Neometals signs joint venture deal with German group to commercialise lithium-ion battery recycling technology

Neometals ASX NMT joint venture deal German SMS Group GmbH lithium-ion battery recycling technology
Leading global processing plant manufacturer, SMS Group, will form a JV to accelerate commercialisation of Neometals’ lithium-ion battery recycling technology.

Perth-based lithium company Neometals (ASX: NMT) has executed a binding memorandum of understanding agreement with Germany’s SMS Group GmbH to jointly fund and evaluate the next stage of development work on its proprietary lithium-ion battery recycling technology.

Privately-owned SMS – established more than 140 years ago – has a global footprint and is known for its capabilities in design, construction and operation of metallurgical plant and machinery for industrial processing.

It has been granted an exclusive due diligence period to evaluate the results of Neometals’ pilot battery recycling trial in Canada.

If successful, the parties propose to form a 50:50 incorporated joint venture to commercialise the technology.

Activities will include the design, manufacture and operation of a 2-tonnes per day demonstration-scale plant at SMS’ sites in Germany and Austria.

Neometals is working on a proprietary technology for the recovery of cobalt and other valuable materials from spent and scrap lithium batteries.

If the technology proceeds to commercial stage, it could potentially generate $1.2 billion in revenue over 10 years.

Final investment decision

Neometals said the demonstration plant will run in parallel with an engineering cost study to generate operating and capital cost estimates as well as market evaluation.

All commercialisation activity costs will be shared equally between the partners and will be followed by a final investment decision in early 2021 to construct a commercial-scale lithium-ion battery recycling plant.

A positive decision would allow Neometals to contribute its technical and commercial know-how, including transfer of the recycling technology, to the venture.

SMS would contribute to the engineering design, fabrication, operation and maintenance of future recycling plants.

The company would also procure debt financing for no less than 50% of the capital expenditure required.

The remaining equity as well as efforts to secure feed supply and offtake arrangements would be contributed equally by both partners.

Well-timed venture

Neometals managing director Chris Reed said the joint venture had been timed to accelerate commercialisation and underwrite the delivery of recycling services to the lithium-ion battery supply chain.

“SMS is a very well-respected name particularly in Europe, which is expected to become home to half the world’s battery megafactories outside of China,” he said.

“Having a brand name partner with best-in-class expertise on large-scale design, operation and plant maintenance will provide confidence to our prospective feedstock supply partners – the cell and car makers who ultimately have the responsibility for end-of-life recycling.”

Headquartered in Dusseldorf and with 95 locations worldwide, SMS employs more than 13,000 people and turns over approximately $4.9 billion per year.

A decision on the joint venture will be made within four months and following shareholder approval.

At midday, shares in Neometals were steady at $0.200.