Announcements are multiplying in the battery sector, but some Quebec players are struggling to convince local investors to support them. To continue to have a say at the decision-making table, the industry believes that a change of direction is necessary.
Although the challenges are numerous for start-ups in the electrification niche, that of access to capital tops the list. And when money is found, it often comes from outside Canada’s borders. The issue was raised earlier this month at the International Electric and Intelligent Transportation (TEI) Summit taking place in Montreal.
Result: it is sometimes difficult to maintain a Quebec presence in the shareholding of a company that needs money to finance its growth, illustrates the president and CEO of Recyclage Lithion, Benoit Couture.
“We still have Canadian control, that’s good news,” he said. But after the next round, it will be difficult to announce the same thing at the end. If we don’t have weight at the table, it will become very difficult. I can be convincing, but at some point money talks. »
The Quebec company founded in 2018, which specializes in the recycling of lithium-ion batteries for electric vehicles, estimates that it will need to find up to 1 billion to achieve its ambitions in Quebec territory. So far, it has received 22.5 million from Investissement Quebec (IQ), its third-largest shareholder. The financial arm of the Quebec state cannot do everything alone.
“In the United States, a competitor [Ascend Elements] got $480 million in loans,” says Couture. We are going to play on the same field. I’m not saying the game is lost in advance. I’m just saying wake up. We can be proud of what we manage to do with little money in Quebec. But factories are not only made with good will and know-how. It takes money. »
The leader of RecyclageLithion finds it hard to understand the timidity of private firms and certain institutional investors to get on board the sector. Quebec’s ecosystem is still in its infancy, points out Hubert Bolduc, who leads IQ’s international arm – which has been instrumental in convincing giants like General Motors (GM), Posco, BASF and Vale to roll out projects in Quebec.
The founder and president and CEO of Nouveau Monde Graphite, Eric Desaulniers, was able to count on the support of the Caisse de dépot et placement du Québec (CDPQ) and IQ during the exploration phase. But the company also turned to Pallinghurst Group for financing. The London firm is the largest shareholder in the Quebec company, ahead of IQ and the CDPQ.
“We are among the few mining companies of a certain size able to say that we still have our head office in Quebec,” says Mr. Desaulniers. It’s the same for the battery sector. The risk is if our shareholding becomes more and more diluted. There, it could move. »
Nouveau Monde Graphite wants to transform the graphite extracted at its Saint-Michel-des-Saints mine – a project that divides the local population – into a product used by manufacturers of anodes, one of the components of the lithium-ion battery that the found in electric vehicles.
The CDPQ is one of the investors who could fill a need when it comes to access to capital for Quebec players in the battery industry. The woolen stocking of Quebecers confirms that it has set up a “working group” to “closely follow this market”.
“We are on the lookout for interesting opportunities in this sector of the future and we regularly meet with players in the sector […] whether for the manufacture of batteries and their components, recycling and mining”, underlines the Caisse spokesperson Kate Monfette.
The latter, however, did not give details on when investments could be announced.
Although its net assets are not comparable to those of the CDPQ, the Fonds de solidarité FTQ has begun to get involved in financing rounds, in particular by supporting the manufacturer of batteries for industrial vehicles UgoWork last fall.
