Ottawa, Quebec to fund about $300

General Motors is partnering with South Korean battery materials maker Posco Chemical Co. Ltd. on a new factory that will produce so-called 'cathode active material' for batteries that will power GM's Chevrolet Silverado pickup truck and GMC Hummer EV.Christinne Muschi/The Globe and Mail

The Canadian and Quebec governments will provide financial support worth roughly half the cost of General Motors Co.'s GM-N new electric vehicle battery materials plant in Bécancour, Que., a project now valued at more than $600-million.

The Detroit automaker is partnering with South Korean battery materials maker Posco Chemical Co. Ltd. on a new factory that will produce so-called "cathode active material" for batteries that will power GM's Chevrolet Silverado pickup truck and GMC Hummer EV, part of an effort to crank out one million electric vehicles in North America by the end of 2025.

Cathode material, made up of components such as processed nickel and lithium, makes up about 40 per cent of the cost of a battery.

Quebec Premier François Legault said the province is providing a loan to help finance the plan worth $152-million, partly forgivable if employment is maintained over a decade. François-Philippe Champagne, the federal Minister of Innovation, Science and Industry said Ottawa would contribute up to $147-million through the Strategic Innovation Fund's Net Zero Accelerator initiative. The government never specifies the nature of the funding under that program because it's commercially sensitive, a spokesperson for the minister said.

The plant is currently under construction. It's the most advanced of what are expected to be several subsequent projects by auto and battery materials makers in Bécancour, a largely rural town with significant industrial land halfway between Montreal and Quebec City. The Quebec and Canadian governments are both betting Bécancour can be a key North American hub for EV battery development.

How the EV battery boom could change Bécancour, a quiet corner of Quebec, forever

The GM-Posco project was first announced roughly a year ago and billed as a $500-million endeavour. Now, the partners estimate the value at more than $600-million. Local and federal politicians joined executives from the companies as well as South Korea's ambassador to Canada Monday in Bécancour to formally kick off the project.

"What we’re doing here amounts to nothing less than a new economic golden age for the region," Premier Legault said. "This sends a signal that Quebec is open to investments by international companies. We’re determined to create in Quebec a world leader in the green economy."

The desire by Western automakers to cut their dependence on China and map out new EV supply chains in Europe and North America has triggered a reset of their global footprints. Companies are scrambling to secure minerals needed for battery production. And they’re forging alliances with new partners and plotting new factories to feed their dealer showrooms. It's a once-in-a-lifetime shift that's being fuelled by government backing on an unprecedented scale.

The Trudeau government has agreed to provide subsidies that could reach $13-billion over a decade for a new Volkswagen AG battery plant in St. Thomas, Ont. The government has come under criticism for the sheer scale of that corporate aid, but has insisted it's justified by the economic spinoffs it will create.

Opinion: The ugly downsides of Canada's costly obsession with electric vehicles

Stellantis NV and LG Energy Solution are planning their own $5-billion factory in Windsor, Ont., that will also be financed with help from the Canadian and Ontario governments. The companies said earlier this month they were halting construction on the project – a decision prompted by a funding dispute with the governments.

Quebec has many of the minerals the auto industry needs as it goes electric. And the province has something equally valuable: cheap, green hydropower – the kind needed for the energy-intensive task of pulling those minerals out of the ground to create cathodes and anodes, the basic components for EV batteries.

All of that, topped with government financial incentives, has drawn the attention of several big-league multinationals, including GM, Germany's BASF SE and Brazilian mining giant Vale SA. A wave of smaller suppliers is expected to join them as they firm up plans and secure financing.

Quebec Economy Minister Pierre Fitzgibbon estimates the value of projects announced and in the cards for Bécancour at $4-billion, with a possible doubling of that if companies move forward with expansion projects on their properties. Quebec hasn't seen private sector industrial spending of that size since Bombardier Inc. launched development of the C Series airliner in 2008.

Quebec on Wednesday also said it has created an economic innovation zone stretching from Bécancour to Shawinigan that it calls the "energy transition valley." It's the third such innovation zone in the province after Sherbrooke's quantum science focus and Bromont's intelligent electronic systems. The idea behind the zones is to bring companies, economic organizations and researchers specialized in one sector together to work on projects that will drive exports and investment, and ultimately yield commercial sales.