Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Lithium-ion battery resource recovery company Li-Cycle (NYSE: LICY) announced Tuesday it has raised $75 million through a senior note financing with an affiliate of Swiss commodities giant Glencore (LON: GLEN).
Glencore last year said it planned to develop a recycling hub in Europe with Li-Cycle to produce materials including lithium carbonate in response to a global shortage of key raw materials for the fast-growing electric vehicle (EV) market.
This not the first investment Glencore made in Li-Cycle. In June 2022, it invested $200 million in the Canadian-based battery recycling firm. Li-Cycle’s CEO Ajay Kochhar said at the time that the agreement 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 EVs 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.
“This financing enhances Li-Cycle and Glencore’s existing long-term, strategic partnership and represents an interim step in our funding strategy to support Li-Cycle’s future plans,” Kochhar said in a news release. “We also continue to work closely with the US Department of Energy on the conditional commitment for a loan of up to $375 million.”
Li-Cycle said it is continuing to review its global recycling network and its go-forward strategy for the paused Rochester Hub in the US, including analyzing potential end-product mix options and construction strategy.
“Glencore is committed to bringing scalable and sustainable circularity into the supply chain of battery materials,” Kunal Sinha, Glencore’s global head of recycling and non-executive director of Li-Cycle’s board, said in the statement.
“Our original investment in Li-Cycle, alongside key commercial agreements, formed part of this strategy. Today, we are pleased to further support Li-Cycle through this additional $75 million investment so both Li-Cycle and Glencore can continue to build the battery circularity platform of choice for our customers.”
Li-Cycle’s stock surged over 38% in Tuesday’s afternoon trading in New York. By 2 p.m. EDT, the shares had traded at a volume of 51.6 million, compared to an average daily volume of 3.3 million. The company has a $97.8 million market capitalization.
