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The federal government is trying to entice Canadian pensions to finance the building of dozens of electric battery plants and lease them back to the automotive industry.
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François-Philippe Champagne, the minister of innovation, science and industry, said the proposal would be a win for industry and for the retirement plans because it would speed up the building of plants to service growing demand for electric cars while providing stable returns to pensions.
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Speaking at the Bloomberg Canadian Finance Conference on Thursday, Champagne said pairing institutional investors with large production facilities is not without precedent — citing Brookfield Infrastructure Partners L.P.’s agreement with Intel Corp. last month to jointly fund Intel’s under-construction semiconductor fabrication facility in Arizona.
It would also help clear a “bottleneck” by accelerating construction of production facilities to process critical minerals that are abundant in Canada such as lithium nickel, cobalt, manganese and graphite, he said.
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“I think we can be creative in financing these assets and providing stable returns to these pension funds and at the same time ensuring access to these critical minerals in a jurisdiction of choice,” Champagne said.
Michel Leduc, senior managing director and global head of public affairs at the Canada Pension Plan Investment Board, said he isn’t aware of any current talks specifically about electric battery plants but he “can’t see why it wouldn’t be interesting to explore.”
The sub-sector and theme of electric vehicles and critical minerals would be “on target” for Canada’s largest pension, he said.
What’s more “the model isn’t entirely foreign” to CPPIB, which has experience with buying intellectual property rights in the pharmaceutical sector in exchange for a share of royalty payments.
“Not the same, yet a relatable model,” Leduc said.
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