Umicore halts construction of $2.8-billion EV battery-materi Belgian company Umicore announced Friday that it was pumping the brakes on a planned $2.8-billion battery-materials manufacturing plant in Ontario.
The company, which is also active in Europctive in Europe and Asia, announced it had delayed spending on the plant’s construction in Loyalist, Ont., and commenced a review of its expansion plans in North America. It promised to make the results of that review public in the first quarter of next year.
The move arrived amid falling revenues for the company. Last month, Umicore revealed that an expected contract with a Chinese manufacturer would not materialize, and that existing contracts were “tailing off faster than anticipated.”
Umicore said Friday it had begun reassessing growth forecasts for its battery-materials business beyond this year.
“For Umicore, customers’ demand projections for our battery materials have steeply declined recently,” company spokesperson Caroline Jacobs wrote in a statement.
“No decisions have been made yet” regarding the project’s fate, she added.
Announced in 2022, the Loyalist plant would have manufactured enough cathode active battery materials for 800,000 electric vehicles a year on a 142-hectare plot of land, and was expected to employ about 600 people.
The company said it represented its final step to becoming a truly global producer and would have been the first of its kind on the continent. Prime Minister Justin Trudeau at the time said the plant, and others like it, would make Canadians global leaders in EVs.
Its construction, the first phase of which was to have been completed late next year at a cost of roughly $1.9-billion, was strongly supported by government subsidies. The federal government had committed up to $551.3-million to the project, and Ontario promised an additional $424.6-million.
On Friday, the company said it’s now assuming that customers contracted volumes for EV batteries will be delayed by at least 18 months. It also undertook a €1.60-billion ($2.4-billion) impairment relating to property, plant and equipment and inventories across its battery-materials business, primarily in Asia.
“In recent months, short- and medium-term growth projections for the electric-vehicles market have been scaled back substantially, significantly affecting Umicore’s battery-materials business,” Umicore CEO Bart Sap said in a statement.
Both the federal and provincial governments said they had not yet made any payments to Umicore. Both governments also remained enthusiastic about the possibilities of developing the country’s EV battery sector.
“Global automakers know that Ontario has everything they need to be successful, which is why we have secured over $43-billion in transformative automotive and EV investments over the last four years,” Vanessa De Matteis, a spokesperson for Ontario Minister of Economic Development Vic Fedeli, said in a statement.
Audrey Milette, a spokesperson for federal Industry Minister Franois-Philippe Champagne, said the department was aware that certain other EV and battery projects supported with federal funding had been delayed. Some of those projects have already received payments from the federal Strategic Innovation Fund, while others had not.
“It is important to note that projects are often delayed for a variety of reasons,” she wrote in an e-mailed response to questions.
Umicore’s share price UMICF has fallen by more than half over the past year, and closed at €13.11 ($19.70) on Friday.
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