Glencore investing $200 million in battery recycler Li-Cycle

(Reuters) – Miner and commodity trader Glencore Plc said on Thursday it is investing $200 million in battery recycler Li-Cycle Holdings Corp as it looks to expand supply of battery metals for the electric vehicle (EV) industry.

Recycling is seen as a large potential new source of EV minerals, and governments and companies around the world are boosting efforts to turn old batteries into new ones. U.S. President Joe Biden’s administration, for example, said this week it would set aside $3 billion in part to finance EV battery recycling.

Switzerland-based Glencore’s investment will come in the form of a $200 million note that is convertible to equity at $9.95 per share, roughly 38% higher than Li-Cycle’s stock closing price on Wednesday.

Glencore will gain a seat on Toronto-based Li-Cycle’s board and has agreed to a standstill agreement, which prohibits unsolicited takeover offers.

The deal is set to close by July. LG Chem Ltd and privately held Koch Industries Inc are also investors in Li-Cycle.

The deal announced on Thursday is the latest between a mining giant and recycler. In March, French mining group Eramet said it could develop jointly with Suez a recycling facility in France for EV batteries by 2024.

Glencore will supply Li-Cycle black mass – shredded batteries that can be processed to extract metals such as cobalt and nickel – as well as manufacturing scrap, giving Li-Cycle access to more feedstock to recycle.

Roughly 5% to 10% of the EV battery manufacturing process produces manufacturing waste. Li-Cycle is building several recycling facilities around North America. The Glencore investment will be used by Li-Cycle for those projects and other corporate purposes.

The Glencore-Li-Cycle deal is part of a long-term agreement, though the companies did not specify the timeline.

Glencore has also agreed to supply Li-Cycle with sulfuric acid and will buy certain metals that are produced during Li-Cycle’s recycling process.

(Reporting by Ernest Scheyder; Editing by Muralikumar Anantharaman)