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Li-Cycle Holdings Corp. has notched significant milestones towards restarting construction on its Rochester Hub project, which was paused last year after cost estimates soared.
The company, which specializes in lithium-ion battery resource recovery, posted third-quarter results highlighting a litany of measures taken to shore up funds to restart construction on the $960 million Eastman Business Park facility, which is poised to be the first commercial hydrometallurgical resource recovery facility in North America.
The facility’s projected $960 million price tag was far higher than the company’s initial estimates of under $600 million. The soaring costs and financing delays led the company to pause the project late last year as it conducted a comprehensive review to chart a phased path forward.
“We have performed an initial analysis of options for completion of the Rochester Hub, and we are taking steps to conserve cash,” Ajay Kochhar, president and CEO of Li-Cycle, said at the time.
Funding the hub
Some of these new measures were reflected in the company’s latest quarterly report.
For one, the company closed an upsized $475 million, 15-year loan facility with the U.S. Energy Department that was extended to support the hub project.
Initially $375 million with a 12-year term, the 2023 loan was the first conditional commitment from the Energy Department’s Advanced Technology Vehicles Manufacturing program. The Rochester Hub is expected to support the battery needs of about 203,000 electric vehicles annually and to strengthen the domestic EV supply chain, along with creating 270 jobs and 1,000 construction jobs in the area, which is in line with the expressed goals of the DOE program.
Prior to the first advance of loan funds (which must occur on or before Nov. 7, 2025), the company will have to complete its equity contribution to the hub project, which includes settling outstanding incurred costs (about $92 million as of Sept. 30) and funding about $173 million in reserve account requirements. Those figures may change.
The company is exploring additional financing and strategic alternatives for a complete funding package it says is needed to restart construction. That package would assist in satisfying the conditions for the first advance of loan funds.
“(We) thank the DOE for their continued support and are grateful for the bipartisan support for lithium-ion battery recycling and how it can underpin the development of a strong domestic battery supply chain,” says Kochhar.
On top of upsizing the loan facility, Li-Cycle finalized an agreement with Glencore Ltd., a Swiss commodities producer and trader, that will cover the off-take of 100 percent of the mixed hydroxide precipitate to be produced at the Rochester Hub. MHP is an abundant source of nickel, which is crucial for lithium-ion battery production.
The deal comes alongside existing unaffected agreements with Glencore and Traxys North America LLC granting them off-take rights for lithium carbonate produced at the hub.
Li-Cycle expects to produce up to about 8,250 metric tons of battery-grade lithium carbonate and up to about 72,000 metric tons of MHP annually in Rochester, according to figures the company determined through its internal technical review of the site’s MHP scope completed in the third quarter.
“These are positive steps that will help us build momentum as we work to optimize our Spoke facilities to establish a self-sufficient Spoke business and secure a full funding package needed to restart construction of the Rochester Hub project,” Kochhar says about the DOE loan and the new off-take agreement.
Ever since the pause, the company has reiterated its intention to charter a feasible path to continuing construction. The latest quarterly report is no different, but management noted that the project will require significant additional financing to complete.
“We expect to recommence construction on the Rochester Hub after securing additional financing toward the cost to complete the project, which is currently estimated at $486.7 million,” the report states.
Promising performance
On a more general note, the company also saw a strong quarter financially.
Li-Cycle’s year-over-year revenue growth of 79 percent, for a total of $8.4 million, was on par with the previous quarter’s record revenue. Its other income leaped to $81.7 million from $13.3 million last year, reflecting a fair value gain on financial instruments.
Selling, general and administrative expenses were down 50 percent year-over-year, from $25.9 million to $12.9 million, primarily due to lower recurring personnel costs due to the construction pause.
Net profit rose to $56.5 million compared with a loss of $30.7 million during the same period a year ago. The company’s loss from operations declined to $25.2 million versus an operating loss of $44 million in the third quarter of 2023.
Management noted that current macroeconomic and industry trends, particularly inflationary pressures, have reduced project commitments to build relevant supply chains in North America and Europe. But they remain optimistic.
“Notwithstanding the current challenging global economic environment, the long-term demand for EVs and hybrids remains strong,” they wrote in the company’s quarterly report.
Justin O’Connor is a Rochester Beacon contributing writer. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected].
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