Nemaska ​​Lithium in Bécancour | At least half a billion more than expected

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 have not even started to build the factory and the bill goes 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 extent of the phenomenon.

Invited to comment on this information, the Minister of Economy, Innovation and Energy, Pierre Fitzgibbon, does not slip away. In interview with The Presshe 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 package. We don’t have the exact number. But we are definitely going there. 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 caused taxpayers to lose tens of millions of dollars.

Essential

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, about 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 thinking of coming to Bécancour to manufacture cathodes there. The American car manufacturer 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 if the processing plant has not yet started up.

“As customers raise their hands, and there are several […], we can ask for that today, said the minister. We could never have demanded this in 2018. But now this product [l’hydroxyde de lithium] is so sought after that we can have requirements. »

Risky, with potential

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 realize 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 position 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.