The bill jumped by at least half a billion dollars at Nemaska Lithium, a flagship company in the Quebec battery industry, 50% owned by Quebec. This mining and processing project will cost at least 2 billion, but the Legault government promises that the financial efforts are coming to an end.
Materials, equipment, labour… When the construction of a new complex has not started, the inflationary context can quickly have an impact on budgets.
“We haven’t even started building the factory and the bill is going up every day,” illustrates a government source familiar with the matter, but who is not authorized to speak publicly, to give an idea of the situation. extent of the phenomenon.
Invited to comment on this information, the Minister of Economy, Innovation and Energy, Pierre Fitzgibbon, does not slip away. In an interview with La Presse, he does not rule out the possibility that the total sum is even higher.
“If you’re talking about the factory and the mine, you’re right,” he said. What was 1.5 billion two years ago has necessarily increased. We are finalizing the financial arrangement. We don’t have the exact number. But of course we are going. We don’t want to waste time. »
This decision to move forward was recently formalized by the Quebec state and the other co-owner, Livent, a converted lithium supplier that counts Tesla and BMW among its customers. However, it is accompanied by a considerable financial effort: up to 250 million for each of the partners. In Quebec, the Council of Ministers gave the green light to this new injection of capital on May 24.
If the sum is disbursed in full, this will increase to 425 million the capital invested by the Legault government in the new version of the company, which had placed itself safe from its creditors at the end of 2019 – which cost taxpayers tens of millions of dollars.
In the Bécancour industrial and port park, Nemaska Lithium aims to produce lithium hydroxide – essential in the manufacture of lithium-ion batteries for electric vehicles – by transforming the lithium extracted from the Whabouchi mine, approximately 300 kilometers from James Bay. This project is one of the Legault government’s cards to attract cathode manufacturers – which represent approximately 40% of the cost of a battery – to Quebec.
An example: Ford, Nemaska Lithium’s first customer, is seriously considering moving to Bécancour to manufacture cathodes there. The American automaker will buy up to 13,000 tons per year of lithium hydroxide produced by the Quebec company. This is about a third of the annual production of its factory, which is scheduled to start in 2026. Construction work has just begun.
Professor in the Department of Earth and Atmospheric Sciences at UQAM, Michel Jébrak is not surprised by the skyrocketing costs at Nemaska Lithium. In addition to the inflationary environment, we are trying to foray into a whole new sector, notes the specialist.
We should have a better idea of the portrait by the end of the summer. That could happen “in August,” says Fitzgibbon. This exercise should also coincide with the announcement of new customers. A larger bill for the project does not necessarily rhyme with other checks, says the minister. For example, customers could make “prepayments” at Nemaska Lithium even though the processing plant has not yet started.
“As customers raise their hands, and there are several […], we can ask for that today, said the minister. We could never have demanded that in 2018. But now, this product [lithium hydroxide] is so sought after that we can have demands. »
Despite the hundreds of millions of taxpayer dollars at stake in this case, Mr. Fitzgibbon points out that “at this time, there is zero subsidy in Nemaska Lithium.” Without providing figures, he suggests that the value of the investment has increased and that the Quebec state could well make a profit when it becomes a minority shareholder or liquidates its participation.
Since the beginning of the year, Nemaska Lithium has lost its two main leaders. The post of chairman and chief executive Spiro Pippos was cut earlier this year, and the departure of chief operating officer Rober Beaulieu was announced last month. Mr. Fitzgibbon is clear: Livent will be responsible for managing day-to-day operations.
December 27, 2019: Nemaska Lithium protects itself from its creditors.
August 24, 2020: Quebec takes over the company with the firm Groupe Pallinghurst.
May 2, 2022: Livent buys out Pallinghurst interests.
May 24, 2023: Quebec and Livent jointly inject $500 million into Nemaska Lithium.
