Umicore Suspends $2.7 Billion EV Battery Plant in Ontario Amid Market Slowdown

In the realm of materials that build electric vehicles (EVs), Belgian materials technology and recycling group Umicore recently announced the suspension of construction on its $2.7 billion cathode material plant in Loyalist, Ontario, Canada.

Originally aimed to start operations by the end of 2025, the plant was projected to produce cathode materials for around one million EVs annually by the end of the decade. The project, which broke ground in October 2023, was backed by substantial government support, with the Canadian federal government pledging up to $551 million and the Ontario provincial government offering up to $425 million in subsidies.

Umicore CEO Bart Sap cited a sharp decline in demand forecasts for battery materials as the primary reason for the pause. “There’s a new market reality out there and we have to adjust to it,” Sap said during a conference call discussing the company’s half-year financial results. The company reported a 33% decrease in revenue for its battery materials business in the first half of 2024 compared to the same period last year.

The decision reflects a broader trend of slowing growth in the EV market, with major automakers like Ford and General Motors also recently announcing delays in their EV manufacturing plans in Ontario. Umicore’s move is part of a “thorough review” of its battery materials business, with results expected to be presented at its Capital Markets Day in Q1 2025.

Umicore’s Affected Partnerships

The halt in construction could impact Umicore’s partnership with BMW, which had planned to source cathode materials from the Ontario plant for its battery cell partner AESC. This partnership was crucial for BMW’s plans to supply round cells for new class electric models from 2026.

Despite the setback, Ontario’s Minister of Economic Development Vic Fedeli remains optimistic about the future of EV production in the province, “Global spending on EVs was up 31 percent in 2023, and as demand for EVs continues to ramp up in the years ahead, we are ensuring the supply will be made-in-Ontario.”

As Umicore continues its review, the company has taken a 1.6 billion euros ($1.73 billion) impairment charge on its global battery materials business. With uncertainties of the Ontario plant looming, the company’s battery construction business reaching new heights will be further determined through the coming months.

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