General Motors and POSCO Future have indefinitely paused Phase 2 of their Bécancour plant.
Mining company Vale, for whom GM was the only potential client in the region, is cancelling its facility in the town.
Stagnant EV sales and economic uncertainty caused by the United States are responsible.
In a domino effect, two other projects in the battery sector have been halted indefinitely.
Due to weaker-than-expected electric vehicle sales and economic uncertainty created by the American government, General Motors and POSCO Future are postponing the start of Phase 2 of their Bécancour plant to an undetermined date.
This possibly temporary abandonment of the project is pushing mining company Vale to cancel the construction of its own plant, which was intended to supply minerals for Phase 2 of GM and POSCO’s operations.
As a reminder, Phase 1 of this project is expected to become operational in 2026 to produce the final cathode element used to manufacture lithium-ion batteries for electric vehicles.
Phase 2 was meant to add a plant that would have locally produced PCAM, a compound of nickel sulphate and other elements essential for manufacturing cathodes.
To supply this future plant with nickel sulphate, the mining company Vale was planning to open its own facility in the Bécancour industrial park.
The site of the future plant Ultium CAM. Photo : GMSince General Motors was Vale’s only prospective client in the region, the mining company will not move forward with its plant as long as the GM-POSCO Phase 2 is not firmly back on track.
The Vale plant alone represented an investment of $325 million, including loans of $55 million from Quebec and $37 million from Ottawa.
Fortunately for taxpayers, these loans have not been given out as construction has not yet begun. However, the anticipated economic benefits of this project will not materialize either.
On the GM-POSCO side, the costs for Phase 1 have exploded since the initial announcement. While it is officially estimated at $600 million, sources cited by Radio-Canada now value it at $2 billion.
In this case, public money has already been spent, as the governments of Quebec and Canada have each invested $150 million, primarily in the form of loans. It appears the federal loan is conditional on the completion of Phase 2, which could cause financial trouble for GM and POSCO.
We do not know at this time if the provincial loan is subject to the same conditions.
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Despite all the reversals in the Quebec battery sector, the Legault government’s Minister of Economy, Christine Fréchette, believes that investing heavily in this project was the right thing to do, as 3,000 jobs were created in construction alone in Bécancour.
Furthermore, the minister highlights that contracts obtained by Quebec companies in this file exceed $3 billion and that the sector continues to grow.
The news that GM-POSCO and Vale are suspending or abandoning their projects in Bécancour comes two days after Stellantis announced the move of part of its future production from Ontario to the United States, confirming that American tariff measures, economic instability in North America, and the halt of electric vehicle credits south of the border are jeopardizing the Canadian automotive industry and related sectors.
Source: Radio-Canada
