EV Battery-Recycling Pioneer Li-Cycle Pauses Construction
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Li-Cycle Holdings Corp., which is set to receive significant backing from the Biden administration, saw its share price slashed nearly in half after announcing it would pause construction on a first-of-its-kind lithium-ion-battery recycling plant.
The Toronto company said it would halt work on its Rochester Hub pending completion of a strategic review, including scope and budget. Li-Cycle said it is facing escalating construction costs that exceed prior guidance and is working closely with the U.S. Energy Department concerning its offer of a $375 million loan commitment.
Li-Cycle is one of the many companies vying to help the U.S. meet surging demand for battery materials needed in the transition from gas-powered cars. The government is pouring billions of dollars in subsidies and tax incentives to build up a domestic supply chain intended to help the U.S. compete with China’s dominant industry position. The setback shows the challenges the U.S. and the West face trying to essentially kick-start an industry from scratch.
Li-Cycle shares fell 45.8% to $1.23 in New York.
“Engineering and procurement for the project are largely complete, with the current focus being on construction activities on-site,” the company said in a statement.
A worker watches batteries on a conveyor belt as they prepare for sorting at the Li-Cycle lithium-ion battery recycling facility in Kingston, Ontario. (Christinne Muschi/Bloomberg News)
Shares jumped 6% in February after the Biden administration announced the company’s U.S. subsidiary would receive the loan to help finance expansion of a facility to recycle lithium-ion batteries into chemicals that can be used for the batteries of more than 200,000 electric vehicles a year. The funding is from the department’s Advanced Technology Vehicles Manufacturing Loan Program amid a broader White House goal of having half of all car sales in 2030 be zero-emission.
The unexpected announcement comes as congressional Republicans have vowed to find the next Solyndra in their criticism of the hundreds of billions of dollars in new loan authority given to the Energy Department in President Joe Biden’s signature climate law. Solyndra, a California solar manufacturer that flopped soon after receiving a $535 million loan guarantee during the Obama administration, resulted in a yearslong pause in loan activity amid intense congressional scrutiny.
The Energy Department said the Li-Cycle loan is still in the conditional phase, and no money has yet been distributed.
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