The Exchanges

Q Let's talk about battery recycling. Starting with the basics. So, uh, there's an end-of-life battery, whatever kind of battery, it's an EV battery, it's a battery from some tool, whatever it is. Um, can you just walk us through the, the steps in the process to recycle its components?

A Sure thing. So, you know, there, there's already differentiation when the cell is delivered to wherever it's, it's going to be recycled. The first thing the recycler has to ask itself is, does it need to discharge the cell or not? When cells come in, they may be charged, they may be discharged, they're likely somewhere in between zero and a hundred. Importantly, there's still flammable components in some degree of energization inside of it. A big concern that we've seen in my lab is, Uh, uh, what's called dead lithium, or I like to call it zombie lithium, uh, because it comes back and bites you in moments that, that you didn't expect, and this is lithium metal that's deposited, um, inappropriately in a lithium ion battery, and what that means is, in a lithium ion battery, there's not supposed to be any lithium metal. As cells degrade, as cells get older, particularly as, as we ask them to charge faster, there's more of this stuff, and so, uh, uh, recyclers have to contend with what the, The latent energy is, or, or the, the remaining, uh, active chemical energy, uh, that's in the cell. Ideally, they would just like to chew up the cell, uh, and turn it into what we call a black mass. So let, let's assume that, that they, uh, one way or the other, either discharge the cell, or allowed for a little bit of a, a combustion in their consumption process, and they will typically just t…

AI assessment note: “The first thing the recycler has to ask itself is, does it need to discharge”

Q And I guess before we get You're starting at the sort of like, what do you do with the cell? But there's a step before the cell, right? Like there's a, there's a disassembly component as well.

A Yeah, no, excellent point. So, so, cells come in typically welded packs, and, and each pack has its own design, and so the recycler has to have an understanding of, of where the cells sit, how the cells sit in the pack, and, and a means to un-weld or mechanically remove the cells from that pack without breaking or reducing the integrity of, of the cell itself. In this mechanical disassembly process, You don't want to have something that eats into the cell itself. And so, the way to think about this is most of your listeners probably know that Tesla has something like 8000 plus cells inside of it. When that pack would be disassembled, you don't want to break the integrity of the individual unit as you take it apart. And so, these cells have to be taken out and separated from the rest of the pack and module assembly. The degree to which these cells are then checked and sorted for remaining life, I think is, is questionable. There, there is some interest, um, with good intention to have a second life for some of these cells. Maybe some of them are still good. Maybe some of them are, are still useful. It's typically pretty, pretty difficult to justify the cost of grading these cells and estimating their, their second life. We do a fair bit of that in my lab, and I have to say to date, I think that, that it's probably not a bankable effort yet. I'm not sure that even if we had perfe…

AI assessment note: “cells come in typically welded packs... a means to un-weld or mechanically remove”

Q Yeah. Uh, you're saying Ascend has, has spent a lot of time focused on this hydro-de-cathode bit. Um, what about Lycycle?

A So life cycle is, is, uh, the real politic of the three. Uh, life cycle is born from hatch DNA. Hatch has been making mining electro, uh, primary extraction, electro winning equipment for, for a very long time. And, uh, life cycle says the world wants sulfate, uh, metal sulfate, excuse me, as a commodity. And, uh, we should focus on the best possible processes to create the digesters To focus on the battery inputs as they are. So, uh, what I mean by real politic is they're not trying to necessarily disrupt the way the battery industry works, but rather make a product that the cathode manufacturers already know how to deal with, so they have the broadest possible customer base, and use their mining roots to digest the ore in a reasonable fashion, as I understand it, using a mixture of precipitation processes and solvent extraction. So, so they are the, the, uh, conservative, I think is not fair to them. I think, I think they're taking the world as it is, as opposed to how they, as they want it to be.

AI assessment note: “life cycle is, is, uh, the real politic of the three.”

