Billions of dollars worth of new projects with companies including Tesla and South Korean conglomerates SK Group and LG have been the subject of advanced talks this spring with federal and provincial governments, The Logic has learned, as Canada continues its efforts to bolster its electric-vehicle supply chain. 

The potential investments would fill specific gaps in the battery supply chain, helping build what Innovation Minister François-Philippe Champagne once called “an ecosystem from mine to recycling.” 

To complete a domestic supply chain to feed EV battery gigafactories—like the one Volkswagen plans to build in St. Thomas, Ont. and the one NextStar, a joint venture of Stellantis and LG, is building in Windsor, Ont.—Canada would need facilities to create all the essential components of lithium-ion batteries.

According to a source with direct knowledge of the projects, facilities under discussion in recent months include a lithium hydroxide plant in Thunder Bay, Ont., to be built by Australia-based Green Technology Metals, with potential for a partnership with LG Energy Solution. Elon Musk’s Tesla is also considering a lithium hydroxide plant in the province. 

Taiwanese chemical giant Chang Chun Group is considering building a factory to manufacture the copper foil used to make lithium-ion battery cathodes. Subsidiaries of SK Group, a South Korean energy and wireless mobile-service giant, are in discussions with Canadian governments over a facility to produce copper foil for EV battery anodes, as well as a facility to make so-called “separators,” which act as a membrane between an EV battery’s anode and cathode. 

The size of the investments have not been finalized and could change, but each could range $500 million to $1.5 billion, and each could create between 200 to nearly 700 jobs, according to the source. 

Ontario’s economic ministry said it “does not discuss economic prospects publicly” but that it “continues to seek out opportunities to promote job growth and ensure Ontario remains a competitive jurisdiction.” Neither Quebec’s economic ministry or the federal government responded by deadline to a request for comment about the projects. 

While SK has lobbied openly for potential federal support for a separator plant in Ontario’s St. Clair, Ingersoll or Welland, or in Quebec, recent discussions also advanced to include specific permitting and land negotiations for a copper-foil factory, according to the source. 

Though Tesla has previously hired Canadian critical-mineral specialists and lobbyists, it has not publicly disclosed specific Canadian supply-chain ambitions related to lithium processing. 

Chang Chun has lobbied in Quebec for a copper-sheet manufacturing plant, but The Logic has learned that recent discussions have included Ontario locations and have closed in on potential hiring figures and capital expenditure. 

SK, Tesla and Chang Chun did not provide comment before the deadline for this story.

Green Technology Metals, or GT1, told The Logic it has a signed letter of intent to acquire a package of land in Thunder Bay, which is subject to environmental due diligence, permit approval and local community acceptance. “We want to partner on the hydroxide facility, because we know how expensive it is going to be,” said spokesperson Jacinta Martino. “We want a partner that brings the capability—obviously LGE does, but we’re just not there yet.”

The company said last year the federal government was urging it to build a lithium hydroxide processing plant in Thunder Bay to supply North American gigafactories. Last month, LG Energy Solution signed a five-year deal with GT1 to buy spodumene concentrate from its Canadian mine, with a clause to receive the equivalent amount of lithium hydroxide “in the event that GT1 develops a lithium hydroxide conversion facility during this period.”   

LG told The Logic it has not finalized an agreement to partner with GT1 on the Thunder Bay plant, nor has it decided which gigafactory GT1’s spodumene will supply. 

The Ontario government has made it clear it wants to build on the marquee EV sector investments in NextStar’s and Volkswagen’s gigafactories in the province by attracting complementary projects like these. Ontario Economy Minister Vic Fedeli told The Logic in February, “We’ve always said we want to see a lithium conversion facility established in Northwest Ontario, and we’re working hard to accomplish that.” 

“We’re always going to look for every opportunity to expand our EV production, our EV ecosystem, whether it’s cars, batteries, all of the components like cathode, anode, separator, copper foil, lithium hydroxide—each of those will be billion-dollar plants,” Fedeli told The Logic again in April in St. Thomas, where Volkswagen unveiled the details of its new Ontario gigafactory. 

Last year, Maciej Jastrzebski, CEO and co-founder of Canadian lithium-metal anode company Li-Metal, told The Logic that copper foil was still hard to source in Canada, while Dan Blondal, CEO of Nano One Materials, said Canada lacks a midstream industry that turns raw materials into battery-grade materials.  

Sean De Vries, executive director of the Battery Metals Association of Canada, told The Logic that while he didn’t have any details on specific projects, there’s lots of activity in the works—it’s just that some projects will take years to prepare. 

When building out the crucial “midstream” industry that turns raw materials into battery-grade components, De Vries said, it will be important for Canada to tailor its investments to the best chemical processes for both type of mineral deposits we have available, as well as the type of battery chemistry in use at the gigafactory the components will supply. 

The NextStar battery plant in Windsor is “a foundational anchor investment,” he said, and “that helps the other pieces of the value chain build out, as well.” 

Canada’s efforts to land more EV battery-linked facilities are playing out amid geopolitical tension over the global EV supply chain and controversy over the impact of lavish subsidies for the industry.

Most of the ingredients to make lithium ion batteries, including about two-thirds of the lithium mined in the West, must today be shipped back to China to be processed for batteries, a risk that many businesses would now like to avoid amid growing geopolitical tensions. 

Meanwhile, Canada’s domestic supply-chain efforts have been complicated by the U.S.’s Inflation Reduction Act, which showers American cleantech companies with tax credits and other subsidies to accelerate that country’s transition away from fossil fuels. The bill, which Goldman Sachs estimates could cost U.S. coffers US$1.2 trillion, has prompted calls among Canadian businesses for the federal government to match U.S. subsidies to avoid capital flight. 

Ottawa clinched German automaker Volkswagen’s St. Thomas gigafactory with an offer of subsidies that could reach $13 billion, equivalent to what the company would get under the IRA if it built a gigafactory south of the border. That in turn led NextStar, to halt construction on its $5-billion Windsor battery-assembly plant earlier this month, as Stellantis, the French parent company of Chrysler and Jeep, among others, sought subsidies on par with those given to Volkswagen. 

On Wednesday, the Toronto Star reported the federal and Ontario governments had reached a deal with Stellantis to secure the future of the NextStar plant, after Ontario substantially increased its subsidy offer. The NextStar subsidies could now be worth more than $13 billion, the Star reported.