Quebec premier taking heat over $7-billion Northvolt battery plant

Quebec Premier François Legault is under pressure over his government's investment in a planned battery factory near Montreal, as Swedish manufacturer Northvolt cuts costs following a slowdown in demand for electric vehicles.

Opposition leaders at the Quebec legislature on Tuesday called on the Coalition Avenir Québec government to be more transparent about its agreement with Northvolt for the $7-billion project. They want to know what conditions are attached to the $710 million in public funds the province has already committed.

Legault, who touted the plant as the "greenest electric battery factory in the world" when he announced it one year ago, used more muted language on Tuesday. "When you want to develop, you have to take calculated risks. Otherwise, you don't advance," he said in the national assembly. "We think this is a special opportunity for Quebec."

Normand Mousseau, scientific director of the Trottier energy institute at Polytechnique Montréal, said the Quebec government failed to communicate to the public that the Northvolt deal was inherently uncertain.

"I think the main issue was the fact that the government didn't present this as what it is, which is a risky investment," he said. "It was presented as a done deal."

On Monday, Northvolt announced it is laying off 1,600 employees at its plants in Sweden, totalling one-fifth of its workforce. The company said the cuts have no impact on its plans to build a battery factory in Quebec, a message echoed Tuesday by Quebec Economy Minister Christine Fréchette.

"The project in Quebec remains a priority," she told reporters. "We were aware that this is a new sector. And any new sector has to live with ups and downs. And so we've been careful in order to make sure that the protection of the public money is there."

Earlier in the day, interim Liberal leader Marc Tanguay said the opposition party wants more details about the deal secured with Northvolt last year, including a "schedule of payments."

The Quebec government has given Northvolt a $240-million guaranteed loan to help the company buy land about 30 kilometres east of Montreal to build its plant. The government has invested a further $270 million in Swedish parent company Northvolt AB, alongside a $200-million investment from Quebec's pension fund manager.

On Tuesday, Fréchette confirmed the government could inject another $300 million into the project once construction has started and private financing is in place.

"We need to have a government with transparency and honesty with respect to the taxpayers' money," Tanguay told reporters. The Liberals are also criticizing the government for setting aside a 354-megawatt energy block for the project, which former economy minister Pierre Fitzgibbon said earlier this month could be delayed until 2028.

Moshe Lander, a senior lecturer in economics at Concordia University in Montreal, said the government should provide more information about how many jobs and how much revenue the project could generate, and how it plans to make a return on its investment. "There's almost no transparency other than just the promise that this will be great," he said in an interview.

Quebec Solidaire spokesperson Gabriel Nadeau-Dubois told reporters Tuesday he supports the development of the battery supply chain in the province, but wants the government to provide "the bare minimum in terms of transparency and information" about a project that he said is in "serious difficulty."

"Mr. Legault has played poker with the money of Quebecers, and now he seems like he might be losing the game," he said.

The Parti Québécois on Monday called for an emergency debate in the legislature on the project's future, but the Speaker rejected the request Tuesday afternoon.

Mousseau said if Quebec wants to get into the electric vehicle battery industry, it has to take some risks and find a better way of explaining the uncertainty.

"If you say, 'That's the deal of the century, it will transform Quebec,' I'm not sure that's the right way to prepare people for the fact that they're very risky investments," he said.

But Lander believes that at this point, Quebec should "cut (its) losses and run," rather than risk more public funds on a project that might never get off the ground.

"They never really had an exit strategy for how they were going to get their money back, how they were going to make a return on it," he said. "It's just further indication that when the government tries to bet on a horse, there is the chance that the gamble is wrong."

This report by The Canadian Press was first published Sept. 24, 2024.