Envirostream Australia Pty Ltd, a subsidiary of Lithium Australia Ltd (ASX:LIT, OTC:LMMFF) which is leading Australia’s onshore battery recycling industry, has expanded its relationship with South Korean battery recycler SungEel HiTech Co., Ltd by way of a three-year Mixed Metal Dust (MMD) offtake agreement.
Under the agreement which has effect from July 1, 2024, SungEel HiTech will purchase a minimum of 60% of Lithium Australia’s annual MMD production, subject to meeting minimum quality requirements.
The offtake agreement, which follows an MoU between the parties in March 2024, validates Lithium Australia’s high-quality MMD and provides an important strategic partnership for the company’s growth strategy.
“Rapid progress after MoU”
Lithium Australia CEO and managing director Simon Linge: “We are very pleased to sign this MMD offtake agreement with SungEel, demonstrating rapid progress after the MoU was initially announced in March 2024.
"SungEel has been a longstanding customer and we are excited to expand our strong commercial relationship.
"The signing of this MMD offtake agreement represents a core component of our recycling growth strategy, given its synergistic value with the company’s rapidly growing large-format LIB collection volumes and MMD production.
"This offtake agreement also highlights the strong market demand for MMD and supports the expected uplift in future production volumes.”
The agreement defines achieved MMD price (denominated in USD) in reference to prevailing metal prices from agreed indices.
Assuming that the agreement had been in place since July 1, 2023, based on FY24YTD MMD sales the revenue would have been approximately A$514,000.
About SungEel
SungEel has been an LIT customer since 2020 and has purchased more than 300 tonnes of MMD to date, which reflects the market’s growing demand for recycled materials to be utilised in battery manufacturing processes.
South Korea’s leading battery recycler has recently opened the third hydro centre in South Korea. This facility is the largest lithium-ion battery recycling plant in the world and can input 20,000 tonnes of MMD in Phase 1.
These hydro centres utilise hydrometallurgy to extract high-purity battery materials from MMD.
SungEel operates recycling plants in South Korea, Hungary, Poland, India and Malaysia and has announced planned investments in the USA, Spain and Germany to expand its global footprint.
Through this offtake agreement, it is possible for SungEel to produce battery materials using MMD produced by Envirostream.
Growing MMD market
It comes as market demand for MMD continues to grow reflected by Lithium Australia’s FY24YTD MMD sales of 256 tonnes (FY23pcp: 139 tonnes).
This is underpinned by the company’s growth in large-format lithium-ion battery (LIB) collections, which represents ~30% of FY24YTD collection volumes (FY23pcp: ~14%).
The growth in large-format LIB collections is driven by LIT’s focus on securing recycling agreements with leading original equipment manufacturers (OEMs) and battery manufacturers.
JDA discussions
Following this offtake agreement, SungEel and Lithium Australia have started discussions on a joint development agreement (JDA), which includes an investment, focused on upgrading recycling equipment and expanding total processing capacity. The JDA is subject to negotiation and relevant approvals.
"We are now ready to start the next step of our SungEel relationship with a Joint Development Agreement to be finalised through this year,” Linge added.
"We are excited to continue building upon this momentum while aiming to achieve sustainable profitability within our recycling business in the near term.”