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Li-Cycle to receive $101M investment from Glencore

Adds on to US$200-million investment in 2022 from Swiss mining giant

Battery recycler Li-Cycle Holdings Corp. (LICY-N) will receive an additional $101-million injection from Swiss miner Glencore plc, on top of a US$200-million investment from the company in 2022.

The funding is a welcome breath of fresh air for the company and its plans to dramatically scale-up battery recycling efforts after a series of financial setbacks in recent months.

The investment will see Glencore purchase a senior secured convertible note from Toronto-based Li-Cycle for $101 million. The note will mature on the fifth anniversary of closing and be convertible into common shares of Li-Cycle at an initial conversion price of US$0.53.

Li-Cycle’s stock rose over 36 per cent from market open to US$0.55 on the announcement.

“We are pleased to secure an additional ($101) million investment from Glencore, following Glencore’s June 2022 investment, to improve our liquidity position while we continue our ongoing comprehensive review process,” Ajay Kochhar, Li-Cycle’s CEO, said in Tuesday's release.

“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.”

Li-Cycle and Glencore have engaged in a strategic partnership since May 2022, with Glencore subscribing for US$200 million of convertible debt in Li-Cycle and to supply Li-Cycle with black mass and offtake the battery-grade materials from its recycling process.

Delays and project cancellations in 2023

Li-Cycle has patented a Spoke & Hub model for lithium-ion battery resource recovery. At its "Spoke” sites, batteries are recycled to produce a material called black mass that contains valuable metals such as lithium and nickel. At its "Hubs," the black mass is converted into battery-grade materials to reuse in new batteries.

Its ambitions to create an international Spoke & Hub system at a commercial scale have been held back by two blows to the company.

In October 2023, construction on its Rochester Hub, described as a “cornerstone asset” by Kochhar, was delayed due to rising costs. The facility’s costs rose from an estimated $560 million to a range of $700 million to $1 billion.

In response, Li-Cycle entered into a strategic review, taking steps such as cutting staff, extending credit terms and looking into the possibility of changing its planned strategy for the Rochester Hub.

The setback cascaded onto Li-Cycle’s other Spoke & Hub projects. The company reviewed its Spoke facilities in Norway, France and Hungary, and expansion in Germany as a result.

Li-Cycle’s plan for a recycling hub in Portovesme, Italy with partner Glencore was cancelled because the local government refused to expedite an environmental impact assessment for it, Reuters reported in November 2023. At full capacity, the Portovesme facility was expected to process 50,000 to 70,000 tonnes of black mass and begin construction in late 2026 to early 2027.

Glencore said it would continue to pursue plans for a battery recycling facility in Portovesme while building a pilot recycling project outside of Italy.

Following the setback in Rochester, Li-Cycle’s special committee and financial advisor Moelis & Company reviewed its options, and this new agreement with Glencore is the latest result of that process, the release says.

Li-Cycle’s plans

After a difficult 2023, Li-Cycle will review its strategy for the Rochester Hub by examining potential end-product mix options and construction strategy, the company’s executive chairman Tim Johnston said in the release.

“We believe the demand for critical battery materials continues to accelerate and Li-Cycle continues to work to position itself as a future leader in the production of critical battery materials through our sustainable, safe, and patented recycling technology,” he added.

Kochhar said Li-Cycle will continue to work with the United States Department of Energy in an effort to secure its US$375-million loan.

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