Inside a $1.1 billion deal to re-refine critical minerals

The United States and Europe have a nickel problem. This important metal is used in everything from batteries and rockets to electronics and steel. However, both regions struggle to extract and refine it largely due to permit issues and waste concerns.

Indonesia and China dominate the refining process. However, if we dig deeper, it is clear that Chinese companies control about 75% of Indonesia’s nickel refining capacity as well, giving the country control over more than half of the world’s supply.

As relations with China soured, “a lot of companies started to really think about, ‘How do they start refining here in the United States?’ Megan O’Connor, co-founder and CEO of Nth Cycle, told TechCrunch.

O’Connor’s startup is developing an electrochemical system to purify nickel and other important metals, including cobalt, copper and rare earths. Just over a year ago, the company began production at a facility in Ohio that can process up to 3,100 metric tons of scrap. Now, Nth Cycle has entered into a $1.1 billion agreement with commodities trading company Trafigura to quadruple that amount.

The new deal signals a shift in how companies evaluate their metals supply chains — and how technology could change them.

Today, not only are metals being refined abroad, but recycling is also taking place. When batteries reach the end of their life, they are shipped elsewhere for processing. “These are really valuable resources, and we’re currently shipping most of them to China. You don’t necessarily want to give up these valuable materials and then have to buy them again,” O’Connor said.

O’Connor didn’t come to this realization alone. Another company, Westwin Ingredients, operates a small refinery in Oklahoma and is trying to expand with a new facility in Georgia, though it has faced opposition there.

Nth Cycle believes the solution is its modular electrical system. “You can’t translate traditional central refining operations that work well overseas, across Asia,” O’Connor said. “You translate that here and it’s very capital intensive.”

The startup works with recyclers to source black nugget — a mixture of metals from shredded batteries — and other sources of nickel such as catalysts from the oil and gas industry. It then feeds it into its electrochemical system, which is about five to ten times smaller than a conventional refinery. Because the system is smaller, Nth Cycle says it reduces capital expenditures, allowing it to make money sooner.

“Our system can operate profitably at as low as 6,000 metric tons per year,” O’Connor said.

This low number is important. Although there will eventually be a tidal wave of electric vehicle batteries that need to be recycled and refinished, that has not yet been achieved and is unlikely to happen before the end of the decade. One major battery recycling company, Redwood Materials, even started a separate division to reuse old batteries instead of recycling them after its team discovered that the cells had a much longer life.

Currently, O’Connor is confident that there is enough raw material available in the United States and Europe to supply the two new facilities it is building. The facilities in South Carolina and the Netherlands can process 18,000 metric tons of scrap combined. As the composition of the material changes, Nth Cycle says it can adjust its process accordingly.

Other approaches rely too heavily on economies of scale to compete with Asian processors, leaving them vulnerable until waste volumes increase, O’Connor said. Nth Cycle can add modules as its battery waste grows, she said.

“That’s how it changes and you really get the refining capacity here [in the U.S.] “You match the sizes,” she said.