The Exchanges

Q Let's talk about the scope of the problem. We have around a hundred million electric vehicle batteries that could get retired in the next decade. There's so much volume coming, so much expected volume of material that's going to need to be recycled over the next decade as lithium ion batteries overtake transportation and the grid. How do you wrap your arms around the scope of that challenge?

A Yeah, so that's a good rough estimate for, um, uh, what is on the horizon is the past 15 years plus the current growing waves of EVs that are being sold today ultimately make their way to retirement. But what a lot of people don't think about is, in addition, there's another major source of lithium ion batteries that need to be recycled now. Um, in addition to all the consumer electronics, you know, what do we do with all of our iPhone batteries? And laptop, and, and, you know, everywhere you turn, there's a lithium battery on a GoPro, you name it. But the real huge quantities that are coming today are from these gigafactories, um, and the gigafactory battery plants themselves, and that's in the form of production scrap. And so as battery components and these cathode, what are called cathode materials are cut and formed, a significant amount of that scrap is produced, and sometimes that's as high as 10 to 15% of the entire production of the plant. Especially in the earlier days as they're dialing in their processes. Um, so in the near term, this is a huge primary source of recyclable materials for companies like Aqua Metals. Um, and you know, from now until the end of the decade, uh, we, we think there's an estimated ten million tons or so of combined scrap material and end of life batteries that are really going to be ready to be recycled. And another data point that's interes…

AI assessment note: “we think there's an estimated ten million tons or so of combined scrap material”

Q interest, a lot of potential policy support. More and more eyes are now on the importance of lithium battery recycling, but it's still a very immature industry, especially compared to something like the lead acid battery recycling industry. How would you define the current supply chain from, you know, how you source materials to Selling the recycled materials. How mature or immature is it, and how could it be refined?

A Yeah, so the, the current supply chain is today, um, in terms of commercial scale, really smelters and these hydro processes. The hydro processes that are up and running at any scale are happening in China. Um, the smelting is happening, uh, mostly in Europe, and a lot here in the U.S. as well. Uh, as it, as it gets started, but now that's really, um, less than one percent, like I was mentioning earlier, of batteries that are, um, getting back into the supply chain through those recycled processes. So therein lies the opportunity to build this new infrastructure, and aqua refining, uh, is what we believe is the technology suite that will allow us to build that infrastructure so it's clean, safe, and protects the workers and all those great things. And so we've structured our business model to help this, uh, industry really stand up by creating, uh, an intrinsic set of our own IP and our own patents and building our own, uh, facility, which today, our first commercial facility, we call the Sierra Arc, um, because it's in the Tahoe, Reno area, so it's right by the Sierras, and the Arc stands for Aqua Refining Recycling Center, and, um, that Sierra Arc will prove the technology at scale Um, so then with our IP, we can, uh, joint venture, license, and partner with other players in the world, um, to develop new recycling centers utilizing the superior suite of technologies. We've al…

AI assessment note: “less than one percent... of batteries that are, um, getting back into the supply chain”

Q And when you think about the material inside the battery, um, what are the most valuable materials, and, and, and where are those materials going after they've been extracted, um, and reused?

A So, the materials that come out of lithium-ion batteries, um, are actually quite valuable, and, uh, the primary list of that Is the lithium and the nickel and the cobalt. And there's also some copper and some manganese that can be recaptured from our recycling process. But if you look at the three highest value minerals, which is the lithium and the nickel and the cobalt, that's really what we're after when we're recovering from the economic aspect of the lithium batteries. I'd say that the smaller amounts of copper and manganese Um, is, uh, reuse oriented. So it's a multi-mineral recovery, so it's very complex to be able to get those minerals and recapture them and get them in spec to go back into new batteries with battery manufacturers.

AI assessment note: “the three highest value minerals, which is the lithium and the nickel and the cobalt”

Q So that brings us to the aqua metals recycling process. It replaces chemical baths and high heat with electricity to recover, uh, lithium hydroxide, nickel, cobalt, manganese dioxide. The process has its roots in the lead acid battery industry. How does it work?

