Umicore halts construction of $2.7B EV battery materials plant in Ontario

Umicore has slammed the brakes on its $2.76-billion battery materials plant in Eastern Ontario as it continues an ongoing review of its business amid “substantially” scaled-back expectations for the electric-vehicle market. 

The Belgium-based company broke ground on the site in Loyalist Township, just west of Kingston, Ont., in October 2023, but said July 26 that it would delay construction spending on the site “pending the outcome of this review.”

“There’s a new market reality out there and we have to adjust to it,” company CEO Bart Sap told analysts on a conference call, as Umicore reported its half-year financial results. 

The company expects the recent slowdown in EV sales growth to extend at least into the midterm as automakers revise their original EV ramp-up plans amid market uncertainty, he added. 

Umicore gave early warnings this spring that its battery materials business was not developing as expected, but would not comment on the future of the Ontario plant at the time. Sap, who was previously vice-president of Umicore’s catalysis business, replaced former company CEO Mathias Miedreich, who had championed the Canadian plant, in mid-May. 

Along with pausing spending in Ontario, Umicore took an impairment charge of 1.6 billion euro (Cdn $2.4 billion) on its global battery materials business in Europe and Asia July 26, as revenue in the segment declined 33 per cent for the first half of 2024 from the same period a year earlier. 

With the company review still ongoing, Umicore did not pull the plug on the Ontario plant outright, but said the move would keep its “options open” as it looks to maximize use of its existing production capacity.  

Sap said the company will continue weighing options for the Ontario plant as well as its battery materials unit until the first quarter of 2025, when it will finalize its new strategy. 

The future of nearly $1 billion in federal and provincial government funding pledged the Kingston-area plant was not immediately clear, though sources with knowledge of the matter said no funding from either government has flowed to the project to date. 

Innovation, Science and Economic Development Canada spokesperson Audrey Milette said federal spending on EV value chain investments remains "pivotal for fostering growth," but automotive and battery manufacturers often need to "adjust their timelines and plans to ensure long-term success."

"We are in touch with the company to better determine and understand next steps following the announcement," she said in an email. 

In a statement, Ontario Minister of Economic Development, Job Creation and Trade Vic Fedeli said the province continues to ensure EV battery materials "will be made-in-Ontario," but did not directly address questions about the funding for Umicore. 

The Ontario government initially said in October 2023 that Umicore planned to start commissioning the plant by the end of 2025 and begin ramping up production at the start of 2026.

Miedreich said last year that battery cell maker AESC was the company’s initial customer.  

AESC has three battery plants in operation or under construction in the United States and supplies batteries to BMW Group, among other customers. Cathode active material (CAM) from Umicore’s planned Ontario plant was to power the automaker’s next-generation electric vehicle platform.