In the News

February 19, 2021

Li-Cycle rides excitement around surging EV sales with SPAC merger

Li-Cycle says it has devised a new more efficient way to recycle batteries that emits less carbon and produces zero wastewater

Original article published in Financial Post
Li-Cycle employees feed lithium-ion batteries into the shredder at the company's Kingston, Ont. facility.
Li-Cycle employees feed lithium-ion batteries into the shredder at the company’s Kingston, Ont. facility. PHOTO BY LI-CYCLE

That explosive growth speaks to growing momentum of the electric vehicle market, especially in the past year. Earlier this month, Citigroup analysts released a report that found electric vehicle sales in Europe shot up from less than 50,000 in January 2019 to roughly 250,000 in December 2020.

China experienced a similar trend, where electric vehicle sales rose from around 50,000 in March 2019 to 200,000 in December 2020.

While sales in both markets were juiced by government incentives, including “generous” ones in Europe, the report notes that electric vehicles cut against “the prevailing zeitgeist” over the last decade in which automakers have profited by selling “larger and more powerful” vehicles.

“With consumer and auto OEM demand for (battery-powered electric vehicles) reliant on incentives, the development of the industry is reliant upon the supply chain to find cost efficiencies and technological improvements,” the report states. “This in theory means battery cell suppliers and chemical companies should generate higher returns” than the automakers.

In other words, there is rising investor sentiment towards companies such as Li-Cycle that are producing innovative ways to reshape the supply chain. Its competitors include Redwood Material Inc., a Nevada-based company founded by a former Tesla Inc. executive, which counts Inc. as an investor, and also other companies.

In Canada, the excitement around battery recycling has drawn in Toronto-based First Cobalt Corp., which has been working on plans to open a cobalt refinery in Ontario. On Wednesday, it said it would commission a study on whether it makes sense to also open a secondary line of business recycling batteries.

A rechargeable battery in a Volkswagen.
A rechargeable battery in a Volkswagen. PHOTO BY RONNY HARTMANN/AFP VIA GETTY IMAGES FILES

Trent Mell, chief executive of the company, said the idea was spurred in part by the fact that his existing facilities are hooked up to clean hydroelectric power, rather than natural gas, or even coal power, providing a potential competitive advantage over other recyclers.

Automakers, he said, “have to measure their environmental footprint all the way up the chain.”

Still, his company remains behind a company such as Li-Cycle, which has spent the past few years developing and patenting its recycling method, and also striking contracts with about 40 customers including 14 automakers and battery makers. It currently operates two facilities that shred 5,000 tonnes of battery material per year, located in Kingston, Ont., and in Rochester, New York.

Li-Cycle plans to operate 20 such centers by 2025, and also to open a ‘hub’ facility in Rochester that can further break down 60,000 equivalent tonnes of shredded battery material into its constituent metals.

The company already has an offtake agreement for cobalt and nickel with the global metal trader Traxys S.A., an important validation of their technology.

Kochhar acknowledged that demand for the battery metals in electric vehicles is likely to be “chunky,” with supply deficits followed by periods of oversupply.

But his dream is that in a few decades, the number of electric vehicles on the road that have reached the end of their life will provide enough feedstock for recycling operations that the need to mine new lithium, cobalt and other metals will start to taper off.

“With this whole supply chain changing like it’s never been done before, we have to think of things we’ve never done before,” he said, adding it’s a lot more efficient to get these materials from “above the ground.”