Lithium Australia [ASX:LIT] announced that its subsidiary, Envirostream, has signed an agreement with LG Energy.
Despite the announcement, LIT shares fell nearly 5% late Wednesday.
The drop could have something to do with the fact the company did not put a value to the deal, with no revenue projections provided.
LIT is down 50% over the past 12 months:
www.TradingView.com
Envirostream & LG Energy ink deal
Envirostream Australia, Lithium Australia’s wholly-owned battery recycling subsidiary, has entered an agreement with LG Energy to recycle ‘significant lithium-ion battery volumes’ for LG’s residential and grid scale ESS batteries.
Working together since 2018, LG has now called upon Envirostream to process a minimum of 250 tonnes of lithium-ion batteries, representing more than 5,000 energy storage systems.
Originally, Envirostream has been recycling more than 85t of LG’s batteries, yet today’s announcement nearly triples that amount, setting a new milestone between the partners.
Envirostream currently turns over 90% lithium-ion batteries back into minerals such as steel, copper, and aluminium, basically becoming critical batteries’ mixed metal dust (MMD).
Using the newly created MMD, active metals can then be repurposed into new lithium-ion batteries, anodes, and cathode powders.
Envirostream’s battery collection volumes in FY22 were around 1,086 tonnes, with its latest agreement with LG representing 23% of the total.
The agreement is to begin with immediate effect, and is for an initial term ending 31 August 2023.
Once the initial term concludes, the term may then continue on a six-monthly rolling basis, unless either party wishes to terminate.
As well as the agreed fixed revenue, Envirostream will be able to claim further revenues from reclaimed commodity sales, including from MMD.
Envirostream’s General Manager, Andrew Mackenzie stated:
‘Envirostream is leading the battery recycling industry in Australia. LGES share our aspirations of an ethical and sustainable future for the global battery industry. Making these batteries available to Envirostream for recycling demonstrates LGES’s commitment to our shared vision. Envirostream have been recycling LGES batteries since 2018 and it is very pleasing to see LGES commit to Envirostream as its Australian battery recycling partner for these new volumes. We would like to thank LGES and look forward to our continued collaboration.’
What’s next for LIT and Envirostream?
Since the end of FY22, Envirostream said it has seen a continual rise in collection volumes. Around 100 tonnes of batteries were collected in July, 94 tonnes in June, and 90 tonnes in May.
Envirostream said that a monthly collection rate of 100 tonnes equates to an annualised rate of 1,200 tonnes a year, and with new LG and Battery World agreements, the company’s expects volumes to increase even further.
Lithium Australia has been scouring avenues for funding its battery recycling and advanced cathode powders segments.
Overlooked lithium stocks
Junior miners benefited greatly from strong interest in the lithium theme last year.
But many are now trading well below their 52-week highs.
While the lithium theme still has legs — EV adoption is only set to rise — the easy money in lithium stocks has been made.
Shrewd investors now have to look a bit harder.
So are there any overlooked lithium stocks out there?
Our Money Morning experts think so, and have profiled three of them in a recent research report that you can access for free here.
Regards,
Kiryll Prakapenka
