Battery Recycler Li-Cycle Secures US$75 Million Investment from Glencore

In a move toward making battery production more sustainable, Swiss mining conglomerate Glencore (LSE:GLEN,OTC Pink:GLCNF) has announced a US$75 million investment in Li-Cycle Holdings (NYSE:LICY).

The investment underscores Glencore's commitment to promoting circularity within the battery materials space and further solidifies its partnership with Li-Cycle, a lithium-ion battery resource recovery company.

Glencore made an initial US$200 million investment in Li-Cycle in June 2022, designating the company as one of its preferred recycling partners and laying the foundation for a long-term partnership.

This week's agreement amends the convertible note that Glencore purchased from Li-Cycle at that time.

Under the new deal, Glencore will purchase a senior secured convertible note from Li-Cycle with an aggregate principal amount of US$75 million. It is structured to mature on the fifth anniversary of the closing date, and is convertible into common shares of Li-Cycle at an initial conversion price of US$0.53 per share.

The liquidity injection from Glencore comes after Li-Cycle paused construction of its Rochester Hub project in October 2023. Due to rising costs, the company decided to take a step back to re-evaluate its approach. While the initial budget was set at US$560 million, Li-Cycle said in November 2023 that costs could range from US$850 million to US$1 billion.

Li-Cycle also said at the time that it is actively engaged in working with the US Department of Energy (DOE) to satisfy the conditions for closing a loan for gross proceeds of up to US$375 million.

In Tuesday's (March 12) announcement, Li-Cycle CEO Ajay Kochhar said Glencore's investment will support the company’s ongoing review of Rochester, and confirmed that it continues to communicate with the DOE.

“We are pleased to secure an additional $75 million investment from Glencore, following Glencore’s June 2022 investment, to improve our liquidity position while we continue our ongoing comprehensive review process," he said.

Li-Cycle's share price surged following the news, rising as high as US$0.85 on Thursday (March 14).

Battery recycling plays a pivotal role in mitigating environmental impact and reducing reliance on primary resource extraction. As demand for electric vehicle batteries continues to surge, recycling initiatives are becoming increasingly crucial in minimizing waste and conserving valuable resources.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.