Li-Cycle Holdings Corp. (NYSE:LICY), a leading lithium-ion battery recycler, has put a halt to the construction of its Rochester Hub project due to cost overruns exceeding previous estimates. The company's board of directors made this decision in response to escalating costs and is currently reassessing the project's strategy, which includes revisiting its scope, budget, and construction plan.
Following the announcement of the project suspension, Li-Cycle's stock experienced a significant drop of 48%. The company is now in talks with the U.S. Department of Energy for a loan commitment of $375 million through the Advanced Technology Vehicles Manufacturing (ATVM) program as part of its ongoing project review process.
Despite the pause in construction, Li-Cycle remains committed to its customers and strategic partners. The company continues to aim at leading the global supply of recycled critical battery materials for a sustainable future. It employs its proprietary Spoke & Hub Technologies™ to recycle various lithium-ion batteries and extract key battery-grade materials such as lithium carbonate, nickel sulphate, and cobalt sulphate.
Analysts have noted that this situation could signal potential disruptions in the electric vehicle industry for capital-intensive projects. Morgan Stanley and analyst Adam Jonas have identified higher interest rates, rising cost of capital, and a slowing EV market as potential causes for these disruptions. Other companies such as Fisker (NYSE:FSR), Lucid Group (NASDAQ:LCID), QuantumScape (NYSE:QS), and FREYR Battery (NYSE:FREY) could also face challenges due to their external funding or project financing needs.
Further details regarding Li-Cycle's short-term plans and the status of the project review will be provided during the release of the company's Q3 2023 financial results on November 13, 2023.
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