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Battery recycler Li-Cycle gets US$375 million loan commitment from US Department of Energy

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The US Department of Energy’s Loan Programs Office (LPO) has announced a US$375 million loan to lithium-ion recycling firm Li-Cycle to finance its material recovery facility in Rochester, New York.

The money will go towards the construction of the facility and help Li-Cycle expand its operations. It is set to partially start operations in 2023 and ramp up over the coming years. The loan is expected to close in Q2 2023 and will have a 12-year term at US Treasury Rates.

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The Rochester facility use hydrometallurgical recycling to process black mass – shredded material containing all the important metals from a battery – received from the firm’s existing spoke locations which are already processing used lithium-ion battery packs. From the black mass it will extract the crucial metals like lithium, nickel and cobalt needed to produce lithium-ion batteries for, once fully operational, 203,000 EVs a year. Li-Cycle did not provide a timeline when announcing the loan commitment about when exactly when that will be.

Ajay Kochhar, Li-Cycle CEO said: “The Rochester Hub is a cornerstone asset for Li-Cycle and its stakeholders and will be an important contributor to the clean energy economy. As a sustainable pure-play battery material recycling company, we expect the Rochester Hub will position Li-Cycle as a leading domestic producer of recycled battery-grade materials for accelerating electrification demand to address climate change and secure energy independence.”

Until the Rochester hub opens, the firm is selling its black mass on the open market which exposes it to metals price volatility. This was the main driver behind a 32% fall in revenue in the three months to October 31, 2022. The company went public through a SPAC merger in late 2021.

With the electrification of transport and wider society the amount of used lithium-ion batteries is set to grow substantially (though some argue that for EV batteries’ re-use in stationary energy storage, known as second life energy storage, is a better first option than recycling).

Li-Cycle’s projects also score a double-win in fulfilling the US’ desire to foster a domestic lithium-ion battery supply chain.

The LPO is a big part of that push and recently had its loan mandate expanded from US$60 billion to US$100 billion as part of the Inflation Reduction Act.

It is the second high-profile loan the body has given to a lithium-ion recycling firm after Redwood Materials’ US$2 billion for its closed-loop anode and cathode plant in Nevada.

Recent recipients from elsewhere in the lithium-ion battery supply chain include ICL for its LFP cathode material plant and the Rholite Ridge lithium carbonate processing project as well as Ultium Cells – a JV between General Motors and LG Energy Solution – which is building three lithium-ion gigafactories.

Looking more downstream and outside lithium-ion, cold energy storage solutions firm Nostromo is in the process of raising equity as one of the final steps in securing a loan guarantee from the LPO.

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