The mining company Glencore which is one of the world's largest producers of copper, nickel and cobalt has agreed to invest $200M in the Canadian battery recycler Li-Cycle while the partners will work together to source and process recycled batteries.
Under the agreement Glencore and Li-Cycle will trade materials in both directions. According to the companies Glencore will:
Supply all types of manufacturing scrap and end-of-life lithium-ion batteries to Li-Cycle
Supply black mass to Li-Cycle's material recovery plants
Source black mass from Li-Cycle's pre-processing plants
Source battery grade end products produced by Li-Cycle
Source by-products from Li-Cycle
Supply sulfuric acid to Li-Cycle
Glencore will also make a $200M investment in Li-Cycle through a convertible 5 years note with a conversion price of $9.95 per share which, with the current numbers of outstanding shares, will give a Glencore a 10% ownership in Li-Cycle. The interest on the note, which can be paid in cash or in kind, may be anything from 6% to 8% depending on its repayment and Fed's rate. Glencore will also have the right to nominate one board member to the Li-Cycle board and Li-Cycle has agreed to nominate Kunal Sinha, Glencore’s Head of Recycling.
Glencore is already today one of the world's largest recyclers of lithium-ion batteries through its smelter in Sudbury, Ontario in Canada. Here black mass from both European and American pre-processors have been mingled with primary feedstock and turned into a intermediary matte which has been further processed in Kristiansand, Norway into cobalt and nickel metals. The company, which also owns the UK-based lead smelter Britannia has recently invested in the battery-startup Britishvolt through which it plan to feed production scrap to Britannia in Kent while jointly working on aggregating end-of-life batteries. Glencore also recently announced that it aims to enter into a tolling agreement with Morocco-based Managem for hydrometallurgical processing or recycled materials.
In the announcement of the investment in Li-Cycle Glencore also states that it works to assess the feasibility of utilising existing assets in Europe with a view towards re-purposing some of them to further strengthen its recycling footprint. Glencore will also explore, together with other appropriate supply chain partners, the production of precursors for lithium-ion batteries in Europe and potentially North America. Such a move would take Glencore a step further up in the battery value chain to a position where also recycling makes most sense. As a precursor producer with recycling capabilities, a model which is championed by Chinese manufacturers, a player can produce a high value product using multiple types of feedstock.
Li-Cycle said in its latest earnings call that it is on track to produce 6,500-7,500 tonnes of black mass within its current financial year ending in October 2022. With the latest average price for black mass communicated by Li-Cycle, $3.80 per kg, that equates to $28.5M, which is a about double the amount of the annual in-kind interest of the Glencore convertible note.
The investment by Glencore comes after LG Chem and LG Energy Solutions agreed to invest $50M in Li-Cycle as a part of 10-year recycling partnership for processing of production scrap in North America. Through the agreement Li-Cycle will have the opportunity to recycle nickel-bearing lithium-ion battery scrap and other lithium-ion battery material from LGES’s North America manufacturing sites. Additionally, under a 10-year nickel sulphate off-take agreements with each of LGC and LGES, Li-Cycle will sell a combined initial allocation of 20,000 tonnes of nickel contained in nickel sulphate produced at Li-Cycle’s material recovery facility currently under construction in Rochester, New York to LGC and LGES, through its off-take partner, Traxys North America LLC.
Whether Traxys has a role in the agreement with Glencore has not been stated in the company's communication.