Automotive News Canada - March 2024 - 4

4
* MARCH 2024
Volatility and capital shortfall slow mining
Price dips for EV
metals prompt GM
to act; industry wants
government support
if Canada is serious
about the battery
supply chain
By DAVID KENNEDY
T ORONTO BUREAU CHIEF
GENERAL MOTORS HAS
struck a deal to invest US $150
million (Cdn $200 million) in
Canadian mining company
Nouveau Monde Graphite (NMG)
as part of its bid to help shield
North American suppliers from
choppy global metals prices and
create greater
certainty
for new mines
and processing
plants.
Under the
agreement
announced Feb.
15, Nouveau
Monde Graphite
would provide
18,000 tonnes of
refined graphite
from the second
phase of
its Becancour,
Que., plant
to GM every
year for an initial
term of six
Thibault:
Lower metal
prices over
the past year
have made
it harder on
developers of
lithium and
nickel mines.
FILE PHOTO
years, once it reaches full production.
In
addition to the supply
agreement, GM would invest
$150 million in two tranches
to advance construction of
the second phase of the miner's
Matawinie Mine and Becancour
battery material plant. It could
be the first of a new series of
mining investments from the
automaker.
On Feb. 7, Simon Thibault,
EV critical-materials leader
at GM, told the EV Innovation
& Technology Conference in
Toronto that the company was
planning to make more investments
in the sector shortly.
Metals markets are currently
" very painful " for developers
of lithium or nickel mines, he
said, with a year of sharp price
declines weighing on the ability
of companies to raise capital to
get shovels in the ground.
" We want to protect our supply
from the market influence,
and we're planning on
signing contracts with
suppliers, directly with
mining companies and
refiners, to build that
supply chain, " Thibault
said.
He did not specify
what minerals GM is
focused on, though he
said Canada remains
" absolutely central " to
the automaker's electric
vehicle strategy.
The plummeting prices have
prompted layoffs at lithium
mines already in production,
including in Canada. They also
have threatened investments in
proposed mines, with financiers
questioning the payback of projects
based on the deflated prices.
Long-term partnerships with
end customers, such as the
one GM struck with Lithium
Americas, are one way to create
greater stability for miners.
Such relationships often
provide miners upfront
development cash and a
committed buyer once
mine output begins.
'BOOM OR BUST'
CLOUDY OUTLOOK
This next wave of
investments follows
spending over the past
two years on both upand
midstream projects.
Among other investments,
GM made a commitment
in March 2022 of more
than $1 billion to a joint-venture
cathode-active-materials plant in
Becancour, and in January 2023
spent US $650 million (Cdn $870
million) to buy into Lithium
Americas Corp.'s Thacker Pass
mining project in Nevada.
But global pricing for key battery
materials has clouded the
outlook for mine developments.
Prices for the two common
types of lithium compound
used in EV batteries have fallen
roughly 80 per cent in the past
year, according to the industry
analysis firm Benchmark
Mineral Intelligence. Nickel
prices, meantime, have declined
close to 50 per cent from the
start of 2023, according to the
London Metals Exchange (LME).
Muinonen:
Governments
need to give
miners the
same " really
big chunks
of money "
that they
currently
give
battery-cell
producers.
PHOTO:
LINKEDIN
But this type of relationship
is also new territory
for both industries,
Johnna Muinonen, president
of Dumont Nickel in
Quebec, told attendees at
the EV conference.
" The mining industry
has been boom or bust forever, "
she said. " We've hit
the highest highs, we've
hit the lowest lows, and
we continue. And we hire
and we fire, and we develop
and we don't develop
based on that cycle. "
Nickel miners, for instance,
typically sell their product to
smelters, which then sell refined
nickel on the LME as a commodity,
Muinonen said.
" It's very different when we
start to have those conversations
about the involvement in a
supply chain, " she said, but that
approach " might really help stabilize
the industry. "
NMG President Eric
Desaulniers said the " generational "
projects that NMG and other
Canadian miners aim to build
require this type of " fundamentally
different " customer relationship.
" This
is the reality, "
Desaulniers told conference
attendees. " That's the only way
to finance those projects. "
At the EV Innovation & Technology Conference in Toronto on
Feb. 7: Simon Thibault, EV critical-materials leader at General
Motors (second from left), Johnna Muinonen, president of
Dumont Nickel (third from left), and Eric Desaulniers, president
of Nouveau Monde Graphite (far right) PHOTO: DAVID KENNEDY
NMG, which plans to produce
graphite anodes for the negative
side of EV batteries, is competing
with established companies
in China that have product
catalogues ready for buyers in
North America, he said. NMG,
in contrast, requires a 10-year,
billion-dollar commitment from
a customer before it can confidently
shift into the construction
phase.
