Li-Cycle Holdings Corp. (Li-Cycle), an industry leader in lithium-ion battery resource recovery and the leading lithium-ion battery recycler in North America, this week announced that it has entered into a manufacturing scrap supply and nickel sulphate off-take agreement non-binding letter of intent with LG Chem, Ltd. (“LGC”) and LG Energy Solution, Ltd. (“LGES”).
Upon execution of the definitive commercial agreement related to the proposed supply and off-take arrangements, LGC and LGES will together make a $50 million investment to purchase common shares (“Common Shares”) of Li-Cycle, (each making a $25 million investment), pursuant to the terms of definitive subscription agreements now effective today (14 December 2021).
LG Chem is Korea’s largest diversified chemical company. LGC offers robust chemical expertise, which includes high-tech areas such as active battery materials manufacturing. LG Energy Solution is a global leader delivering advanced lithium-ion batteries for electric vehicles (EVs), mobility & IT applications, and energy storage systems (ESS). With 30 years of experience in advanced battery technology, LGES continues to solidify its position as one of the world’s largest lithium-ion battery manufacturers. With battery production sites in the United States, Poland, South Korea, and China, LGES is more committed than ever to developing innovative technologies that will bring the future of energy a step closer.
Upon the execution of the definitive agreement, Li-Cycle, through its end-product off-take partner for the Rochester Hub, Traxys North America LLC, will sell 20,000 tonnes of nickel contained in nickel sulphate produced by Li-Cycle to LGC and LGES over 10 years, beginning in 2023. Additionally, LGES and Li-Cycle intend to cooperate on recycling nickel-bearing lithium-ion battery scrap and certain other lithium-ion battery materials to create a closed-loop ecosystem. Nickel is essential for producing many types of EV batteries. Li-Cycle estimates that the amount of nickel that LGC and LGES plan to procure from Li-Cycle will be enough to produce lithium-ion batteries to power approximately 300,000 high-performing EVs.
Ajay Kochhar, co-founder and Chief Executive Officer of Li-Cycle said:
“This proposed commercial arrangement with LGES and LGC and related strategic investment further enhance our global growth strategy as we continue to scale our safe, efficient and sustainable lithium-ion recycling technologies.” Kochhar continued: “We are excited to collaborate with industry leaders LGES and LGC on a closed-loop arrangement to recycle nickel-bearing lithium-ion battery materials and supply their battery manufacturing plants with recycled nickel battery-grade product. We look forward to continuing to collaborate closely as we transform lithium-ion batteries into a truly circular and sustainable product.”
Byungchul Choi, department leader of LGC battery materials development commented:
“Sustainable recycling for lithium-ion batteries is critical to the electrification revolution. Li-Cycle is making economically and environmentally sustainable lithium-ion battery recycling a commercial reality through its innovative technologies.” Choi added: “As a leading global battery materials manufacturer, LGC looks forward to executing on this strategic arrangement with Li-Cycle, including the supply of recycled nickel from Li-Cycle to LGC. This exciting investment and commercial arrangement demonstrate LGC’s strong commitment to ESG principles.”
Hyuksung Chung, leader of LGES Corporate Strategy Group said:
“We believe LG Energy Solution’s commitment to bringing more sustainable solutions for a greener world can be realized through this collaboration with Li-Cycle,” Chung added: “We are thrilled to join forces with Li-Cycle on the supply of nickel-bearing lithium-ion battery materials that require recycling and off-take for use in new battery cells for EVs. LGES and Li-Cycle are truly making the circular economy a reality for lithium-ion batteries.”
Terms of the Transaction
Under the terms of the proposed investment, LG Chem and LG Energy Solution will each subscribe for 2,208,480 Common Shares at a price of $11.32 per share, for an aggregate investment in the Company of $50 million (the “Investment”). The subscription price per Common Share is based on a 30-day volume-weighted average price of the Common Shares prior to LGES’ investment committee approval of LGES’ participation in the Investment on October 28th, 2021. The closing of the Investment is conditional on the parties entering into mutually acceptable definitive commercial agreements regarding the supply of nickel-bearing lithium-ion battery scrap from LGES to Li-Cycle and nickel sulphate off-take from Li-Cycle to LGES and LGC.
Additional information regarding this announcement may be found in Form 6-K that will be filed with the U.S. Securities and Exchange Commission and the Ontario Securities Commission.
This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The Common Shares to be issued in connection with the Investment have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.