Toronto-based Li-Cycle gets conditional commitment for US$375-million U.S. Department of Energy loan

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The U.S. Department of Energy is providing Li-Cycle Holdings Corp. LICY-N with a US$375-million loan to help it complete North America’s first major refinery for recycling battery-grade lithium, a major step in the Toronto-based company’s growth plans, it said on Monday.

Li-Cycle plans to start operations at its US$485-million Rochester processing hub in Western New York late this year. The project, located in Greece, N.Y., a suburb of Rochester, will include a plant that will use the company’s hydrometallurgical system to process up to 35,000 tonnes of black mass – e-waste from crushed and shredded battery cells – per year, for use in new lithium-ion batteries. That is equivalent to about 18 gigawatt-hours of battery capacity.

The company said in a statement that the U.S. DOE’s Loan Programs Office has conditionally committed to the financing through its Advanced Technology Vehicles Manufacturing (ATVM) program, which provides loans for manufacturing eligible cars and trucks that meet the department’s standard of fuel efficiency, or components that go into them.

The program is being funded with US$3-billion over the next five years as part of President Joe Biden’s Inflation Reduction Act. The act’s marquee feature is US$369-billion in spending on green technology, including electric vehicles, renewable energy and building efficiency measures. It is seen as a major attraction for capital in those fields, and a competitive threat to cleantech investment in Canada, which offers less lucrative incentives.

The ATVM loan is the first for a pure-play battery materials recycling company. The U.S. DOE says it can make loans to foreign-owned or sponsored companies as long as the manufacturing takes place in the United States.

Still, it is rare for a Canadian company to win a commitment under the program, Ajay Kochhar, co-founder and chief executive officer of Li-Cycle, told The Globe and Mail. The funding shows the seven-year-old company is being recognized for leading the charge in solving the problems facing battery supply chains in both the United States and Canada, he said.

That means addressing “the need for localized supply sources of strategic battery-grade materials to further drive electrification.”

Li-Cycle shares on the New York Stock Exchange jumped 4 per cent to US$5.89 on Monday. They are up nearly a third since hitting a recent low in late December.

The project will help the United States reduce its reliance on China in the battery manufacturing field, and bolster its supply chain, Senate Majority Leader Chuck Schumer said in a statement. “Last year, I stood alongside Li-Cycle’s powerhouse work force and promised I would push to deliver federal funding to spark more growth, and now thanks to the investments I secured in the Inflation Reduction Act, Rochester will help power America’s drive to lead in battery technology,” the Democrat from New York said.

Aside from the processing plant, the 26-hectare site will include a warehouse and other facilities.

The company’s circular-economy strategy involves using its own technology to recycle battery materials, including those from electric vehicles, energy storage and consumer electronics. It has four North American supply “spokes” to feed its Rochester hub, with processing capacity of more than 50,000 tonnes of lithium-ion battery material annually, it said. They are located in Ontario, New York, Arizona and Alabama. It is also developing new supply sources in Germany and Norway.

Li-Cycle said the financing will strengthen its balance sheet and allow it to plan for future expansion of its network. Mr. Kochhar said the loan serves as validation of his company’s technologies, and its potential as a supplier to the boarder North American market.