Despite the barriers, some
buyers have this " long-term
view " to support an integrated
North American supply chain,
Desaulniers said. " It's happening. "
GOVERNMENT
SUPPORT
Desaulniers and Muinonen
stressed that government must
step in with further support if
the country is serious about
establishing a battery supply
chain that runs all the way
upstream to mining.
Eric Desaulniers, president
of Nouveau Monde Graphite,
said Canada's battery supply
chain is great " on paper " but
still needs government help.
PHOTO: LINKEDIN
Canada has an excellent ecosystem
for battery production
" on paper, " Desaulniers said,
but government needs to provide
" more weapons " for those financing
projects. As one example, he
pointed to extending the use of
flow-through shares for the construction
of mining projects.
Today, the tax-favoured shares
apply only to mine exploration.
Muinonen said Canadian governments
need to get behind
miners with " really big chunks
of money, " the same way they've
supported battery-cell producers.
With current metals prices
creating a tough financing market,
she said, miners need all parties
to take a long-term outlook.
" If we can't get all of those
things to come together, "
Muinonen said, " it's going to be
very difficult for projects like all
of ours and other ones as well to
be able to get enough funding to
actually put them into production. " -
ANC
Kia store purchase strengthens group's B.C. foothold
By DAVID KENNEDY
T ORONTO BUREAU CHIEF
GO AUTO IS ADDING TO ITS DEALERship
network in British Columbia's
Lower Mainland with the purchase of
Kia West, located in the
Vancouver suburb of
Coquitlam.
The Edmonton dealership
group announced it
had acquired the store on
March 1 without disclosing
the terms.
Kia West is the top Kia
dealership for retail sales
in Canada, with annual volume
of more than 1,500 vehicles, Go Auto
said. It was previously owned by Andrea
Backman, Mark Ahnert and Daryl
Endresen of the West Auto Sales Group,
which has three other new-car dealerships
and one used-car store in B.C.
Go Auto President Phil Abram said Kia
West has a strong foundation, which Go
Auto plans to build upon following the
ownership transition.
" We are excited to leverage the
achievements of Kia West and simultaneously
broaden the presence of the Go
Auto brand in British Columbia, " he said
in a statement.
The purchase follows several Go Auto
acquisitions in 2023, including another in
the Lower Mainland and the group's first
in the United States.
The group now owns 52 new-vehicle
dealerships across British Columbia,
Alberta, Northwest Territories, Ontario
and Washington state. It also has five
used-vehicle stores in Western Canada,
four RV dealerships and two collision
centres.
ACQUISITIONS DIVERSIFY GROUP'S PORTFOLIO
CANADAONE AUTO HAS ADDED TO
ITS fast-expanding Ontario business with
the purchase of two stores in two growing
markets west of Toronto.
The group announced on Feb. 2 that
it had acquired Guelph Toyota and K-W
Mitsubishi Motors. Terms were not disclosed.
The
addition of the two franchises
builds on a pair of CanadaOne acquisitions
in Ontario last year and takes the
group's new-car store count to more than
30.
In February 2023, the dealership group,
based in Edmonton, bought high-volume
Barrie, Ont., dealership Georgian
Chevrolet-Buick-GMC. It followed that
deal in September with the purchase of
Toronto Honda and Toronto Kia.
CanadaOne's latest Ontario deal " fortifies "
its partnership with Toyota and gives
the group its first Mitsubishi location, adding
more diversity to its portfolio, the company
said on its social media channels.
Guelph Toyota is in the Guelph Auto
Mall at the west end of the city. K-W
Mitsubishi is at the southern end of
Kitchener-Waterloo.
Despite the change of ownership,
top management at the two stores is
unchanged. Michael Tavares, general
manager of both Guelph Toyota and K-W
Mitsubishi, has agreed to stay in his role,
CanadaOne said.
GROUP GROWS ITS HOMETOWN PRESENCE
PERFORMANCE AUTO GROUPHAS
added to its local market with the acquisition
of Brampton Chrysler-Dodge-Jeep-Ram
in the city northwest of Toronto.
The Brampton dealership group said on
its social media channels March 7 that it
had purchased the store. It did not disclose
the terms.
Performance Auto Group, which now
owns 35 new-vehicle stores in Ontario,
including several in the Brampton auto
mall adjacent to the newly acquired
Stellantis dealership, said roughly 80 staff
will join its ranks as part of the transaction.
Brampton Chrysler-Dodge-Jeep-Ram was
previously owned by Rafih Auto Group,
based in Windsor, Ont.
Performance Auto Group also owns two
used-vehicle stores and four collision centres
across the Greater Toronto Area and
Niagara Region. - ANC
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Automotive News Canada - March 2024

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