Li-Cycle and LG enter into recycling and nickel agreement

The Canadian battery recycler Li-Cycle has concluded a still non-binding memorandum of understanding with South Korea’s LG Chem and its battery division LG Energy Solution for the supply of scrap from battery production and complete lithium-ion batteries for recycling as well as for the purchase of nickel.

++ This article has been updated. Please continue reading below. ++

Upon completion of the final agreement, LGC and LGES will make a combined investment of US$50 million (44.3 million euros) in Li-Cycle. Specifically, Li-Cycle will recycle battery materials from LG Energy Solution and supply LG Chem and LG Energy Solution with 20,000 tonnes of nickel over ten years starting in 2023 – enough for approximately 300,000 electric vehicles.

LG Chem and LGES will split the investment exactly 50/50, whereby Li-Cycle has already announced where some of the money will go: The first battery recycling plant in the US, which is currently under construction, will be expanded by more than 40 per cent. The plant in Rochester in the US state of New York will now be designed for a processing capacity of 35,000 tonnes of ‘black mass’ per year. Li-Cycle says that this should enable the plant to process battery material equivalent to about 225,000 electric vehicles per year.

In total, the company estimates that the Rochester recycling hub will require $485 million in capital expenditure, with the addition of +/- 15 per cent. This should be able to be financed from existing cash on the balance sheet. However, Li-Cycle itself expects to “explore various options to optimise its capital structure, such as potential loans from government-related institutions”.

The hub in Rochester occupies a central role in Li-Cycle’s structure: The company has already announced four ‘spoke’ plants. These spokes process the spent batteries and scrap from battery manufacturing into the black mass. This black mass is then transported to the hub and processed there. So in the ‘Spoke’ plants – such as ‘Spoke 4’ in Tuscaloosa near the Daimler plant – only the crushing and sorting takes place, while the recycling of the valuable battery materials is carried out in Rochester.

“Sustainable recycling for lithium-ion batteries is critical to the electrification revolution,” says Byungchul Choi, LGC battery materials development department manager. “Li-Cycle is making economically and environmentally sustainable lithium-ion battery recycling a commercial reality through its innovative technologies.”

“This proposed commercial arrangement with LGES and LGC and related strategic investment further enhance our global growth strategy as we continue to scale our safe, efficient, and sustainable lithium-ion recycling technologies,” said Ajay Kochhar, co-founder and CEO of Li-Cycle.

The cooperation with LG Chem and LGES is not the first contact with the South Korean group for Li-Cycle: Already in May, a recycling agreement was concluded with Ultium Cells, the joint venture of General Motors and LGES.

Update 24 April 2022

Following the earlier MoU, as described above, Li-Cycle and LG Chem have now finalised the deal. LG’s battery division LG Energy Solution will supply the Canadian company with battery manufacturing scrap and complete lithium-ion batteries for recycling and nickel. This makes Li-Cycle officially the preferred recycling partner of LG Energy Solution and LG Chem for lithium-ion batteries in North America.

Li-Cycle will recycle nickel-bearing lithium-ion battery scrap and other lithium-ion battery material from LGES’s North American manufacturing sites.

Additionally, under the 10-year Nickel Sulphate Off-Take Agreements, Li-Cycle expects to sell 20,000 tonnes of nickel contained in nickel sulphate produced at Li-Cycle’s Hub facility currently under construction in Rochester, New York to LGC and LGES. This should enable the two Korean companies to build batteries for around 300,000 high-performance electric cars. The final agreement also clears the way for a $50 million investment by LGC and LGES in Li-Cycle.

“We’re thrilled to advance our collaboration with LGC and LGES, two global industry leaders in the EV supply chain,” said Ajay Kochhar, co-founder and Chief Executive Officer of Li-Cycle. “Together, we are driving sustainable global electrification through the creation of this milestone closed-loop ecosystem in the lithium-ion battery supply chain.”

The partnership will enable a closed-loop ecosystem for LGC and LGES for critical materials in the lithium-ion battery supply chain. It will provide additional capital to Li-Cycle for its continued global expansion, so the partners.

Li-Cycle is publicly listed on the New York Stock Exchange as “LICY”.

In January, they announced plans to build a second recycling factory, this time in Norway. (combined announcement), (Li-Cycle announcement), (update April ’22)


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