Q Okay, so we have these two high-level paths, pyro and hydrometallurgy, um, trade-offs amongst them, and some nuances within each category. Let's just talk about the landscape that exists today. Who are the big battery recyclers, and where are they, and which path are they taking?

A Right, so, so I'm gonna focus on three that, that I have some familiarity with because I've looked at their, their flow sheets and their patents. There, there are many out there, and, and many I don't know, so I, I just want to be clear to your listeners that it's, it's a pretty competitive space. In China, there's probably 50, 50 to a hundred, easy, at different points in the tech stack. But the three, um, we can talk about today, uh, because I, I think they, they represent three interesting shades of, uh, hydrometallurgy, upstream and downstream, are redwood, redwood materials, ascend elements, and lifecycle. Uh, they've all capitalized to significant extents In the United States, um, I would say that Redwood, in both its design and its aspirations, wants to be the mine of the future. They, they really see that, uh, uh, the main value of, uh, recycling is not the process, but the input material. Uh, you can control the value of the output, the downstream material, as much as you'd like, but you're gonna have massive margin pressure from, from all the battery suppliers who are fashion, facing, uh, massive margin. Pressure from, from their OEMs, right? So I think that, that Redwood is taking an approach where it is trying to consolidate as much of the recycled material at a, um, at a commodity, uh, level as possible. And so there, uh, uh, as I understand it, starting with, with…

AI assessment note: “three interesting shades of, uh, hydrometallurgy, upstream and downstream, are redwood... ascend elements, and lifecycle.”

Q And I guess before we get You're starting at the sort of like, what do you do with the cell? But there's a step before the cell, right? Like there's a, there's a disassembly component as well.

A Yeah, no, excellent point. So, so, cells come in typically welded packs, and, and each pack has its own design, and so the recycler has to have an understanding of, of where the cells sit, how the cells sit in the pack, and, and a means to un-weld or mechanically remove the cells from that pack without breaking or reducing the integrity of, of the cell itself. In this mechanical disassembly process, You don't want to have something that eats into the cell itself. And so, the way to think about this is most of your listeners probably know that Tesla has something like 8000 plus cells inside of it. When that pack would be disassembled, you don't want to break the integrity of the individual unit as you take it apart. And so, these cells have to be taken out and separated from the rest of the pack and module assembly. The degree to which these cells are then checked and sorted for remaining life, I think is, is questionable. There, there is some interest, um, with good intention to have a second life for some of these cells. Maybe some of them are still good. Maybe some of them are, are still useful. It's typically pretty, pretty difficult to justify the cost of grading these cells and estimating their, their second life. We do a fair bit of that in my lab, and I have to say to date, I think that, that it's probably not a bankable effort yet. I'm not sure that even if we had perfe…

AI assessment note: “cells come in typically welded packs, and, and each pack has its own design”

Q Yeah. Uh, you're saying Ascend has, has spent a lot of time focused on this hydro-de-cathode bit. Um, what about Lycycle?

A So life cycle is, is, uh, the real politic of the three. Uh, life cycle is born from hatch DNA. Hatch has been making mining electro, uh, primary extraction, electro winning equipment for, for a very long time. And, uh, life cycle says the world wants sulfate, uh, metal sulfate, excuse me, as a commodity. And, uh, we should focus on the best possible processes to create the digesters To focus on the battery inputs as they are. So, uh, what I mean by real politic is they're not trying to necessarily disrupt the way the battery industry works, but rather make a product that the cathode manufacturers already know how to deal with, so they have the broadest possible customer base, and use their mining roots to digest the ore in a reasonable fashion, as I understand it, using a mixture of precipitation processes and solvent extraction. So, so they are the, the, uh, conservative, I think is not fair to them. I think, I think they're taking the world as it is, as opposed to how they, as they want it to be.

AI assessment note: “life cycle is born from hatch DNA... life cycle says the world wants sulfate”

Q Okay, so we have these two high-level paths, pyro and hydrometallurgy, um, trade-offs amongst them, and some nuances within each category. Let's just talk about the landscape that exists today. Who are the big battery recyclers, and where are they, and which path are they taking?

