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As EV battery push continues, Trudeau says new plant will ‘meet this moment’

Click to play video: '$1.6B lithium-ion battery plant to be built in Ontario'
$1.6B lithium-ion battery plant to be built in Ontario
A Japanese company, Asahi Kasei, has announced it will build an approximately $1.6-billion plant in Ontario's Niagara Region that will make a key electric vehicle battery component as part of Honda's supply chain in the province. "We are the leaders in that transformation and that's going to pay dividends for a generation," Canada's Innovation Minister François-Philippe Champagne said on Tuesday – May 14, 2024

The federal and Ontario governments announced Tuesday that Canada’s first lithium ion separator plant will be built in Port Colborne, Ont. The facility is part of broader electric vehicle supply chain projects being built in the region.

As first reported by iPolitics, Japanese company Asahi Kasei said on April 25 that it will build a lithium ion separator plant — a first of its kind facility — in Ontario. That was the same day that Honda announced its $15-billion plans for an Ontario electric vehicle supply chain.

“After decades of decline in our manufacturing communities and in an uncertain world where we’re facing a lot of new challenges, we have a plan to meet this moment, a plan to secure the future for our families to breathe life into our main streets and to position Canada as the most reliable supplier in a net zero world,” Prime Minister Justin Trudeau said at the announcement.

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According to Asahi Kasei, this plant will cost nearly $1.6 billion and produce 700 square metres of a specially coated membrane used in lithium battery manufacturing annually. Asahi Kasei did not mention which municipality the plant would be coming to in its April announcement.

At the time of Honda’s announcement last month, the company said it would retrofit its existing vehicle plant in Alliston, Ont., to build solely electric vehicles, a battery plant nearby, and two battery part facilities elsewhere in Ontario.

The Niagara region plant is part of the two levels of government partnering with Japanese auto-maker Honda to build an entire electric vehicle supply chain in Canada.

Unlike previous electric vehicle deals inked by Ottawa and Ontario, this one does not appear to include production subsidies.

Instead, the federal government is contributing $2.5 billion through tax credits under the already existing clean technology manufacturing program and proposed electric vehicle supply chain tax credit included in the 2024 budget.

Ontario is contributing $2.5 billion through direct help on capital costs and indirectly through covering the land servicing costs for the future facilities.

The federal and Ontario governments have already put up a combined $28.2 billion in subsidies to attract battery plants from Volkswagen and Stellantis LG to St. Thomas and Windsor, respectively.  This tactic was used to attract the plants to Canada instead of the United States, which included incentives in the Inflation Reduction Act.

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These subsidies are contingent on hitting hiring, construction and production targets, which are expected to be doled out over the years, ending in 2032.

The federal government is covering two-thirds of these costs, with the Ontario government paying for the remainder.

Click to play video: 'Canada, Ontario net historic new deal with Honda'
Canada, Ontario net historic new deal with Honda

These other projects, most notably the Stellantis battery plant in Windsor, have faced criticism for foreign workers being brought on to assist with the construction.

Ottawa has maintained those foreign workers are training up Canadian trades people on how to do specialized work.

For this latest project on Port Colborne, Industry Minister Francois-Philippe Champagne did not share specific figures when asked about jobs going to Canadians, but said the goal is to maximize opportunities.

“We’ve always made sure that we maximize the number of jobs for Canadians, but not only during the plant construction phase, but certainly making sure that all the suppliers will be involved in that. And I can tell you, when you have a plant like that in Port Colborne or the region, you’re changing the landscape for generations to come,” Champagne said.

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Currently, the federal government’s goal is to have all new vehicles sold in the country be electric by 2035.

Click to play video: 'Can Canada be a leader in mining critical minerals for EV battery supply chains?'
Can Canada be a leader in mining critical minerals for EV battery supply chains?

The announcement comes as the Biden administration has announced plans to slap new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment — an election-year move that’s likely to increase friction between the world’s two largest economies.

The tariffs come in the middle of a heated campaign between President Joe Biden and his Republican predecessor, Donald Trump, in which both candidates are vying to show who is tougher on China.

The tariffs are unlikely to have much of an inflationary impact because of how they’re structured, administration officials said. They explained they think the tariffs won’t escalate tensions with China, yet they expect that China will explore ways to respond to the new taxes on their products. It’s uncertain what the long-term impact on prices could be if the tariffs contribute to a wider trade dispute.

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The tariffs are to be phased in over the next three years, with those that take effect in 2024 covering EVs, solar cells, syringes, needles, steel and aluminum and more. There are currently very few EVs from China in the U.S., but officials worry that low-priced models made possible by Chinese government subsidies could soon start flooding the U.S. market.

When asked if Canada was considering similar measures, Trudeau replied “obviously we’re watching closely what our closest trading partners in the United States is doing.”

— with a file from The Associated Press

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