Construction of $2.7 Billion Battery Plant in Eastern Ontario Paused
Multibillion-Dollar Project Intended to Create Hundreds of Jobs Faces Market Delays
By Jocelyn Shepel
A significant battery production project in eastern Ontario has been put on hold. The company behind the initiative, Umicore Rechargeable Battery Materials Inc., announced the delay citing a significant downturn in the electric vehicle (EV) market. The plant, which began construction in 2023 in Loyalist Township near Kingston, Ontario, was expected to cost up to $2.76 billion and create 600 jobs.
Economic Impact and Government Involvement
The Canadian federal government had pledged up to $551.3 million for the project, while the provincial government was to contribute up to $424.6 million. However, as of the latest update, no provincial funds had been disbursed. Umicore’s statement pointed to a major disruption in the EV market, including the non-materialization of a contract with a Chinese manufacturer and a quicker-than-expected decline in legacy contracts.
Market Challenges and Strategic Review
The company emphasized that their battery materials’ demand has significantly decreased, leading to a comprehensive review of their operations to align with the new market conditions. This review will be concluded and presented during their capital markets day in the first quarter of 2025.
Broader Industry Context
Experts note that Canada’s early investments in the EV market, aimed at positioning the country as a leader, face challenges. The local auto industry largely comprises suppliers to globally owned companies, and current market conditions have not yet caught up with the anticipated growth. Similar reevaluations are happening across the industry, with other major players like Ford also scaling back their EV production.
Local Reactions
Residents of the region, like Kathleen Palmer from Bath, Ontario, expressed disappointment but not surprise at the news. The plant was expected to boost local employment and services. However, there is still optimism that the area will see development in the long term. Loyalist Township Mayor Jim Hegadorn reassured that while construction is delayed, the project is not abandoned, and more information is expected in the fall.
This development highlights the volatile nature of emerging industries and the importance of strategic flexibility in response to market changes.