Li-Cycle shares jump on US$75M Glencore investment

Lithium-ion battery resource recovery company Li-Cycle (NYSE: LICY) announced Tuesday it raised US$75 million through a senior note financing with an affiliate of Swiss commodities giant Glencore (LSE: GLEN).

Glencore last year said it planned to develop a recycling hub in Europe with Canada’s Li-Cycle Holdings to produce materials, including lithium carbonate, to respond to a global shortage of key raw materials for the fast-growing production of electric cars.

“This financing enhances Li-Cycle and Glencore’s existing long-term, strategic partnership and represents an interim step in our funding strategy to support Li-Cycle’s future plans,” Ajay Kochhar, Li-Cycle co-founder and CEO said in a news release. “We also continue to work closely with the U.S. Department of Energy on the conditional commitment for a loan of up to US$375 million.”

The deal comes as demand for lithium-ion batteries, used in electric vehicles (EV), continues to rise, as the world looks to meet its goal of transitioning away from fossil fuels by 2050. The recycling of lithium-ion batteries, however, is not expected to take off before 2030 due to obstacles such as the lack of recyclable feedstock and the long life of EVs, according to Wood Mackenzie. 

The financing follows a previous investment of US$200 million that Glencore made with Li-Cycle in June 2022. Kochhar said at the time that the agreements would “further secure and diversify” the company’s lithium-ion battery supply and feedstock sources and help improve its position in North America and Europe.  

Li-Cycle said it is continuing to review its global recycling network and its go-forward strategy for the paused Rochester Hub in the U.S., including analyzing potential end-product mix options and construction strategy.

“Glencore is committed to bringing scalable and sustainable circularity into the supply chain of battery materials,” Kunal Sinha, Glencore’s Global Head of Recycling and non-executive director of Li-Cycle’s Board said in the statement.

“Our original investment in Li-Cycle, alongside key commercial agreements, formed part of this strategy. Today, we are pleased to further support Li-Cycle through this additional US$75 million investment so both Li-Cycle and Glencore can continue to build the battery circularity platform of choice for our customers.”

Li-Cycle’s stock surged over 38% in Tuesday afternoon trading in New York. By mid-afternoon the shares had been traded 51,617,600 times, compared to an average volume of 3,323,515. The company has a US$97.8 million market capitalization.