Lithium battery recycling firm details finances, operations, investments, and additional plans to overcome challenging financial landscape.

Following the $75 million strategic investment from Glencore plc last week, which was aimed to alleviate some of the pressures the company is feeling due to the higher-cost environment, Li-Cycle Holdings Corp. announced an update on its situation and plans to right-size its recycling enterprise going forward.

"Since embarking on our comprehensive review, we are pleased to report significant progress, including improving our current liquidity position and conducting an internal technical review of the Rochester Hub," said Li-Cycle President and CEO Ajay Kochhar. "We recently announced $75 million of strategic financing from Glencore to enhance our liquidity position and further build on our long-term strategic partnership."

In October 2023, Li-Cycle announced a pause on the construction of its future Rochester Hub in New York due to escalating costs, project that the actual price tag would be nearly double the $560 million originally estimated.

Foreseeing financial difficulties as part of the pause in construction, Li-Cycle implemented a cash preservation plan to reduce expenses and slow cash outflows. This enabled the company to explore financing options and strategic alternatives to increase its liquidity.

As a result, the company undertook steps to significantly reduce its workforce and curtail other non-operational spending.

Additionally, Li-Cycle slowed operations at its Spoke network, including pausing operations at its Ontario Spoke, slowing operations at its New York, Arizona, and Alabama Spokes on an ongoing basis, and reevaluating its overall strategy for its North American spokes, which the company says may include further pauses or slowdowns.

Although the company was able to produce roughly 6,825 metric tons of black mass in 2023, exceeding the top end of its revised annual guidance, it was still unable to fund its quick growth.

Based on its present go-forward strategic objectives and the cash plan, Li-Cycle is targeting for a right-size and right-shape for its organization.

As for its Rochester Hub, Li-Cycle's internal and economic review has come forward with a more definitive estimate regarding the costs of construction.

The company says it has already incurred costs of approximately $567 million on the project, which exceeds the original estimated cost for the hub facility. The company's new estimates land the total costs at around $960 million.

Although the $75 million investment from Glencore should help with operational costs, it appears Li-Cycle will have to undertake some severe finessing to navigate the present financial landscape that is weighing on many companies and consumers.

However, despite the perceived setbacks, the company aims to continue advancing toward stipulations set in a $375 million provisional loan from the Department of Energy's Advanced Technology Vehicles Manufacturing program.

"Additionally, as part of our internal technical review of the Rochester Hub project, we confirmed the technical viability of producing lithium carbonate and mixed hydroxide precipitate," said Kochhar. "We also continue to work closely with the DOE on the conditional commitment for a loan of up to $375 million. We believe the strategic value of the Rochester Hub is underpinned by strong industry fundamentals driving robust demand for domestic sources of critical battery materials."

Whether it can close the DOE loan, and manage to overcome the trying financial environment, remains to be seen. However, given the recent investment from Glencore, there still seems to be confidence that Li-Cycle will pull through and establish itself as a long-term recycler in North America.