Li-Cycle and Glencore have announced a strategic partnership that will provide customers with an integrated approach for both primary and recycled metal needs. As part of this partnership. This is in addition to another partnership announced earlier in May.
The two companies executed a global feedstock supply agreement in which Glencore will supply all types of manufacturing scrap and end-of-life lithium-ion batteries to Li-Cycle. The two have also entered into a non-binding Term Sheet for global, long-term strategic contracts. The agreement will complement Li-Cycle’s existing offtake and marketing agreements. These include:
- 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 commercial agreements are executed, Glencore will invest $200 million in Li-Cycle and will have the right to nominate one board member to the Li-Cycle board of directors. That board member is Kunal Sinha, Glencore’s Head of Recycling.
Li-Cycle Co-Founder Ajay Kochhar shared his thoughts about the partnership in the following statement:
“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 expansion network in North America and Europe.”
Sinha also shared his thoughts on working with Li-Cycle:
“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 how the $200 million investment by Glencore will help 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.”
Glencore is purchasing a $200 million convertible note which will mature on the fifth anniversary of closing. It will also have an initial conversion price of $9.95 per Li-Cycle common share. Li-Cycle will pay interest on the note at its election in either cash or payments in kind.
Glencore has also committed to a standstill agreement and granted Li-Cycle certain registration rights to Glencore, which, if it decided to convert during the conversion option period, would hold around a 10% equity stake in Li-Cycle. This is based on the current number of outstanding common shares.
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