Huge investments on battery recycling

Huge investments on battery recycling
Mining News Pro - Glencore (LSE: GLEN) has inked a deal with Toronto-based Li-Cycle Holdings (NYSE: LICY) to supply the company with all types of manufacturing scrap and end-of-life lithium-ion batteries.

According to Mining News Pro - The company will also invest $200 million in Li-Cycle once the agreement is executed, which would give it the right to nominate its head of recycling, Kunal Sinha, on to Li-Cycle’s board. The deal is expected to close in the third quarter of 2022. 

“This is a key step in establishing a strong long-term foundation for the vertical integration of the battery materials supply chain,” Sinha said in a press release. “Together, we will be expanding the spectrum of battery material supply solutions to a broader global customer base, particularly in Europe and North America.”

Li-Cycle’s CEO Ajay Kochhar said that the agreements would “further secure and diversify” the company’s lithium-ion battery supply and feedstock sources and help improve its position in North America and Europe.  

The demand for lithium-ion batteries, used in electric vehicles (EV), has been on the rise, as the world looks to meet its goal of transitioning away from fossil fuels by 2050. The recycling of lithium-ion batteries, however, is not expected to take off before 2030 due to obstacles such as the lack of recyclable feedstock and the long life of EVs, according to Wood Mackenzie.  

Hub and spoke model

Li-Cycle follows a hub and spoke recycling strategy.  Spent batteries and scraps are processed to produce a powder-like substance called black mass, that contains metals like nickel, cobalt and lithium in its spokes and hubs are where the black mass is processed to produce critical battery materials like lithium carbonate, nickel sulphate and cobalt sulphate.  

Currently, the Canadian company has two operational “spokes” in Kingston, Ontario, and Rochester, New York. It expects to add spokes in Arizona and Alabama later this year.  

It is also in the process of constructing a “hub” in Rochester. According to a feasibility study completed in December, the Rochester Hub will have the nameplate input capacity to process 35,000 tonnes of black mass annually, which is equivalent to about 90,000 tonnes of lithium-ion battery feed every year. The hub will process enough battery material for about 225,000 electric vehicles per year, it says.

“The $200 million investment by Glencore… will provide us with total cash greater than our anticipated capital needs for the completion of the Rochester Hub and the five Spokes currently in development,” said Debbie Simpson, Li-Cycle’s chief financial officer.

Earlier this month Glencore agreed to purchase nickel and cobalt products for a year from a battery recycling plant that’s poised to go online in 2023 – Electra Battery Materials’ (TSXV: ELBM; US-OTC: ELBMF) Battery Materials Park project situated in Cobalt, Ontario.  

The company says it has been working to establish regional platforms across the world to localize battery raw material supply chains within key regions in a scalable and sustainable manner.  

Shares of Li-Cycle were trading last at C$7.62, up 43¢ or 5.9%. The company has 169.1 million common shares outstanding for a market cap of C$1.2 billion ($930m). 

Biden Administration Makes $3.1B Push to Expand US Battery Production

The U.S. Dept. of Energy on May 2 announced $3.1 billion in grants for battery and component production to support building new U.S. facilities, and expanding or retrofitting existing ones. Separately, the administration is also earmarking $60 million toward electric vehicle battery recycling and reuse.

The funds are part of a Biden administration push to achieve energy independence, as well as reach a 2030 goal for electric vehicles to comprise half of all vehicles sold in the country, a complement to other recently announced funding infusions for efforts including increasing U.S. mining and development of critical minerals such as lithium, a crucial EV battery component.

The funds come from the new federal infrastructure investment law, which includes more than $7 billion marked for battery-supply-chain related investments between fiscal 2022 and fiscal 2026. Awards will cover both demonstration and commercial facility projects focusing on production of battery materials, component parts and battery cell manufacturing and recycling.  The U.S. shortfall was outlined in a recent Senate hearing.

DOE expects to grant between 17 and 34 awards, each ranging between $50 million and $400 million.

“Positioning the United States front and center in meeting the growing demand for advanced batteries is how we boost our competitiveness and electrify our transportation system,” said U.S. Secretary of Energy Jennifer M. Granholm in a statement, adding that the move will “give our domestic supply chain the jolt it needs to become more secure and less reliant on other nations.”

In May 5 testimony before the Senate Environment and Public Works Committee, Granholm tied the cost and stability of battery production to EV affordability, saying, “if you want to bring down price of an EV vehicle, you need to bring down the price of a battery and control inputs for it.” She said she was hopeful Congress will expand tax credits for EV vehicle purchases, but said there is no Biden administration 2023 budget item for EV vehicle credits.

DOE anticipates EV and battery demand to increase market growth by a factor of between five and ten by 2030, with an already strained U.S. supply heavily reliant on China for most of the battery production cycle—including materials, components and battery manufacturing, according to a February 2022 agency report on the energy storage supply chain. “Even end-of-life (EOL) recycling and reuse processing is dominated by other countries, and most used batteries collected in the United States today are exported,” it states.

The U.S. currently has 13% of global lithium-ion battery cell manufacturing capacity, compared to China's 80% share, and planned U.S. capacity is even lower, with domestic factories comprising just 10% of global manufacturing plants that are planned or under construction.

Letters of intent for funding are due May 27, and completed applications by July 1.

DOE will consider a project's alignment with Justice40 environmental justice initiatives and job opportunities and benefits for low income and disadvantaged communities in assessing applications.

The administration expects to notify winners by October, and negotiate awards between then and April 2023.

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