A Right, so, so I'm gonna focus on three that, that I have some familiarity with because I've looked at their, their flow sheets and their patents. There, there are many out there, and, and many I don't know, so I, I just want to be clear to your listeners that it's, it's a pretty competitive space. In China, there's probably 50, 50 to a hundred, easy, at different points in the tech stack. But the three, um, we can talk about today, uh, because I, I think they, they represent three interesting shades of, uh, hydrometallurgy, upstream and downstream, are redwood, redwood materials, ascend elements, and lifecycle. Uh, they've all capitalized to significant extents In the United States, um, I would say that Redwood, in both its design and its aspirations, wants to be the mine of the future. They, they really see that, uh, uh, the main value of, uh, recycling is not the process, but the input material. Uh, you can control the value of the output, the downstream material, as much as you'd like, but you're gonna have massive margin pressure from, from all the battery suppliers who are fashion, facing, uh, massive margin. Pressure from, from their OEMs, right? So I think that, that Redwood is taking an approach where it is trying to consolidate as much of the recycled material at a, um, at a commodity, uh, level as possible. And so there, uh, uh, as I understand it, starting with, with…

AI assessment note: “represent three interesting shades of, uh, hydrometallurgy... redwood materials, ascend elements, and lifecycle”

Q Okay, so they're put into this digestion process. How then do you get from there to extracting the valuable components of the cell?

A Yeah, so there's two processes, and they're identical to the, uh, ancestor processes in mining, um, in the same way we would act on an ore. And so, at a very high level, um, the very cheap but very dirty method is called pyrometallurgy, where you just start to burn things and let whatever, uh, nasty gases evolve that will, will evolve, and, and typically in, in twenty-twenty-four, we have to use fossil fuels to heat the pyrometallurgical process, although there could be some Exothermic combinations from just heating the cell itself. Uh, but the off-gassing is so nasty that, that in the United States, we basically don't want to do any, any pyrometallurgy anymore. It's not to say that there isn't a lot of pyrometallurgy. There's plenty in China and India and in other parts of the world. But basically, you, you heat the cell, uh, components up. It's, again, homogenized mass. Uh, this is called a black mass. And then you, Go into a process by which you, um, begin to, to separate the components out, and it's identical to, uh, the processes one would use in mining. You would use physical separation and flotation methods as, as much as possible, as those, those are cheapest, and then, uh, where you need to put in alloys and fluxes to get out specific chemicals, you, you, you would do this in a, in a, in a, a molten state.

AI assessment note: “there's two processes, and they're identical to the, uh, ancestor processes in mining”

Q talking about the unit economics and, and the technical pathways, actually, I think we've mostly been talking about recycling cathode materials and cathodes themselves. We haven't really talked about the anode, which is where you have graphite, or maybe some silicon, or lithium, if it's a lithium metal battery, or something like that. Um, what, what is the, what are the similarities and differences on the, on the anode side?

A This is a hard question. Uh, the carbon That is, is pretty robust stuff, uh, but it's not as, I'm gonna use a fancy word here, immutable, right? I'm a professor of metallurgy, and I've studied metals my whole life, because you, you can always screw up with metals and start over. You can always break something that has metallic ion, uh, or a metal in it, a metal element in it. Uh, you can break it down through any of the methods we spoke about and build it back up, and it's very easy to do so. It's much harder to recreate the right structure out of carbon, even if you have a lot of Carbon. So we're, we're seeing this play out, ah, the prequel to the story on graphite recycling is just in, in where we're gonna source graphite to begin with for first use. Not all graphites are created equal, and, ah, there can be a whole other podcast on, on the history of different graphites in the lithium ion battery. They're, the small differences in composition and starter material have a big impact on, on how the, the performance plays out. Long story short, graphite recycling is in its infancy, and it's pretty difficult to, to justify from a purity and homogeneity basis, and, you know, frankly, there, there, there's plenty of graphite in the ground, so, so it's, it's hard to justify from an economic basis, uh, uh, recycling of graphite. We certainly want to do it from an environmental basis,…

