Lithium Australia has announced that its subsidiary, Envirostream, has signed an exclusive three-year recycling agreement with LG Energy to provide battery recycling services for recalled lithium-ion batteries (LIB) in Australia.
The agreement is for an initial three year term ending on 10 March 2027. Customary termination rights exist on the occurrence of an insolvency event or any unremedied breach under the agreement.
In addition to recycling revenues received under the agreement, Envirostream has an opportunity to generate additional revenue from the sale of mixed metal dust back to LG Energy Solution (subject to certain collection volumes being met), and will otherwise share in the revenue derived from third party sales of mixed metal dust generated from LIBs supplied by LG Energy Solution.
During the term, Envirostream has the exclusive right to provide battery recycling services for LG Energy Solution’s LIBs in Australia which are subject to a recall.
The agreement replaces the prior recycling agreement between the parties which was announced in September 2022 and is expected to significantly increase Envirostream’s large format LIB collection volumes, leading to greater recycling revenues.
There are currently approximately 6,000 units of LG Energy Solution’s large-format LIBs ready for Envirostream to collect and process under the Agreement, and approximately 5,000 further units anticipated.
In total, this represents approximately 770t of LIB batteries, or around 140 per cent of Envirostream’s total LIB collection volumes in FY23, highlighting the significant LIB collection volume growth the new agreement brings.
Lithium Australia says the agreement highlights Envirostream’s continued focus on accelerating growth in collection volumes of large format LIBs, such as those from EVs and ESS, due to their higher margin profile.
The total tonnage of ESS and EV batteries sold is projected to grow between ten per cent and 40 per cent year on year until 2030, which in turn is expected to result in an increased demand for battery recycling services.
Signing exclusive contracts with leading battery manufacturers is a core part of Envirostream’s national growth strategy, in line with the company’s previously identified key priorities of FY24.
Lithium Australia’s CEO and Managing Director, Simon Linge, said, “We are very excited to announce this new agreement signed with LG Energy Solution, a world leading battery manufacturer for EVs and ESS around the globe.
“The signing of this Agreement extends the already strong relationship with LG Energy Solution, who shares our vision for sustainable recycling of lithium-ion batteries.
“Our strategic roadmap identified the importance of signing long term agreements with tier one EV and ESS manufacturers.
“We see agreements of this type as key to moving our recycling operations to being cash flow positive and allowing us to grow our capabilities nationally. We are pleased that the first of these agreements is with LG Energy Solution and look forward to announcing further agreements with other tier one manufacturers.”
