Energy Plug CEO Broderick Gunning stands outside the company's office in Vancouver, on Aug. 27. The company is partnering with the Malahat Nation on a facility to assemble lithium iron phosphate battery storage packs for power grid, commercial and residential uses.Tijana Martin/The Globe and Mail
Malahat Nation and Energy Plug Technologies Corp. PLUG-CN are launching construction on a $57-million battery assembly factory on Vancouver Island, a venture the First Nation hopes will provide it with a new economic base and jobs.
The partners on Wednesday will commemorate the start of the project with a land blessing led by Malahat elder May Sam at the site, on the western side of the Saanich Inlet north of Victoria.
The project, announced early this year, includes a facility on reserve land to assemble, initially, lithium iron phosphate battery storage packs for power grid, commercial and residential uses. The partners call it the world’s first Indigenous-led gigafactory.
“It’s one of the emerging opportunities that can provide benefits in the realm of people, planet and profit, which has definitely been the focus of Malahat’s economic development efforts,” said Tristan Gale, the nation’s director of economic development.
Under the plan, Malahat and Vancouver-based Energy Plug will import many of the components from Taiwan to be assembled at the 5,200-square-metre facility, scheduled to be completed by the end of 2025. The factory is expected to create 210 jobs, and Mr. Gale said qualified Malahat members will be given preferential hiring consideration.
It is the latest in a list of battery manufacturing projects in Canada, though the bulk of those are multibillion-dollar ventures proposed by major U.S., European and Japanese companies and aimed at the nascent Canadian electric-vehicle sector. This factory’s products are aimed at bolstering reliability of power grids and industrial electricity storage.
The nation is kicking in $24-million and will own 51 per cent of the venture. The partners have signed memoranda of understanding with Johnson Controls and Siemens Canada to provide engineering and financial services as well as equipment.
They are also in talks with officials at the Canada Growth Fund and with the British Columbia government for additional funding for the venture, said Broderick Gunning, Energy Plug’s chief executive officer.
Energy Plug sought Indigenous partners last year when devising the strategy to tap a quickly expanding market for energy storage, he said. The Malahat are closely aligned with the company’s vision of combining environmental stewardship with an entrepreneurial approach, Mr. Gunning said.
The nation also has a large business park on its lands suited for the factory, he said.
“We met Malahat’s team and council, and they’re very sophisticated. They shared a very similar philosophy of not only what we were envisioning, but with our ties to the Southeast Asia supply chain. It was very strategic to be positioned in that location,” Mr. Gunning said.
For the Malahat, the battery industry represents a chance to shift from being one of the most indebted First Nations in Canada to one with new potential, Mr. Gale said. The community was left with its debt burden after securing lands for the proposed Steelhead liquefied natural gas project. In 2017, Steelhead LNG scrapped plans for a project in that location.
Besides battery assembly, the partners plan on developing software and collaborating with their Taiwanese partner on developing new battery designs.
Energy Plug has been focused on the Canadian market, but Mr. Gunning said his recent discussions with U.S.-based companies have shown a demand there for products that do not originate in mainland China and won’t be subject to heavy tariffs.
The partners are watching increasing trade friction closely. This week, Ottawa announced 100-per-cent tariffs on Chinese EVs. The U.S. in May imposed tariffs on a broader range of Chinese products, including solar cells, computer chips and lithium ion batteries.
Canada said it isn’t following suit yet on all those products because of supply chain implications. However, the Finance Department announced Monday it is launching a new round of consultations to determine if tariffs on products such as batteries and semi-conductors are warranted.
“I think what government is looking to do is have a lot of near-shoring be done in Canada and the U.S. for battery cells in particular. But the industry just hasn’t caught up yet and we won’t see such facilities ready until 2027 or 2028,” Mr. Gunning said. “So, you’ve got this window here with a lot of groups looking for other such jurisdictions.”