Oost NL, the provincial agency which stimulates new business in Overijssel and Gelderland, has called on Hengelo-based battery company Lithium Werks to return a €7.5m loan made to establish a new factory in Enschede.

The project, presented last September, has now been scrapped and the founder Kees Koolen has pulled out of the firm, the Financieele Dagblad reported on Tuesday.

The Enschede project would have created 1,000 jobs.

‘We invest public money to boost the local economy,’ Oost NL director Marius Prins told the FD. ‘Now there will be no campus and no headquarters, it is only logical that the cash is returned.’

The agency and Lithium Werks are due to hold talks on Tuesday, the paper said.

Koolen has also removed his company Super B from the Lithium Werks umbrella and plans to build this company up in the Netherlands himself.

‘Oost NL made a good first step but we needed a lot more money,’ he is quoted as saying by the FD. ‘US investors wanted the activities to be established closer to them. They wanted more control.’

According to a Lithium Werks statement, Koolen remains a shareholder and supporter of Lithium Werks, and ‘the two companies will continue to cooperate closely going forward’.

In October, the company Lithium Works signed a deal to build a massive battery factory in China together with Chinese firm Zheijiang Jiashan in a €1.6bn deal.