More money for US battery recycling: DOE offers $375M loan to Li-Cycle

The U.S. Department of Energy is putting more money behind the U.S. lithium-ion battery recycling industry.

On Monday, DOE’s Loan Programs Office announced a conditional loan commitment of $375 million for Li-Cycle Holdings. The loan is meant to help the Toronto, Canada–based company expand the Rochester, New York facility it’s building to supply battery-grade lithium and other metals to a burgeoning U.S. EV battery industry.

The Rochester site will reprocess materials from a number of recycling sites Li-Cycle is building in the U.S. and Canada. Li-Cycle has pledged to invest $485 million in the facility, which is set to open late this year with the capacity to produce enough lithium carbonate and other materials to supply about 203,000 electric vehicles per year.

Monday’s conditional loan commitment, which remains subject to final approval and depends on whether certain milestones are met by the company, is the second major investment in battery recycling from the DOE’s Advanced Technology Vehicles Manufacturing loan program. Earlier this month, the program issued a conditional loan commitment of $2 billion to Redwood Materials so the company can expand a facility in Nevada that will produce anode copper foil and cathode active material for lithium-ion batteries.

The Inflation Reduction Act, which passed last year, authorized DOE’s Loan Programs Office to issue hundreds of billions of dollars in loans to support the rapid growth of domestic clean energy industries seen as critical for meeting the Biden administration’s goals for reducing greenhouse gas emissions and bolstering domestic industrial competitiveness. U.S. Senator Charles Schumer (D-New York), who is slated to speak Monday at the Rochester site, has been pushing for some of that funding to go to battery production and recycling sites in the state.

The Biden administration has been looking to develop the domestic supply and production of lithium-ion battery materials to ease its dependence on China, which makes most of the world’s lithium-ion battery materials today. The Advanced Technology Vehicles Manufacturing loan program has offered billions of dollars in loans to U.S. battery manufacturing, materials processing and mining over the past year. Funds from 2021’s infrastructure law have also flowed to U.S. battery recycling plants.

EVs make up less than 1 percent of cars on the road today in the U.S., and EV batteries last for about a decade. That means that only a limited stock of batteries is available for recycling today, making up a tiny fraction of the total demand for battery materials needed to meet federal and state targets for converting U.S. cars, buses and trucks from fossil fuels to electricity. But as the number of EVs on the road grows, minerals and metals from their depleted lithium-ion batteries could make up an increasingly significant share of ongoing demand, and at much lower costs and environmental impacts than extracting those raw materials from mines.

Most of the world’s lithium-ion recycling is done in China using processes that involve melting down batteries in furnaces, an energy- and emissions-intensive process. But a rapidly growing number of companies and consortiums of battery manufacturers and automakers outside that country are investing in recycling technologies and processes that aim to cut costs and emissions.

Li-Cycle has developed a process that doesn’t require workers to break down depleted batteries into their constituent components for recycling. Instead, the company shreds entire batteries while they are submerged in a liquid solution to eliminate fire risk. It then sorts out the lower-value aluminum, copper and plastics, leaving a ​“black mass” of reusable chemicals including lithium carbonate, cobalt sulfate and nickel sulfate.

This black mass from recycling facilities in Alabama, Arizona and Ontario will be shipped to Rochester for chemical refinement into battery-grade materials. Li-Cycle says its process yields high-quality materials at lower cost and with less energy use and lower greenhouse gas emissions compared to existing methods.

Li-Cycle went public via a special-purpose acquisition company (SPAC) merger in 2021 and has raised $100 million from Koch Strategic Platforms and $200 million from mining conglomerate Glencore. It has also secured commercial agreements for Glencore to provide manufacturing scrap and end-of-life battery feedstock, as well as to buy and market the output from Li-Cycle’s facilities. Li-Cycle has another commercial agreement with Ultium Cells, the joint venture of U.S. automaker General Motors and South Korea battery manufacturer LG Energy Solution, to supply materials to U.S.-based battery manufacturing sites.