Li-Cycle and Glencore have announced a long-term battery supply agreement to better serve the EV battery supply chain. The agreement is a global feedstock supply agreement. Glencore will supply a wide variety of manufacturing scrap as well as end-of-life lithium-ion batteries to Li-Cycle. The two companies also entered into a non-binding Term Sheet for global and long-term strategic contracts. Li-Cycle noted that it would complement its existing off-take and marketing agreement, which includes:
- Supply of black mass to Li-Cycle’s Hubs
- Off-take of black mass from Li-Cycle’s Spokes
- Off-take of battery-grade end products produced by Li-Cycle’s Hubs
- Off-take of by-products from Li-Cycle’s Spokes and Hubs, and
- Supply of sulfuric acid, one of the key input reagents for Li-Cycle’s Hubs.
Once the companies execute the commercial agreements, Glencore will invest $200 million in L-Cycle and have the right to nominate one board member to Li-Cycle’s board. In light of this, Li-Cycle has agreed to nominate Glencore’s Head of Recycling, Kunal Sinha, to its board.
Ajay Kochhar, Li-Cycle Co-Founder and Chief Executive Officer, said:
“We are thrilled to have Glencore as a long-term strategic investor and global commercial partner. Bringing our complementary capabilities together will accelerate the path to a circular economy for critical materials in the lithium-ion battery supply chain.
“These agreements further secure and diversify our lithium-ion battery supply and feedstock sources, competitively positioning our network expansion in North America and Europe.”
Sinha also gave a statement and pointed out that Li-Cycle is Glencore’s preferred global partner in the battery recycling industry.
“As we continue to add to our recycling infrastructure of critical battery materials, we are pleased to work with Li-Cycle as a preferred global partner in the lithium-ion battery recycling space.
“This is a key step in establishing a strong long-term foundation for the vertical integration of the battery materials supply chain. Together, we will be expanding the spectrum of battery material supply solutions to a broader global customer base, particularly in Europe and North America.”
Li-Cycle’s Chief Financial Officer, Debbie Simpson, shared details on how the $200 million investment will impact the company.
“The $200 million investment by Glencore will enhance Li-Cycle’s already strong balance sheet and will provide us with total cash greater than our anticipated capital needs for the completion of the Rochester Hub and the five Spokes currently in development and our operating needs for the next two years. Once completed, the Glencore investment, together with the previously announced investments by LG Chem, Ltd. and LG Energy Solution, Ltd. and the investment made by an affiliate of Koch Strategic Platforms, will bring the total new capital we have raised since our August 2021 NYSE listing from key strategic global players in the battery material industry to $350 million.”
The two companies shared a bit more details about the investment itself. Glencore will buy a convertible note in the aggregate principal amount of $200 million (the Note). Upon the fifth anniversary of closing and with an initial conversion price of $9.95 per Li-Cycle common share, the Note will mature. Li-Cycle will then have to pay interest on the Note in either cash or payments in-kind. In addition to the partnership and the investment, Glencore committed to a standstill agreement and Li-Cycle has given certain registration rights to Glencore. If Glencore decided to, it would be able to hold around a 10% equity stake in Li-Cycle.
Last month, I interviewed Li-Cycle’s Chief Strategy Officer, Kunal Phalpher, who shared a bit about the progress of the company in terms of goals and expansion. We talked about battery recycling for all items — not just EV batteries — and the progress of the company’s Spokes, which are the battery recycling facilities it’s building to process recycled lithium-ion batteries.
One thing that Kunal shared that stood out was the importance of sharing awareness with consumers that lithium-ion battery recycling companies do exist — for all of their devices, not just EVs.
“I think it’s important to understand that recycling is happening today with lithium-ion batteries. There is a solution for it whether it’s EVs or your cell phone. And we want to encourage consumers to make sure they are asking the right questions to ensure devices and materials to get back to recyclers like ourselves.”
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