Glencore fills financing gap for battery recycling partner Li-Cycle

Li-Cycle is bridging an awkward phase with 75 million dollars from its partner Glencore in the form of a convertible bond. The lender can therefore exercise the option to exchange its bond for shares in Li-Cycle at a fixed price. Converted, this is a cash injection worth 68.7 million euros.

“We are pleased to secure an additional $75 million investment from Glencore, following Glencore’s June 2022 investment, to improve our liquidity position while we continue our ongoing comprehensive review process,” said Ajay Kochhar, CEO of Li-Cycle Holdings.

Glencore entered into a strategic partnership with Li-Cycle in 2022 and has already invested 200 million dollars in the Canadian battery recycling company. Li-Cycle relies on a two-stage process with “spokes” and “hubs”. The factories called “spokes” receive the used or faulty batteries that are mechanically shredded into what is called black mass. In the second stage, which takes place in the “hubs”, the black mass is further processed, separating it into new raw materials.

The bottleneck at Li-Cycle became apparent in November when the company announced that it was suspending construction work on its first plant in Rochester, New York, where a spoke plant is already running. The temporary halt in construction work only affects the hub plant, but without a hub in North America, Li-Cycle cannot process the black mass from the spokes into valuable new raw materials.

Li-Cycle said this was due to increased construction costs, stating that it wanted to “examine financing and strategic alternatives”. Due to these delays in the construction of the recycling plant, the disbursement of a loan of 375 million dollars from the US government that was announced around a year ago was, in turn, postponed.

After what LiCycle says has been a “careful review and assessment of the alternatives” LiCycle entered into a new agreement with Glencore that has now closed this financing gap.

Tim Johnston, Li-Cycle co-founder and Executive Chairman, explained: “As part of our previously announced comprehensive review, Li-Cycle is continuing to review our global recycling network. We are also reviewing our go-forward strategy for the paused Rochester Hub, including analyzing potential end-product mix options and construction strategy.”

Ajay Kochhar, Li-Cycle co-founder and CEO, said the additional $75 million investment from Glencore improves Li-Cycle’s liquidity during its “ongoing comprehensive review process.” He said, “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.” At the same time, he explained that Li-Cylce continues “..to work closely with the U.S. Department of Energy on the conditional commitment for a loan of up to $375 million.”

Li-Cycle announced the hub plant in Rochester, USA, in September 2020 and was planning to see the start of operations in 2022. It was later announced that it would first go into operation before the end of 2023 – the same date that was mentioned for European operations around the time of the opening of the Spoke facility in Magdeburg, Germany. A hub is planned for Europe in cooperation with Glencore in Portovesme on the island of Sardinia, Italy.

handelsblatt.com (in German), reuters.com, li-cycle.com