Canadian pension funds and BlackRock team up for US$1.2-billion EV battery maker financing

Open this photo in the gallery:

Three Canadian pension funds joined BlackRock BLK-N in a $1.2 billion loan to Swedish battery maker Northvolt AB. The company is nearing a decision on whether to build a new manufacturing plant in Quebec.

With this funding, the Ontario Investment Management Corporation (IMCO), the Canada Pension Plan Investment Commission, the City of Ontario Employees’ Retirement Plan and BlackRock, the world’s largest asset manager, expanded their convertible bond program to US$2.3 billion. Northbolt launched the program last year. The funding comes just two months after IMCO invested US$400 million in Northvolt.

The company said it will use the proceeds to fund expansion in Europe and North America.

“We are seeking a dedicated group of investors who understand both the urgent need and the enormous financial potential to enable the rapid electrification of society,” Northvolt Chief Financial Officer Alexander Hartmann said in a statement. I found it,” he said. “But Europe and North America have a long way to go to reach their full potential as leaders in the energy transition.”

Northvolt, which has its main factory in Sweden, is considering a potential major electric vehicle battery production facility in North America and is in talks with the Quebec government about a potential location, people familiar with the matter said.

The EV battery boom could change forever Becancourt, a quiet corner of Quebec

Northvolt spokesman Anders Toll said he could not say more precisely about the location of the new plant in North America, but suggested a decision could be made soon.

La Presse and L’Oeil reported that the company scouted sites near Montreal and Baie Comeau in Cayre, but settled on Saint-Basil-le-Grand in the Richelieu Valley for a project worth about US$7 billion. It says. Regional newspaper. The factory’s main site will be built on land previously occupied by Canadian Industries, a maker of chemicals and explosives.

The Quebec Bureau of Investigation, which is in charge of the Northbolt case, did not respond to a request for comment. The company is still evaluating other potential locations in North America, but the location and availability of talent are seen as positives for Saint-Basil-le-Grand, according to people familiar with the matter. The Globe is not authorized to speak publicly on the matter and has not disclosed its sources.

Quebec is fighting over the factory as Canada seeks to compete with the U.S. cleantech industry, which has intensified over the past year with incentives part of President Joe Biden’s anti-inflation bill. The bill includes US$369 billion in funding for green energy and related technologies, as well as EVs and energy efficiency measures. Ottawa and state governments have responded with billions of dollars of public money to attract battery manufacturers and suppliers to build factories in Quebec and Ontario.

In April, the federal and Ontario governments announced an agreement to provide Volkswagen with up to $13.2 billion in subsidies to support production after it builds a battery plant in St. Thomas, Ontario. Stellantis NV STLA-N and LG Energy Solutions reached an agreement with the governments in June to receive as much as $15 billion in subsidies to restart construction of their EV battery plant in Windsor, Ontario.

Quebec is working hard to make the province a hub for EV battery development, attracting companies with low-carbon hydropower and financial support in partnership with the federal government. General Motors GM-N is partnering with South Korean battery material maker Posco Chemical to build a new cathode plant in Bekancourt, Kenya. And Ford Motor Company FN earlier this month joined forces with South Korea’s EcoProBM and SK On to produce $1.2 billion in EV battery materials in the same city, backed by $644 million in public funding. announced that it is working on the construction of a large-scale factory.

Ford and others to build a $1.2 billion battery materials plant in Bekancourt, Kenya.

Northvolt currently produces batteries for transportation and energy storage at its Gigafactory in northern Sweden. The factory uses emission-free electricity and focuses on sustainable production. The company has set a target of 150 gigawatts of annual capacity by 2030, with a focus on keeping its carbon footprint low through locally sourced and recycled materials.

The company’s ownership group includes Volkswagen AG, Bayern Motoren Werke AG and Goldman Sachs, and the company is reportedly considering an initial public offering. The company has US$55 billion supply deals with European companies such as Volkswagen, BMW, Fluence Energy, Scania AB, Volvo Cars and Polestar.

IMCO said its investment in Northvolt fits into its climate strategy. Fund officials said in June that they had discussed with Northbolt officials about bringing a factory to Canada, but provided help with the process only when needed.

Meanwhile, Northvolt announced on Tuesday that it has assembled its first battery energy storage system at its new 25,000-square-meter plant in Gdansk, Poland. The facility is supported by the European Innovation Fund and is expected to begin delivery to energy storage and industrial customers later this year, according to the company.