Umicore pauses spending for Kingston EV battery plant pending review of EV market

July 30, 2024

Citing uncertainty in the EV market, global materials technology and recycling group Umicore is putting the construction of its new plant planned near Kingston on hold.

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Citing uncertainty in the EV market, global materials technology and recycling group Umicore is putting the construction of its new plant planned near Kingston on hold. The plant, which is slated to open in Loyalist Township west of Kingston, will manufacture cathode active materials (CAM) and precursor cathode active materials (pCAM), critical components for producing electric vehicle batteries. Last October, Umicore Rechargeable Battery Materials Canada Inc. announced it will invest $2.1 billion in the first stage of the project, of which $1.8 billion is capital expenditures, for a battery materials production capacity of 35 gigawatt hours annually. Based on the full scope of the project, which will be carried out in stages, the federal government is providing $551.3 million, while the province is investing up to $424.6 million. Initial projections for the plant estimated that in the first stage, the company would create 600 direct jobs plus an additional 700 co-op positions, making Umicore one of the largest private employers in Eastern Ontario. But the EV market has “worsened,” an Umicore spokesperson told OBJ, prompting the company to delay construction until it has completed a review of its battery materials business. “This delayed spending on our plant in Loyalist is part of a thorough review of our Battery Materials business group, following the significant worsening of the EV market context and the impacts this has on the entire supply chain,” spokesperson Caroline Jacobs said in an email to OBJ, adding that customer demand projections for the firm’s battery materials “have steeply declined recently.” The shift in the market has affected Umicore’s battery materials business. The company announced on June 12 that a contract with a Chinese original equipment manufacturer would not materialize, that legacy contracts were “tailing off faster than anticipated” and that the company was experiencing a delay in “the ramp-up of contracts” in Europe. Umicore has launched a strategic review, with a conclusion expected to be presented to stakeholders in the first fiscal quarter next year. “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. Today, we share the elements of how we are adjusting to this new reality,” Umicore CEO Bart Sap said in a news release. “The large impairment of our Battery Materials assets is painful and reflects the changed situation as we see it today.” The first of its kind in North America, the facility will produce CAM and pCAM on an industrial scale for EV and battery producers in Canada and the U.S. The project was first announced in July 2022. The full project has the potential to produce enough battery materials to support the production of more than 800,000 EVs per year, using critical Canadian minerals such as nickel, lithium and cobalt and strengthening the domestic EV supply chain and batteries ecosystem. The facility will be nearly carbon-neutral, according to the news release. — with additional reporting from OBJ staff