AI assessment note: “It's much harder to recreate the right structure out of carbon”

Q talking about the unit economics and, and the technical pathways, actually, I think we've mostly been talking about recycling cathode materials and cathodes themselves. We haven't really talked about the anode, which is where you have graphite, or maybe some silicon, or lithium, if it's a lithium metal battery, or something like that. Um, what, what is the, what are the similarities and differences on the, on the anode side?

A This is a hard question. Uh, the carbon That is, is pretty robust stuff, uh, but it's not as, I'm gonna use a fancy word here, immutable, right? I'm a professor of metallurgy, and I've studied metals my whole life, because you, you can always screw up with metals and start over. You can always break something that has metallic ion, uh, or a metal in it, a metal element in it. Uh, you can break it down through any of the methods we spoke about and build it back up, and it's very easy to do so. It's much harder to recreate the right structure out of carbon, even if you have a lot of Carbon. So we're, we're seeing this play out, ah, the prequel to the story on graphite recycling is just in, in where we're gonna source graphite to begin with for first use. Not all graphites are created equal, and, ah, there can be a whole other podcast on, on the history of different graphites in the lithium ion battery. They're, the small differences in composition and starter material have a big impact on, on how the, the performance plays out. Long story short, graphite recycling is in its infancy, and it's pretty difficult to, to justify from a purity and homogeneity basis, and, you know, frankly, there, there, there's plenty of graphite in the ground, so, so it's, it's hard to justify from an economic basis, uh, uh, recycling of graphite. We certainly want to do it from an environmental basis,…

AI assessment note: “graphite recycling is in its infancy, and it's pretty difficult to, to justify”

Q Let's talk about battery recycling. Starting with the basics. So, uh, there's an end-of-life battery, whatever kind of battery, it's an EV battery, it's a battery from some tool, whatever it is. Um, can you just walk us through the, the steps in the process to recycle its components?

A Sure thing. So, you know, there, there's already differentiation when the cell is delivered to wherever it's, it's going to be recycled. The first thing the recycler has to ask itself is, does it need to discharge the cell or not? When cells come in, they may be charged, they may be discharged, they're likely somewhere in between zero and a hundred. Importantly, there's still flammable components in some degree of energization inside of it. A big concern that we've seen in my lab is, Uh, uh, what's called dead lithium, or I like to call it zombie lithium, uh, because it comes back and bites you in moments that, that you didn't expect, and this is lithium metal that's deposited, um, inappropriately in a lithium ion battery, and what that means is, in a lithium ion battery, there's not supposed to be any lithium metal. As cells degrade, as cells get older, particularly as, as we ask them to charge faster, there's more of this stuff, and so, uh, uh, recyclers have to contend with what the, The latent energy is, or, or the, the remaining, uh, active chemical energy, uh, that's in the cell. Ideally, they would just like to chew up the cell, uh, and turn it into what we call a black mass. So let, let's assume that, that they, uh, one way or the other, either discharge the cell, or allowed for a little bit of a, a combustion in their consumption process, and they will typically just t…

AI assessment note: “The first thing the recycler has to ask itself is, does it need to discharge”

Q Okay, so they're put into this digestion process. How then do you get from there to extracting the valuable components of the cell?

