Li-Cycle CEO: ‘We’re confident in Rochester hub project and working to secure additional funding
ROCHESTER, N.Y. — The future of Li-Cycle, the lithium battery recycler that halted work on the massive hub project in Rochester, remains unclear.
The company was in the middle of building a 62-acre north American hub at the Eastman Business Park when it suddenly halted construction last month — giving contractors on the job no notice that their services were no longer needed.
News10NBC Investigative Reporter Jennifer Lewke has been covering the situation, and on Thursday was able to interview Li-Cycle CEO Ajay Kochhar.
Here’s part of their conversation:
Ajay Kochhar, CEO of Li-Cycle: “First, let me just say that one of the nuances of being public is we were in a quiet period after announcing the pause. So, until we reported, we couldn’t really say anything. So, we apologize for that. Otherwise, we would’ve been much more out in front talking to the community. It’s not ideal how this happened, it’s not the way that we do things. It’s not good for the community. It’s not good for those who run the site. This is not the way we want to do things. But we’re hard at work, working on the plan to go forward and confident in the business and confident in the project.”
Jennifer Lewke, News10NBC: “How much have you invested in this project so far?”
Kochhar: “We leased the land, but all the buildings on the actual process site, we own it all. We’ve invested almost $400 million, $394 million on the project date. It’s no small sum. There’s a ton of demand for what we do and it’s growing all the time. The response from our customers, from our partners has been awesome. But this is a speed bump and we’ve been dealing with it and taking stock in the situation and we’re in action mode. It’s our responsibility to continue to communicate frequently and often with the community as much as we can.”
Lewke: “I think the feel in Rochester right now, is…look, you just stood there eight months ago, with the senator, with this big fanfare, you knew what building and construction costs were at that point — how did things change so quickly and so massively?”
Kochhar: “Yeah. And that’s the number one question obviously we’ve been getting. So, the work for the first six to eight months of the year was very structural, civil — that sort of work. As we were getting to where we’re starting commissioning — which is when you start to turn stuff on and parallel to completing the plant — the work changed and became much more about mechanical. And a lot of that is detailed work. What’s good for the community, is there’s $4 billion of other projects in the Rochester area all around the same time. There’s certainly been a lot of pressure on specialized trades.”
Jennifer Lewke: “So, was it a lack of skilled labor or the expense of it that you weren’t planning for?”
Kochhar: “It’s not about availability. I think our union partners have been awesome through our subcontracts to give us the specialized skill that we need. We have an agreement with COMIDA (Monroe County Industrial Development Agency) where we’re committed to go to local labor first and that strategy sort of evolved over time and so, that’s what I think frankly we were running into. Not, the need to use local labor, but if that was kind of the starting line then maybe we would have done it differently. But things evolved as the project went on. We have a fully engineered plant now, detailed engineering, we have all the equipment and all the materials on the site, it’s a different profile. There has to be some better way to do this, as opposed to the traditional time and materials for these types of metal producing plants — and that’s what we need to look at. And for that, we need our good partners on the contracting side and we understand that there’s a trust that’s been frayed, and we’re going to have to build back. And it’s going to take some time.”
Lewke: “I want to ask you what kind of conversations you’ve had since your announcement of the pause with the federal government, with Senator Schumer. I think a lot of folks now say, ‘You’re too risky to use my tax dollars.'”
Kochhar: “I think, again, I would say, totally across the board, the conversations we’ve had have been very supportive. The DOE (Department of Energy) has been at the table, they’re great partners and they’re working through it with us, in terms of how we move forward. What hasn’t changed is this facility, after a restart and when we get into production, will still be the largest source of lithium in the U.S. By definition, clean green energy companies aren’t profit-generating for many, many years and I understand there may be different views on that. But the whole mandate of the loan programs office is to be that bridge. Because if I go to a typical bank and say, ‘Hey I want a loan,’ we’re not going to get one.”
Lewke: “If I play out the math, on your most recent financial filings, you’ve got roughly $20 million in revenue annually compared to $200 million in expenses. How do you stay afloat as a company long enough, to see a project like this through?”
Kochhar: “Yeah, so I think that’s a bit of a misnomer floating out in the community. The companies like us, that are building in this industry, they’re not big companies. We’re growth companies. The business that we have today when you look at the revenue is the spoke part of the business where you shed the batteries and make the intermediary product. So, it makes a bit of revenue, but that’s not really the full model here. The real unlock is the hub and so everything we’ve been doing is in preparation. It’s like a development company, you’re basically preparing to build that facility and make products. Now, even go a year ago and look at our revenue and look at our cost base and say, ‘How are you going to do it?’ It would have been a question then, to be honest. The reality is, if it was such an insurmountable thing, why would we have? Since we went public, we’ve raised $350 million from various partners, and that was even earlier in our journey when there was even more risk. Obviously, now this has happened. So we’re going to need to figure out where we go from here. But the point is, it’s a little difficult to do. We’re public because it was a good way to raise capital, but it’s a little difficult to look at mature companies and use those same metrics for a growth company.”
Lewke: “So, how long until you decide how you’re going to move forward? Is there any timetable, or not yet?
Kochhar: “I think that’s just a sure fire way for us to degrade trust even more. So, we’re trying to be super thoughtful before we come back, but in the interim as we find out more, we’ll communicate as much as we can.”