LG Chem, LG ES seal ‘preferred battery recycling partner’ deal with Li-Cycle

April 25, 2022

Original article published in Energy Storage News

Li-Cycle has been selected as preferred battery recycling partner to both LG Chem and LG Energy Solution for their North America operations.

The lithium-ion battery recycling specialist’s deal with the Korean companies includes an agreement to off-take battery manufacturing scrap to be fed into Li-Cycle’s ‘Spoke’ facilities, which shred and then process used batteries and scrap into the black mass which contains critical battery materials like nickel, manganese, cobalt and of course lithium.

Li-Cycle has two types of recycling plant – the Spokes which create the black mass from batteries and scrap and the ‘Hubs’ which then turn that black mass into battery-grade materials for reuse. The company has Spokes already in operation or under development strategically located around the US and Canada and is building a large Hub in Upstate New York.

Announced last week, the tie-up with the LG companies also marks the closing of an agreement by LG Chem and LG ES to make a US$50 million investment into the recycler, as well as confirming the pair’s 10-year supply deal to purchase recycled nickel sulphate, which Energy-Storage.news reported last December.

The LG Group companies will make a US$25 million equity investment, joining the likes of Koch Industries subsidiary Koch Strategic Platforms as a backer of Canada-headquartered Li-Cycle. KSP committed last year to investing US$100 million.

Li-Cycle listed on the NYSE in August 2021 following a special purpose acquisition company (SPAC) merger and is one of a growing number of companies eyeing both the business opportunity and sheer need for effective battery recycling value chains as demand for electric vehicles (EVs) and energy storage systems (ESS) rapidly continues to grow.

Li-Cycle CEO and co-founder Ajay Kochhar said that together the three companies have created a “milestone closed-loop ecosystem in the lithium-ion battery supply chain”.

That “interest in closed loop” across the battery industry and the industries that rely on batteries has accelerated, leading to rapid growth for Li-Cycle, chief commercial officer (CCO) Kunal Phalpher told Energy-Storage.news in an interview.

The public listing helped raise capital to fuel that growth, and Li-Cycle reported a 277% year-on-year growth in its quarterly revenues in Q1 2022, reaching US$3.8 million compared to around a million dollars in Q1 2021. It ended the first quarter of this year with US$522 million cash, largely thanks to the listing.

Battery recycling opportunity needs an all-hands-on-deck approach

Phalpher noted that while a lot of end-of-life batteries are expected to come into the market towards the latter part of this decade, manufacturing scrap of the type covered by the deals with LG Chem and LG ES will make up a lot of the feedstock for recyclers in the next three to five years.

In the long run, Phalpher said, the market for batteries and therefore recycling will grow “exponentially”. While Li-Cycle already has a number of competitors in the field in North America such as Redwood Materials and Ascend Elements, the competition is welcome, he said.

Redwood Materials CEO JB Straubel recently told a US Senate committee hearing that his company’s facility in Nevada close to the Tesla-Panasonic battery gigafactory already takes on about 6GWh of batteries for recycling each year.

Not only will the market be too large for any one company to dominate entirely, the critical need for battery materials, both recycled and newly extracted, means it is a task which requires an all-hands-on-deck approach with commitments from multiple stakeholders.

However, in terms of gaining a foothold into the market and holding onto market share, now is a “critical time to develop partnerships with the large original equipment manufacturers (OEMs) to be their recycler partner of choice,” Phalpher said.

Li-Cycle will sell an initial combined allocation of 20,000 tonnes of nickel to LG Chem and LG ES, from its Hub facility in Rochester, New York, as well as off-taking scrap bearing nickel and other lithium battery elements from the pair for its Spokes. In addition to its existing and forthcoming operations in North America, Li-Cycle is making a push to develop to facilities at at least two locations in Europe.