Japanese companies will install factories to process raw minerals in Canada.
Ottawa will offer subsidies to these companies.
The country has half as much Lithium as China, but its production volume is only 2% that of China.
Canadian and Japanese ministers will meet next week to sign a memorandum of understanding that will allow Japanese companies to build mineral processing factories in Canada.
This deal is part of both countries’ desire to create a Canadian-based EV battery supply chain that will make it easier to build electric vehicles in North America.
At the moment, Canada is estimated to have one of the largest lithium reserves in the world, about half as big a China’s which is at the top of the list.
Despite this, Canada’s production is limited to only about 2% of China’s total lithium production, which is what deals with Japan are expected to change.
Indeed, Ottawa aims for Japanese companies to implant themselves in the country and create job opportunities as well as an increase in economic activity by buying large amounts of natural resources and processing them into finished batteries and associated components.
This would help Canada continue to increase its importance in the North American electric vehicle industry, as the government intends to do.
Of course, in order to attract Japanese companies, the Canadian government is promising subsidies that have yet to be publicly disclosed.
In addition to the Japanese trade minister, representatives of various Japanese companies will visit Ottawa next week to talk about plans to install factories here, including Panasonic Holdings and Prime Planet Energy & Solutions, an affiliate of Toyota.
Making Canada even more attractive for Japanese companies is the fact that many Japanese automakers are already implanted in Ontario, which means customers for EV batteries are present relatively close to the mineral extraction sites, which cuts down on shipping expenses.
Furthermore, Canada’s participation in trade deals with the United States means that complete batteries produced with Canadian minerals are now very valuable to automakers who want their EVs to qualify for federal tax incentives in the United States following the adoption of the Inflation Reduction Act by the Biden administration.
More on the details of these upcoming deals between Tokyo and Ottawa is expected soon.
Source: Nikkei Asia