Workers sort batteries at the Li-Cycle battery recycling facility in Kingston, Ont., in May, 2023. Swiss mining giant Glencore PLC has approached the company about a proposed acquisition.Lars Hagberg/The Globe and Mail
Switzerland’s Glencore PLC GLCNF is interested in acquiring teetering Canadian EV battery recycling company Li-Cycle Holdings Corp.
Glencore on March 14 disclosed that had approached Li-Cycle LICYF to discuss a possible deal. In a letter to Li-Cycle chair Jacqueline Dedo, Glencore senior legal counsel Adam Luckie wrote that a transaction could help the company solve its operational and capital structure problems, and maximize value.
Louie Diaz, vice-president, corporate affairs with Li-Cycle, in an e-mail to The Globe and Mail, said the company had set up a board committee to review the Glencore letter, but there is no guarantee a deal will materialize.
Glencore is one of Li-Cycle’s biggest debt holders, and its financings have helped keep the company afloat. Glencore has invested US$275-million into Li-Cycle since 2022.
Toronto-based Li-Cycle’s future has been in doubt after it paused construction in 2023 on its flagship recycling project in Rochester, N.Y., owing to spiralling costs.
The U.S. Department of Energy agreed to advance Li-Cycle US$475-million last year to help it finish construction of the plant. At that point Li-Cycle pegged the total capital cost of the project at US$960-million. Even though the financing package closed, the company has not been able to draw on the loan because it hadn’t met certain conditions.
Lately, amid mounting quarterly losses, doubts have arisen about Li-Cycle’s ability to service its debt, and it has run low on cash.
Mr. Luckie in the Friday letter said it is imperative that Li-Cycle take immediate steps to conserve its cash to prevent a worsening of its “already strained liquidity,” including cancelling all outstanding warrants.
After the expression of interest from Glencore was disclosed, Li-Cycle’s stock rose by 55 per cent on Friday and an additional 32 per cent on Monday to close at 39 US cents.
Despite the short-term bump, Li-Cycle’s valuation is a fraction of what it once was. Since peaking in February, 2021, the share price has fallen by more than 99 per cent.
The possible acquisition of the company by Glencore may end up being little more than a rounding error compared to its previous multibillion acquisitions in Canada.
The Swiss miner and commodities trading giant acquired 77 per cent of the coal operations of Teck Resources Ltd. in 2024 for about US$6.9-billion. After approving the transaction, then-industry minister François-Philippe Champagne said he would only henceforth approve acquisitions of large-scale Canadian critical minerals companies under the most exceptional circumstances.
Owing to Li-Cycle’s small size, any proposed acquisition by Glencore may not raise any eyebrows from Canadian regulators.
Li-Cycle went public through a special purpose acquisition company (SPAC) in 2021 in which it raised about US$600-million.