As Canada’s EV battery eco-system takes shape, ‘matchmaker’ Champagne eyes microchips

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Two years ago, Canada’s goal of developing an electric vehicle battery eco-system was still in the “envisioning” stage, as Industry Minister François-Philippe Champagne puts it.

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Today, the supply chain build-out is fast becoming a reality, with the country’s first battery and cathode manufacturing plants underway and a record $3.8 billion allocated for the nation’s critical minerals strategy in the latest federal budget.

“It’s a world of difference.… When we started, on one end we had the mining companies saying we will produce and refine if we have the OEMs (original equipment manufacturer) on the other side to do the off-takes … (and) we had the OEMs which were calling me saying we will come to Canada if we can have the critical minerals,” Champagne said in an interview this week. “I have played the matchmaker … to make sure that people talk to each other.”

The demand for electric vehicles, which require batteries sourced from critical minerals such as lithium, has increased in recent years as the world looks to decarbonize.

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I have played the matchmaker … to make sure that people talk to each other

François-Philippe Champagne, Industry Minister

Rich in battery metals, Canada is looking to build an industry to take advantage. But some analysts, such as Patricia Mohr, believe the country has a lot of catching up to do.

According to the former vice-president of economics at Scotiabank, Canada is still emerging as a critical minerals supplier. By comparison, countries such as Australia, the world’s leading lithium producer, and Indonesia, the biggest nickel producer, are way ahead.

“Based upon the large number of deposits being advanced by junior mining companies … I would judge that Canada will emerge as a major supplier of critical minerals in the second half of the decade (2025-2030),” Mohr said.

Many in the industry, however, believe that the recently passed Inflation Reduction Act in the United States, which provides tax credits for electric vehicles that either source their critical minerals from North America or are assembled in the region, is likely to boost this country’s mining and auto industries.

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According to a report published by EY in May, there has already been an increase in demand for electric vehicles in Canada, with 46 per cent of the survey’s respondents planning to purchase EVs, up 11 per cent from last year.

Champagne said his “next goal” was to address the microchip shortage that has hit the auto industry and that he believes Canada can become a manufacturer of such specialized processors.

New cars require microchips that control everything from their navigation systems to headlights. The industry is still facing a supply shortage caused mainly by lower production during the initial days of the pandemic.

MDA Ltd., the company that builds equipment for space and is behind the Canadarm, has also strategized via its contracts in a bid to tackle supply chain issues. “We have to look ahead, make sure we have got the proper lead times and financial attributes … to accommodate supply chain issues,” said Mike Greenley, the company’s CEO. He added the company breaks its contracts into chunks so that it’s able to assess costs and supply chain schedules “accurately.”

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On Wednesday, Champagne visited the company, which is currently building its new headquarters in Brampton, Ontario.

In March, MDA had received a $269-million contract from the Canadian Space Agency to build the Canadarm3 robotic system that will be part of NASA’s Artemis program, which aims to return humans to the moon.

“There was a time when people said, ‘Houston, we have a problem.’ Now they will be saying, ‘Brampton, we need a solution,’” Champagne said during the visit.

Canada will also be sending an astronaut into lunar orbit under the program in the future. “I am not sure Canadians have really appreciated the fact that Canada will only be the second nation in the world after the USA to have someone in lunar orbit and in deep space,” the minister said. “This is a big thing.”