A Yeah, so there's two processes, and they're identical to the, uh, ancestor processes in mining, um, in the same way we would act on an ore. And so, at a very high level, um, the very cheap but very dirty method is called pyrometallurgy, where you just start to burn things and let whatever, uh, nasty gases evolve that will, will evolve, and, and typically in, in twenty-twenty-four, we have to use fossil fuels to heat the pyrometallurgical process, although there could be some Exothermic combinations from just heating the cell itself. Uh, but the off-gassing is so nasty that, that in the United States, we basically don't want to do any, any pyrometallurgy anymore. It's not to say that there isn't a lot of pyrometallurgy. There's plenty in China and India and in other parts of the world. But basically, you, you heat the cell, uh, components up. It's, again, homogenized mass. Uh, this is called a black mass. And then you, Go into a process by which you, um, begin to, to separate the components out, and it's identical to, uh, the processes one would use in mining. You would use physical separation and flotation methods as, as much as possible, as those, those are cheapest, and then, uh, where you need to put in alloys and fluxes to get out specific chemicals, you, you, you would do this in a, in a, in a, a molten state.

AI assessment note: “You would use physical separation and flotation methods as, as much as possible”

Q now are mostly NMC. Um, you know, nickel is a big portion of that value, and of course, nickel prices have crashed, and the nickel market is, um, struggling at the moment. So how much does that, for example, affect the unit economics of battery recycling, and what has to be true about your, the cost of your input or the cost of your process to, to make this profitable?

A Well, you, you, you've hit on it exactly right, and I agree with this a hundred percent. You have to beat the LMX on your eventual price of a, of a sulfate to be, um, uh, competitive or Alibaba or whatever your benchmark price is. Uh, nickel drove most of the deal flow in, in 21, 22, 23, and as you said, nickel prices have crashed. Look, we've seen this story before, even before recycling was a, a challenge, um, Uh, when I started my academic career in oh nine and 10, um, the nickel prices were pushing the world to LFP, uh, once before, and then nickel prices crashed in the early teens, and we had, um, all this wonderful NMC coming online, and then, uh, uh, the world saw nickel prices spike, and so, and so LFP swung back, and now LFP is safer and easier to source, so LFP seems to be here to stay for a little bit, but, um, nickel once again is cheap. And so, what does that ultimately mean for, for, uh, recycling? I think the, the brutal truth is, is that it's a cost center, and that inputs, recycled inputs, are ultimately a tolling operation unless Redwood can pull off owning the supply. Because if Redwood can pull off owning the supply, then it owns the mine of the future, which are these terawatt hours of, of spent batteries. How a Redwood Or, you know, any three, any one of these three can begin to capitalize towards having battery warehouses for spent batteries, but Tesla al…

AI assessment note: “the brutal truth is, is that it's a cost center”

Q now are mostly NMC. Um, you know, nickel is a big portion of that value, and of course, nickel prices have crashed, and the nickel market is, um, struggling at the moment. So how much does that, for example, affect the unit economics of battery recycling, and what has to be true about your, the cost of your input or the cost of your process to, to make this profitable?

A Well, you, you, you've hit on it exactly right, and I agree with this a hundred percent. You have to beat the LMX on your eventual price of a, of a sulfate to be, um, uh, competitive or Alibaba or whatever your benchmark price is. Uh, nickel drove most of the deal flow in, in 21, 22, 23, and as you said, nickel prices have crashed. Look, we've seen this story before, even before recycling was a, a challenge, um, Uh, when I started my academic career in oh nine and 10, um, the nickel prices were pushing the world to LFP, uh, once before, and then nickel prices crashed in the early teens, and we had, um, all this wonderful NMC coming online, and then, uh, uh, the world saw nickel prices spike, and so, and so LFP swung back, and now LFP is safer and easier to source, so LFP seems to be here to stay for a little bit, but, um, nickel once again is cheap. And so, what does that ultimately mean for, for, uh, recycling? I think the, the brutal truth is, is that it's a cost center, and that inputs, recycled inputs, are ultimately a tolling operation unless Redwood can pull off owning the supply. Because if Redwood can pull off owning the supply, then it owns the mine of the future, which are these terawatt hours of, of spent batteries. How a Redwood Or, you know, any three, any one of these three can begin to capitalize towards having battery warehouses for spent batteries, but Tesla al…

AI assessment note: “brutal truth is, is that it's a cost center, and that inputs, recycled inputs, are”