The long-awaited loan, which is USD 100 million higher than provisionally announced early last year, will keep the Glencore-backed company alive as it works to expand the recycling of batteries that are increasingly powering Americans' everyday lives, ranging from everyday electronics to EVs.
The loan for the plant, which would be one of the largest U.S. sources of the battery metal lithium, also cements a key part of Biden's climate agenda, ensuring the company receives government financial support regardless of any steps that President-elect Donald Trump may take when he assumes office in January.
Concerns that Trump could try to slow Washington's financial support for the renewable energy transition have spooked investors since his Tuesday victory. While Trump is not expected to be able to stop that transition, Biden officials are quickly moving to close loans and approve projects before January.
Li-Cycle had sought the loan for nearly three years, but cost overruns and technical issues forced it to hire a corporate restructuring expert last year, a step that sparked questions about its survival.
The company essentially found itself in a holding pattern while Washington reviewed the loan application, unable to advance its business plan even as it contended with rising inflation.
Its stock has dropped more than 75% in the past year.
The loan - which includes USD 445 million of principal and USD 30 million of capitalised interest - will allow the Toronto-based company to now solicit private capital to fund the remainder of its USD 960 million project, slated for Rochester near New York's border with Ontario.
Construction could take 12 to 15 months once full funding is secured.
"The loan demonstrates (the Energy Department's) role in supporting a strong domestic EV battery and critical materials supply chain, which is critical to strengthening America's national and energy security," said Jigar Shah, head of the Energy Department's Loan Program Office, which issued the financing.
Biden officials in recent weeks have pushed to advance several U.S. critical minerals projects before leaving office in January, including permitting ioneer's Nevada lithium mine, issuing a loan to Lithium Americas, and expanding a manufacturing tax credit to miners.
"The big task from here is to get private financing and build this facility," said Ajay Kochhar, Li-Cycle's CEO. "We're positive that we're going to meet our end of the bargain, and we're positive that the U.S. government is going to do the same."
The loan will have a 15-year term and an interest rate matching the 10-year U.S. Treasury rate when funds are issued.
U.S. Senator Chuck Schumer, a New York Democrat who will lose his role as Senate majority leader in January, had advocated for Li-Cycle to receive the funding.
The facility had been slated to open last year at a cost of roughly USD 485 million, but the Energy Department's rules for loan recipients to use union labor in part contributed to cost overruns and delays.
Li-Cycle has developed a network of facilities in Arizona, Alabama and Ontario that produce black mass, which is essentially shredded battery parts. The Rochester facility will break down that black mass into lithium and other metals, the only facility of its kind in North America.
Li-Cycle aims for the facility to produce 8,250 metric tons of lithium carbonate per year, as well as 72,000 metric tons of mixed hydroxide precipitate (MHP), which is essentially a precursor product containing nickel and cobalt that can be used to make batteries.
Glencore, which has issued debt to Li-Cycle that can be converted into equity that would make it the company's largest shareholder, has agreed to buy all of the New York facility's MHP. That agreement, announced last week, helped secure the Energy Department loan, officials said.
The facility is expected to create 825 jobs during construction and 200 permanent jobs once open. Li-Cycle plans to release its second-quarter earnings on Thursday.
The Energy Department has provisionally agreed to lend USD 2 billion to Li-Cycle peer Redwood Materials, although that loan has not yet been finalised.
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