Financing: Glencore injects US$75 mn in battery recycler Li-Cycle; EIB commits EUR500 mn loan to back R&D at Evonik

Lithium-ion battery resource recovery company Li-Cycle Holdings Corp. says that it has entered into an agreement to issue a senior secured convertible note in an aggregate principal amount of US$75 million to an affiliate of Glencore plc, a producer, recycler, and marketer of nickel and cobalt for the production of lithium-ion batteries.

Ajay Kochhar, Li-Cycle co-founder/CEO, commented: “We are pleased to secure an additional US$75 million investment from Glencore, following Glencore’s June 2022 investment, to improve our liquidity position while we continue our ongoing comprehensive review process. 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. We also continue to work closely with the US Department of Energy on the conditional commitment for a loan of up to US$375 million.”

Tim Johnston, Li-Cycle co-founder/Executive Chairman, commented: “We are also reviewing our go-forward strategy for the paused Rochester Hub, including analysing potential end-product mix options and construction strategy. We believe the demand for critical battery materials continues to accelerate and Li-Cycle continues to work to position itself as a future leader in the production of critical battery materials through our sustainable, safe, and patented recycling technology.”

Following the announcement by the Company in October 2023 in respect of the Rochester Hub, the company formed a Special Committee composed solely of independent and disinterested members of the Board (and which excluded Glencore’s Board representative). The SC engaged Moelis & Company LLC, a leading global investment bank, as its financial advisor and placement agent. The SC, with the assistance of Moelis, conducted a robust process to review and evaluate potential financial and strategic alternatives available to the company. After a careful review and assessment of the alternatives identified by the SC through this process, the company entered into the agreement with Glencore.

As previously announced, Glencore has designated Li-Cycle as one of its preferred recycling partners, and Li-Cycle and Glencore entered into a strategic commercial partnership aimed to create an integrated platform to supply a global customer base with both primary and recycled critical battery materials. As part of the partnership, Glencore previously made a US$200 million investment in Li-Cycle in June 2022 through the purchase of a convertible note.

Glencore is a battery feedstock partner for Li-Cycle’s Spoke facilities, as well as a future supplier of both black mass and key reagents for Li-Cycle’s future Hub facilities. Glencore complements the company’s existing partners through off-take and marketing of Li-Cycle’s end products and certain by-products produced and expected to be produced at certain of the Company’s Spokes and Hubs.

In other news, the European Investment Bank (EIB) is providing a framework loan of EUR500 million to Evonik, the second largest chemical company in Germany and one of the largest worldwide. The loan will be used to finance European R&D activities at the company, which firmly integrated sustainability into all elements of its corporate strategy in 2022.

The loan will support Next Generation Solutions, the company’s portfolio of particularly sustainable products. This portfolio currently makes up 43% of the overall revenue of Evonik, with a target of more than 50% by 2030. Next Generation Solutions include biosurfactants from Slovakia, lipid nanoparticles from Germany and membranes for gas filtration from Austria, among other products. Europe is the company’s key location for the majority of its R&D.

R&D also helps to reduce the company’s footprint by reducing both direct and indirect greenhouse gas emissions from production processes. The company’s climate targets are in line with the Paris Agreement on climate change, which aims to limit global warming to well below 2ºC. In addition, Evonik is striving to revalidate its climate targets in the near future in order to align with a path that limits warming to 1.5ºC by 2050.

The EIB loan comes with a term of six years from the date of utilisation. The EU bank will thereby complement the existing funding portfolio of Evonik with a long-term financing instrument that offers attractive conditions relative to the current market.

"Every day we are working on more energy-efficient, durable, bio-based and circular solutions. The financing from the EIB is a valuable recognition of our contribution to the sustainable development of Evonik and our customers," added Chief Financial Officer of Evonik Maike Schuh.

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