Canada signs memorandums of understanding with German automakers to help meet demand for clean transportation

The federal government of Canada has signed new agreements with German automakers Volkswagen and Mercedes-Benz, paving the way for deeper cooperation at all stages of the automotive value chain.

Canadian Prime Minister Justin Trudeau and German Chancellor Olaf Scholz observed a signing ceremony in Toronto on Tuesday at an event hosted by the German-Canadian Chamber of Commerce and Industry.

The agreements cover all elements of the supply chain, from technical development and raw material extraction to production, shelf life and recycling. Ottawa said in a news release that the deals would “help secure Canada’s position as a leading center of excellence for electric vehicle and battery manufacturing.”

The Volkswagen agreement focuses on deepening cooperation on sustainable battery manufacturing, production of cathode active materials and supply of critical minerals. It also allows Volkswagen to set up a Canadian subsidiary for its new battery business.

The Mercedes-Benz agreement aims to strengthen collaboration with Canadian companies throughout the electric vehicle and battery supply chains, supporting the development of a sustainable supply chain of critical minerals.

In a separate press release, Mercedes-Benz said the deal was necessary to secure sustainable sources of raw materials.

The automaker is preparing to go all-electric by the end of the decade, “where market conditions allow”. Due to the surge in electrification of the automotive sector, Mercedes has signaled that demand will increase exponentially for specific and responsibly sourced raw materials, in particular cobalt, lithium, nickel, graphite, manganese and copper.

Canada is seen as a prime destination for European investors, with recent investments in the battery supply chain by companies such as BASF in Germany and Umicore in Belgium demonstrating a strong and growing potential for collaboration in the field of clean and automotive technologies.

Securing metal supplies

According to a report released in early August by the International Energy Agency (IEA), global battery and mineral supply chains need to grow tenfold to meet projected critical mineral needs by 2030. report concludes that industry must build 50 more lithium mines, 60 more nickel mines and 17 more cobalt mines by 2030 to meet global net carbon emissions targets.

Mercedes-Benz is exploring a strategic partnership with Roche Tech Lithium (TSXV:RCK) whose equity rose 14.5% on Tuesday to $4.02. The deal could allow the three-pointed star brand to supply its suppliers with lithium hydroxide to meet global demand for battery electric vehicles. Beginning in 2026, under this planned partnership, Rock Tech intends to supply Mercedes-Benz and its battery partners with up to 10,000 tons of lithium hydroxide per year, beginning with a period qualifying.

“To increase the mass production of electric vehicles, we need access to raw materials. With the planned partnership with Rock Tech, we are diversifying our raw material supply under a direct sourcing approach to secure lithium supply for Mercedes-Benz battery production in Europe,” said Gunnar Guethenke, Vice President of Purchasing and Suppliers at Mercedes-Benz. Quality.

“With sustainability being a central pillar of our Mercedes-Benz procurement strategy, we appreciate that Rock Tech is considering supplying Mercedes-Benz with lithium from mine sites audited to the IRMA standard and processed with renewable energy sources. “

This planned agreement marks a milestone for the supply of high-quality lithium to be processed in Germany. Through the planned strategic partnership with Rock Tech, Mercedes-Benz is expected to advance the localization of European production of state-of-the-art battery cells.

The Stuttgart-based automaker believes this initial supply agreement and other future supply partnerships will be key to helping it achieve its ambitious electrification goals.

The deals come a week after US President Joe Biden signed a plan to give tax credits to electric vehicles produced in North America, not just those built in the United States.

They also follow a series of pledged investments by other electric vehicle manufacturers in the Canadian auto industry.

More than $13 billion was pledged in just eight weeks last spring to build the necessary battery supply chains and shift production from combustion engines to plug-in vehicles. This is on top of the additional $3.5 billion pledged over the past four years, including investments in manufacturing electric school and public transit buses, producing and processing critical minerals needed to battery manufacturing and construction of research and development facilities.

James R. Rhodes