NextStar Energy, Canada reach deal to resume plant construction in Ontario

The officials are taking photos to commemorate the establishment of a joint venture plant between LG Energy Solution and Stellantis. [Photo provided by LGES]

The Canadian government has pledged to provide a subsidy equivalent to the U.S. Inflation Reduction Act (IRA) to a joint venture between South Korea’s battery maker LG Energy Solution Ltd. and multinational automaker Stellantis N.V.

The two companies’ joint venture, NextStar Energy Inc., officially announced Thursday that it has signed an agreement to ensure a stable future for battery cell and module production in Ontario and that the Canadian government has pledged to provide subsidies equivalent to the U.S. IRA.

“We are pleased that the federal government with the support of the provincial government came back and met their commitment of leveling the playing field with the IRA,” said Mark Stewart, chief operating officer of Stellantis in North America.

As a result, LG Energy Solution and Stellantis will immediately resume building the battery module plant that had been put to a halt on May 15.

The battery plant to be built in Windsor, Ontario will have an annual production capacity of 45 gigawatt hours and is expected to begin operations in 2024. The companies expect it to create about 2,500 new jobs.

Earlier on June 29, Canadian local media outlet Windsor Star said that the joint venture will receive $15 billion in financial support once the plant is completed as planned.

“It’s a good day not only for our joint venture but also for Canada,” said Dong-Myung Kim, president of the advanced automotive battery division at LG Energy Solution. “We are pleased to resume construction of the new plant, which will serve as a key base for the North American electric vehicle and battery market.”

“The IRA fundamentally changed the landscape for battery production in North America, making it challenging to produce competitively priced, state-of-the-art batteries in Canada without an equivalent level of support from government,” said Stewart. He added that the joint venture is very grateful to the governments for their leadership to resolve and bring this deal to fruition, as well as to Unifor National President Lana Payne and her team for tirelessly advocating alongside us in our shared commitment to protecting thousands of new jobs.

“NextStar Energy is one of LG Energy Solution’s eight manufacturing plants in North America, a region that is expected to see high growth in the coming years,” said Lee Hoon-sung Lee, chief executive officer of NextStar Energy. “We will produce the highest quality batteries in Windsor, Canada and continue to grow with the community.”

“We are deeply grateful for the all-round support of the Korean government, which helped us achieve a positive response from the Canadian government and clearly deliver our position,” LG Energy Solution said.

In May, Korean President Yoon Suk Yeol and Canadian Prime Minister Justin Trudeau pledged to strengthen bilateral solidarity for sustainable growth and prosperity during the summit commemorating the 60th anniversary of diplomatic relations between the two countries. The ministers of foreign affairs and industry from the two countries also pledged closer cooperation at the first high-level economic security dialogue.