Lithium Australia Ltd (ASX:LIT, OTC:LMMFF) is set to enhance its strong standing in the battery recycling industry after its wholly-owned subsidiary Envirostream Australia Pty Ltd signed an exclusive recycling agreement with the Buses business arm of Volvo Group Australia.
This agreement will see Envirostream recycle end-of-life lithium-ion batteries from Volvo’s fleet of electric and hybrid buses.
The recycling agreement is for an initial three-year term, during which Lithium Australia will be the exclusive provider of battery recycling services to Volvo in relation to its fleet of electric and hybrid buses in Australia.
Accelerating growth
This highlights Lithium Australia’s continued focus on accelerating growth in collection volumes of large-format lithium-ion batteries, such as those from electric vehicles (EV’s) and energy storage systems (ESS), due to their higher margin profile.
The supply of available large-format batteries for recycling is expected to accelerate exponentially as adoption of EV’s and ESS continues to grow.
“Strong drivers”
Lithium Australia CEO & managing director Simon Linge said: “We are very excited by the exclusive recycling agreement signed with Volvo, a leading manufacturer of electric buses in Australia.
"The agreement validates our strategy to target large-scale OEMs and ESS manufacturers to grow our share of the high-margin, large-format battery collection volumes.
"Increasing our capability and growing volumes are strong drivers for the company reaching cashflow breakeven within the recycling business, which we aim to achieve in the near term.”
Lithium Australia expects this agreement will drive an increase in collection volumes of hybrid batteries from buses reaching their end of life and of larger format batteries used in Volvo’s electric chassis platform.
Volvo manufactures and supplies electric and hybrid buses to customers across Australia including Public Transport Authority in Western Australia and Transdev in Queensland.
Core part of strategy
Partnering with top-tier EV and ESS manufacturers is a core part of Lithium Australia’s national growth strategy, in line with the company’s previously identified key priorities of FY24.
The company looks forward to leveraging this momentum, to win new market-leading clients.
Lithium Australia remains focused on signing exclusive contracts with original equipment manufacturers (OEMs) that rely on large format batteries, underpinning the company’s growth strategy.