November 27, 2024

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Canadian Prime Minister Justin Trudeau speaks at a joint press conference with South Korean President Yoon Suk Yeol in Seoul on Wednesday. (Yonhap)

LG Energy Solution’s top management and Canada’s top leadership including Prime Minister Justin Trudeau discussed ways to resolve the issue of the halted construction of a joint battery plant between the South Korean battery maker and Stellantis in the Canadian province of Ontario, according to an industry source Thursday.

“The Canadian prime minister and Canadian government officials sat down with LG Energy Solution’s high-ranking officials to figure out a breakthrough for the ongoing matter,” the source said.

The meeting between the Canadian government leadership and LG Energy Solution’s management took place during Trudeau's three-day visit to Korea for a summit with President Yoon Suk Yeol. The Canadian leader arrived on Tuesday.

LG Energy Solution and Stellantis announced Monday that they decided to stop all construction activities at the $3.7 billion (4.9 trillion won) joint battery manufacturing plant in Windsor, a city in southwestern Ontario, citing the Canadian government's failure to offer pledged subsidies. The exact amount of the subsidies was not disclosed.

“As of today, the Canadian government has not delivered on what was agreed to, therefore Stellantis and LG Energy Solution will begin implementing their contingency plans,” the two companies said in a statement. “Effective immediately, all construction related to the battery module production on the Windsor site has stopped.”

The Canadian federal government and the Ontario provincial government have been at loggerheads, as both want the other to do their part to provide subsidies for the joint battery plant.

The dispute over financial incentives between the federal and provincial governments is likely to lead to a delay in the joint venture’s plan to complete the construction of the battery plant for electric vehicles in the first half of 2024. The plant, which will have an annual production capacity of 45 gigawatt-hours by 2026, is projected to create over 2,500 jobs.

According to the Windsor Star on Wednesday, LG Energy Solution and Stellantis were even considering taking extreme measures including shutting down the Canadian construction plan altogether. The report quoted an unnamed source as saying, “(LG Energy Solution and Stellantis) are not bluffing. They’re prepared to pull the plug on the battery plant.”

Asked about the report, an official at LG Energy Solution said no specific decisions have been made in that regard.

The latest report added more pressure on the Canadian government officials after the CEOs of LG Energy Solution and Stellantis has already sent a warning letter to Trudeau in April. According to the Toronto Star, which published excerpts of the letter, they wrote that if the government’s agreement is not promptly executed, they “will be forced to make difficult decisions regarding this project and other respective investments in Canada.”

Francois-Philippe Champagne, Canada’s minister of innovation, science and industry, reaffirmed Tuesday that the country will offer LG Energy Solution and Stellantis government subsidies on par with what it pledged to Volkswagen during a press conference in Seoul.

The Canadian government announced in April this year that it would provide over 13 billion Canadian dollars ($9.7 billion) in subsidies for Volkswagen’s battery plant in southern Ontario and an additional grant of CA$700 million to the global automaker.

By Kan Hyeong-woo (hwkan@heraldcorp.com)