Umicore halts construction of Loyalist Township plant – Kingston News

Less than a year after construction began on a long-awaited, multibillion-dollar electric vehicle (EV) battery plant in Loyalist Township, Umicore has announced that construction is being postponed.

Citing “the recent significant slowdown in short- and medium-term growth forecasts for electric vehicles,” the Belgium-based company made the announcement in a multi-faceted report, including a “strategic review of battery materials operations and impairments” and a full report on “half-year results” for 2024.

As part of the “immediate action to address this situation,” Umicore said a number of efficiency, cost and strict capital allocation discipline measures have been implemented, including limiting the company’s 2024 capital expenditures to less than €650 million (approximately $976,212,250.00 CAD), according to a 40-page press release issued on Friday, July 26, 2024.

Specifically regarding the local plans, Umicore stated that as part of “maximizing capacity utilization of existing assets before considering further expansion,” the company is “evaluating the configuration of its existing footprint in Asia and Europe, as well as its expansion project in North America.”

“Pending the outcome of this investigation and with options open, Umicore is deferring expenditure on the construction of its battery materials facility in Loyalist, Canada,” the company said.

The full Umicore “Half-Year Results 2024” report can be read (and viewed via multimedia elements) on the Umicore website.

“In recent months, short and medium term growth forecasts for the electric vehicle market have been significantly scaled back, significantly impacting Umicore’s Battery Materials business… In the coming months, we will continue to thoroughly reassess our Battery Materials business, with energy and an open mind, always in close coordination with our customers and partners,” Umicore CEO Bart Sap said in a statement.

Umicore announced to much fanfare in July 2022 that it planned to build an EV battery factory in Loyalist Township, including Prime Minister Justin Trudeau officially announcing the $1.5 billion plan. The facility would span approximately 350 acres near the intersection of Taylor-Kidd Boulevard and County Road 4, just west of Kingston. In October 2023, Ontario Premier Doug Ford came to Loyalist Township to officially break ground on the facility, which at the time had an estimated price tag of $2.76 billion.

But as “customer demand forecasts for our battery materials have fallen sharply recently,” the company has made a number of decisions on how to proceed, Umicore spokesperson Caroline Jacobs told Kingstonist.

“The plant has not been cancelled, but we are deferring expenditures on the construction of the plant until we reach the conclusions of the investigation into our Battery Materials business,” Jacobs clarified via email on Friday, July 26, 2024, following rumors that plans for the plant had been canceled altogether.

“These delayed expenditures on our plant are part of a thorough review of our Battery Materials business group, following the significant deterioration in the EV market context and the impact this has on the entire supply chain,” she expanded, referring to the recent sharp drop in demand for battery materials.

“This had consequences for Umicore’s Battery Materials activities: on 12 June we announced that a contract with a Chinese OEM (original equipment manufacturer) would not be realised; that our old contracts are expiring faster than expected; and that there is a delay in the start-up of contracts in Europe.”

When asked for a timetable for the delay and when construction at the Loyalist Township plant would resume, Jacobs was less than forthcoming.

“The comprehensive investigation into our battery materials business is ongoing and we will present the findings at a Capital Markets Day in the first quarter of next year,” she wrote in an email, which also included some of the same language from the press release as outlined above.

“Our guiding principle in the strategic review remains to maximize capacity utilization of existing assets before considering further expansion… please be assured that we will provide updates on meaningful developments as they occur in the interim.”