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The Caisse de dépôt et placement du Québec is investing $200-million in a Swedish electric-vehicle battery maker that is about to break ground on a new manufacturing plant in the greater Montreal area.

With the investment in Northvolt AB, the Caisse joins a number of other Canadian pension plans in backing the company, whose new plant has been touted by the provincial government as a key part of its strategy to make Quebec a major battery-making hub.

Construction of the $7-billion plant is expected to start by the end of the year in Saint-Basile-le-Grand and McMasterville, outside Montreal. It is designed to have an annual production capacity of as much as 60 gigawatt hours, enough for about a million EVs, with equipment for cathode active material, cells and recycled materials. The company announced in late September that it had picked the location from a number of North American options.

Northvolt, which operates a major facility in Sweden, has signed deals to supply such automakers as Volkswagen, BMW, Scania AB, Volvo Cars and Polestar. Investment Management Corp. of Ontario, the Canada Pension Plan Investment Board and the Ontario Municipal Employees Retirement System have sizable investments in the company, as does BlackRock Inc., the world’s largest asset manager.

The battery industry is a “high-interest sector” for the Caisse because it is expected to expand rapidly as the transition to lower-carbon energy accelerates over the next decade, said Kim Thomassin, the public pension plan’s executive vice-president and head of Quebec, in a statement. The investment in Northvolt is in the form of convertible debt in the parent company.

Paolo Cerruti, Northvolt’s co-founder and chief executive of its North American division, said in the statement that the Caisse was involved in the process of wooing the company to Quebec for several months.

In September, Quebec Premier François Legault said the province was seeking to lock up more deals in the battery industry, having already clinched projects representing half of the government’s $30-billion target. Among those, General Motors Co. is partnering with South Korean battery material maker Posco Chemical Co. Ltd. on a new cathode factory in Bécancour, Que., and Ford Motor Co. is working with South Korea’s EcoProBM and SK On Co. Ltd. on a $1.2-billion plant that would produce EV battery materials in that same city.

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