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Li-Cycle pauses work on Rochester Hub, shares drop

Announces review on New York project due to rising construction costs

Li-Cycle is is pausing construction on its Rochester Hub due to escalating construction costs. (Courtesy Li-Cycle Holdings Corp.)

Li-Cycle Holdings Corp. (LICY-N) announced it is pausing construction on its Rochester, N.Y. battery recycling facility, citing the strain of a rising budget.

In a release Monday morning, Li-Cycle said the Rochester Hub has faced elevated construction costs, which led the company to anticipate the project will exceed its previously disclosed guidance.

As a result, the company’s board of directors ordered construction to pause, pending “an evaluation of the go-forward phasing of its scope and budget, including construction strategy.”

The company reports engineering and procurement for the project are largely complete.

The Toronto-headquartered lithium-ion battery recycler says its Rochester Hub is to become the first commercial hydrometallurgical resource recovery facility in North America. It would receive materials including "black mass" from the company's regional network of smaller Spoke facilities for final processing and recycling.

Li-Cycle shares were down over 40 per cent in Monday morning trading, following news of the announcement.

About the Rochester Hub

Called a “cornerstone asset” by Li-Cycle CEO and president Ajay Kochhar, the facility is to have a processing capacity of up to 35,000 tonnes of black mass per year – equal to approximately 90,000 tonnes of lithium-ion battery material.

Annual production of up to 8,500 tonnes of lithium carbonate, 48,000 tonnes of nickel sulphate and 7,500 tonnes of cobalt sulphate is also projected.

The company claims its recycling process can recover up to 95 per cent of the waste materials from used lithium-ion batteries and cut carbon dioxide emissions by up to 67 per cent compared to traditional mining and refining.

“The main purpose of our black mass production is to utilize it as feedstock for Hubs, which produce lithium cobalt and nickel products, unlocking significant incremental value. The sale of black mass is an interim strategy in the lead-up to the start of operations at our Hubs,” Debbie Simpson, Li-Cycle’s chief financial officer, said during an investor call in August 2023.

“The operationalization of a Rochester Hub will represent a significant inflection point in Li-Cycle’s revenue and financial profile,” Simpson added at the time.

Li-Cycle said approximately 270 new permanent jobs would be created by the facility, and up to 1,000 construction jobs.

A price estimate for the Rochester Hub publicized in February 2023 was US$486 million. Commissioning was anticipated for late 2023.

To fund the Rochester Hub, the U.S. Department of Energy offered Li-Cycle a US$375 million loan commitment through its Advanced Technology Vehicles Manufacturing program.

Li-Cycle said it will continue to work closely with the U.S. federal agency on the loan commitment in conjunction with the project review.

Global Spokes and Hubs

Li-Cycle has plans for a network of facilities across the world as part of its Spoke and Hub model.

Its first European Spoke facility in Magdeburg, Germany started operations this year. Its Portovesme, Italy Hub facility is expected to commence construction in late 2026 to early 2027.

Li-Cycle said updates on its near-term plans and project review process will be revealed alongside its Q3 financial results on Nov. 13, 2023.

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