‘Seized the moment’: Watershed year for EVs paving way for billions in new investment, Champagne says

It has been a busy year for Industry Minister François-Philippe Champagne. He has several responsibilities, but building a new battery sector seemed to keep him the most occupied in 2023 as Canada inked multi-billion-dollar deals with battery and automakers Stellantis NV, LG Energy Solution Ltd., Volkswagen AG and Northvolt AB to build three battery plants.

In the case of Stellantis and LG, Champagne didn’t just need to ink a deal. He had to spend an extra two months improving it to match incentives provided by the Inflation Reduction Act (IRA) in the United States to ensure the companies remained in Canada. Passed last year, the IRA encourages companies to set up factories in the U.S. by issuing financial support.

FP: There have been quite a few battery deals this year. Did everything go according to plan, or were there more deals on the table that didn’t work out?

FP: There has been a lot of progress in the battery sector, but also some criticism due to the billions of dollars of incentives. Since it is a new industry that Canada is committing to, did you ever think about taking a step back amidst the criticism? Did you feel nervous at some point?

Had we failed, that would have been the beginning of the end of the auto sector in Canada

Francois-Philippe Champagne

FPC: No. When I started as the minister of industry, officials were preparing me for the decline of the auto sector in Canada, and what we have done now is that we have seized the moment. Had we failed, that would have been the beginning of the end of the auto sector in Canada. That was really the visionary part for me.

Look at the payback of these investments. Stellantis will contribute an estimated $200 billion to $400 billion to the Canadian economy in 30 years. People will look back at these things and say this is the best investment we could have ever done.

At first, there was something that was somewhat misunderstood. Whether you take Stellantis, or the other plants, it is the company that is investing to build a plant, $3.4 billion, and the production support that is deeply conditional, that is depending upon when the plant is going to open, what’s going to be the production and if, which is a big if, the IRA is still going to be in place in the United States. Most of the amounts that have been reported are deeply conditional. There is no money going to them unless they start production, unless they sell the battery and unless the IRA is still in place.

FP: It’s been a year since Canada asked three Chinese companies to divest their shares in three Canadian lithium junior companies. How do you think that announcement influenced the mining industry or helped Canada in the past year?

FPC: The role of any government is to make sure that we protect our national security and economic security. Some of the critical minerals are strategic for the country, and within the framework of the Investment Canada Act, they would be subject to enhanced scrutiny.

At that time, there were some people who were suggesting (the decision) could slow down the level of investment in the Canadian mining sector and I would say, when you look at BHP, Rio Tinto, some of these investments are among the largest in the world, they are doubling down on Canada. They realize that Canada is one of the few countries which has all the critical minerals to make a battery and a semiconductor.

I’ll say we will never compromise when it comes to national security

Francois-Philippe Champagne

One of the big shifts we are seeing now is that the supply chain is going from global to regional, where we have far more emphasis on resiliency, and one of the things that makes Canada unique is proximity when it comes to critical minerals: proximity to resources, assembly lines and markets. That is why you have seen the likes of Rio Tinto and many others wanting to invest more. In my view, talking to the CEOs of these global companies, they see Canada as one of the most attractive jurisdictions.

FP: The companies you mention are all big. But the Chinese investments are more for junior miners. In the past year, there have been some companies trying to test the system with Chinese investments despite the ban. Some are trying to re-domicile outside Canada. What’s your message to companies like these?

FPC: I’ll say we will never compromise when it comes to national security. That’s the clear message we are sending to them. And when I talk to investment funds around the world, there are significant investors that want to invest in Canada and in the mining sector in Canada. For example, I just came from COP28, there is capital for junior miners that want to develop in Canada and there is a lot of interest from different funds in the world. I would say there is alternative capital that is available for companies, and there are many projects where they not only have financial investors, but what’s interesting now is that the OEM is also interested in mines.

We received, for example, the battery alliances of Japan and Korea; we had investors looking for investment in graphite, nickel, copper, manganese. I see a number of investors very keen to invest and develop the mining and refining capacity in Canada.

FP: There are no concerns of mining companies trying to re-domicile outside Canada?

FPC: I am never going to compromise on national security, and when I see the level of investment in the mining sector, you are right that BHP and Rio Tinto are very large, but it sends a very big signal when you have the two largest miners in the world. They have a choice and they are doubling down on Canada. That must be sending a message to the whole industry that there is something going on in Canada. To me, these large investments are a vote of confidence in Canada.

FP: You are trying to tap Canadian pensions to invest in EV battery plants. How is that coming along?

FPC: Well, it’s an opportunity. My job is to provide opportunities for Canadian businesses. But, obviously, it’s for market participants to decide what they want. My job is to facilitate and convene, and that’s what I have been doing in 2023. Then it’s for the market players to decide. One of the great examples is when Brookfield and Intel teamed up to build one of the largest semiconductor facilities. I think it’s a great model and certainly it’s a model that is available and I have been promoting.