Nth Cycle, Glencore Announce $1B Battery Minerals Offtake Before US IPO
By Ernest Scheyder
Major US Battery Recycling Deal and Implications
Overview of the $1 Billion Offtake Agreement
Sept 22 (Reuters) - US metals refining startup Nth Cycle has signed a $1 billion offtake agreement with Glencore to supply the commodities giant with lithium and other critical minerals extracted from recycled batteries, a deal that comes ahead of a planned public listing later this year.
The 10-year deal is among the largest in the US battery recycling sector as companies and governments race to secure domestic sources of critical minerals needed for electric vehicle batteries and other clean energy technologies.
The agreement, which Reuters is first to report, was signed on Tuesday at Glencore's New York offices at a time when critical minerals are expected to be an area of focus at this week's United Nations General Assembly.
Nth Cycle’s Technology and Operations
Electrochemical Extraction Process
Massachusetts-based Nth Cycle's technology uses an electrochemical process to extract critical minerals from electronic waste, shredded batteries or mined rock.
Black Mass Supply and Processing
As part of the deal, Glencore will sell Nth Cycle roughly 24,000 metric tons per year of shredded battery parts known as black mass for it to process, essentially supplying it the feedstock from which to extract the minerals.
Nth Cycle will then process that black mass and supply Glencore with lithium carbonate and a nickel-rich material known as mixed hydroxide product for 10 years. The exact volume will depend on the percentage of minerals in the black mass, which can vary depending on battery chemistry.
The deal value reflects metals pricing as of the second quarter of this year, the companies said.
Expansion Plans and Facility Development
Department of Energy Grant and Facility Location
Nth Cycle, which in August received a $100 million grant from the US Department of Energy, is planning to build a commercial facility somewhere in the US Southeast to process the minerals for Glencore as well as commodities trader Trafigura under the terms of a similar deal announced in March.
The location of the commercial facility is set to be announced later this year with operations beginning by 2029. That is a shift from earlier this year when Nth Cycle planned to build the facility in South Carolina and open by 2028.
Facility Size and Strategic Partnership
The company now says it doubled the planned size of its facility due to the Energy Department grant and is now searching for a larger site.
"This is a true strategic partnership between the companies, and really just accelerates the overall critical minerals market here in the US," said Megan O'Connor, Nth Cycle's CEO.
Glencore, which is a large marketer of black mass and last year bought the assets of bankrupt battery recycler Li-Cycle, said it aims to "help close the loop in the supply of critical minerals for our US customers."
Public Listing and Financial Strategy
Upcoming IPO and SPAC Merger
Public Listing Expected by End of Year
The Glencore agreement comes after Nth Cycle said in July it would go public through a merger with special purpose acquisition company (SPAC) Kensington Capital Acquisition, a deal that values the company at $585 million.
Funding Decisions and Future Outlook
Nth Cycle had canceled a planned Series C funding round earlier this year, a move O'Connor said was tied to a desire for more funding from the public listing.
"We decided that going public was what we needed," said O'Connor. "I'd be surprised if you met a company that wasn't looking at multiple fundraising options at the same time."
(Reporting by Ernest Scheyder; Editing by Chris Reese and Sanjeev Miglani)