The tariffsaffecting Canada and U.S. are the second factor, Mordue said, because they put an increased cost on an industry which "already has narrow margins" and make businesses question Canadian investments.

The third factor is the state of incentives and support for battery production.

Mordue explained that when the U.S. gave incentives to battery producers during the JoeBiden presidency, Canada followed suitby pledging billions for the battery supply chain.

But after DonaldTrump was elected,American industry and policymakerspulled back their support for electric infrastructure, and Mordue said Canada is expected to do the same because it usually follows America's lead.

With all this in mind,stakeholders and businesses are watching circumstances carefully and considering various options, according to Mordue.

"I don't think it would behoove anybody to say this is what we are definitively going to do going forward," Mordue said."Right now, I think people are going to hold their cards pretty close to their chest."