A Yeah, so, um, aqua refining is what we call our suite of technologies, and it's, um, uh, all our IP and our patent and patent pending process, and what it does is it utilizes a clean electricity-based, which could be renewable electricity, uh, closed-loop process, and that closed-loop process within the recycling process produces high-purity metals, Um, from shredded lithium ion batteries that we get from, uh, what are called black mass providers. And, uh, we can deliver those raw materials right back into the manufacturing supply chain with the AUK refining, um, without the emissions and really toxic byproducts. Um, and it really stands out because we're recycling the chemicals and regenerating the chemicals, um, through our innovative and unique processes by using electricity. And we use those chemicals over and over and over again in that closed loop, um, versus a one-time use, and we don't create these huge waste streams, um, that I was talking about earlier, like sodium sulfate as an example, um, which can sometimes exceed the amount of recycled materials. We create none of that because we're reassembling those molecules within our process over and over again, and then ultimately what does come out of the process is things that we want to reuse, And, uh, put back into the battery supply chain, like lithium and cobalt and nickel and copper and manganese. And, um, the other …

AI assessment note: “we're recycling the chemicals and regenerating the chemicals, um, through our innovative and unique processes”

Q Now, as people look to the future of battery recycling, they often look at the lead acid battery recycling industry, where the vast majority of materials in batteries are reused. I think 95% of materials inside lead acid batteries are, are reused. Um, but there's, there's definitely a darker side to that recycling story. What is that?

A Yeah, so, um, the, the positive side of that is that the lead recycling industry has done an Incredible job of building the infrastructure to recycle nearly a hundred percent of spent batteries. Um, so if you go and put in a new car battery, like a new lead acid battery, or a new battery in a data center, um, as an example I was referring to earlier, um, the amount of metal in that battery that came from a recycled source is about 80 to 90%. So, those new batteries are mostly, um, old batteries reborn as new batteries. And if you contrast that today to a new lithium battery that you get, um, regardless of the application, whether it's an EV or a piece of consumer electronics, et cetera, um, that has under one percent of the recycled lithium, nickel, or cobalt in that new battery. It all comes from mining sources today. Um, and that's gonna change over time, and as the lithium industry grows and stabilizes, um, in, in the, the hyper, uh, growth curve, um, Um, stabilizes. We make this transition. More and more, um, recycling infrastructure gets built. We get closer and closer, um, and migrate from that less than one percent to 80 to 90%, just like, uh, what lead has shown us. Um, and it's, um, really only a couple decades of recycling, so it'll happen fairly quickly. But really, the environmental and worker safety impacts of lead recycling has been a challenge through smelting. A…

AI assessment note: “environmental and worker safety impacts of lead recycling has been a challenge through smelting”

Q Yeah, so you've got this pilot plant operating in Nevada right now, and how, what's the scale of that plant? How much material are you processing? And then what is the commercial facility that you're planning when fully operational look like?

A Yeah, so, um, we took a unique approach, um, I think as compared to a lot of other players that are trying to move perhaps too quickly in this, um, industry that's getting stood up. And we decided, um, at the early on days of our lithium aqua refining program to go through lab scale, then bench scale, And then pilot scale, and then commercial demonstration plant, and then massive commercial plant. Um, so we've already gone through the, uh, the lab, and the bench testing, and we built a pilot plant, and for the last year have been operating our pilot plant successfully, and demonstrating our first-of-kind technology, uh, and producing all these critical minerals from that pilot plant, which this quarter is going to go to 24 hours a day, By seven day a week operations as we continue to build out our commercial plant I'll talk about later. Um, uh, so that pilot facility today generates between 75 and a hundred tons of volume of material per year. So it's not really an economic purpose. It's a validation of technology and getting the critical minerals in the hands of battery manufacturers and big auto and EV manufacturers and, uh, informed the scale up of our technology. We're currently producing those high purity minerals and products, um, in the form of things like lithium, uh, in the form of lithium hydroxide, which is a white substance, um, uh, and also, um, lithium carbonate. …

AI assessment note: “commercial plant I'll talk about later. Um, uh, so that pilot facility today generates”