Canadian battery recycler Li-Cycle now estimates the construction budget for its Eastman Business Park expansion at $850 million to $1 billion.
The update came during the company's quarterly earnings call Monday.
Li-Cycle paused construction three weeks ago saying expenses had significantly exceeded its latest budget of $560 million. The cost pressures were exacerbated by a local construction boom forcing contractors to draw workers from the larger regional area, officials said. And by delays in financing — specifically, the anticipated closing of a $375 million Department of Energy loan, which company officials said was pushed from June to September, then into October.
Li-Cycle reported that it had reduced its workforce, slowed North American production, and paused or was reviewing projects in Canada and Europe. Yet it still reported a net loss of $130.5 million for the quarter compared to $20.6 million in the same period last year.
The company expects it will need additional financing before restarting construction on the local project, and before accessing the DOE loan.
Congressman Joe Morelle said in a recent interview that he is “still hopeful they are going to be in a position to move forward and continue construction in some form or another.”
Li-Cycle reported $394 million has been spent on the Rochester hub and related buildings through Sept. 30 of this year.
There are two facilities at the park. One is referred to as a "spoke," which employs about 40 people who take in and break down lithium batteries, creating a "black mass." Under the initial plan that recycled material would go to the "hub" facility and is processed to create battery-grade lithium, nickel, and cobalt. That could be adjusted under a developing phased concept. The hub employs about 50 people, a figure that was expected to grow to 320 with the expansion.
When Li-Cycle shut down construction, the company cast the work stoppage as temporary. An estimated 200 construction workers were sent home. MasTec, the general contractor and construction manager on the project, since filed notice it laid off 102 staffers. The Florida-based firm filed a lien Monday, claiming it has provided $178 million in labor and materials, for which Li-Cycle still owes $27 million, records show. Another contractor filed an updated lien claiming it is owed $6 million.
The company also is fending off a potential class action lawsuit claiming it misled investors.
Li-Cycle's stock price was at $2.27 before the halt in construction, but dropped significantly and has yet to recover. Its stock price closed down 5.77% on Monday at $1.47, as the company reported worsening year-over-year losses.
Differing theories of what went wrong have pointed to issues with the DOE or mismanagement by MasTec. But Li-Cycle officials said Monday that the DOE has been "great to work with," and that loan delays were more a matter of logistics and working through an initially planned buildings lease arrangements that it no longer plans to pursue.
“I continue to hear that (the) DOE process didn’t have anything to do with complicating things,” said Morelle, explaining that he and his staff have been in regular contact with company and federal officials. “What has transpired has nothing to do with DOE.”
That said, he doesn’t want Li-Cycle tapping into the loan until it has a construction and operations plan that addresses finances.
“I need to have more than assurances — we need to see the plan,” he said. “I’m a little bit more of a doubting Thomas now because we just didn’t have information about this, and they caught us unaware.”
As for MasTec, Morelle deferred to Li-Cycle on specifics but said that there is a “fair amount of concern about their role,” and that he is, “hopeful they will not be involved" going forward. There was no mention of MasTec during the earnings call.
“I think this was MasTec’s responsibility,” Morelle said of managing project costs that ultimately “went well beyond what they expected it to be. But honestly, I'm frustrated. I don’t know their (Li-Cycle's) internal processes, but I think you would be aware of that much sooner than (when) you make the decision to pause construction.”
MasTec released the following statement Monday:
“We are proud of the work that we have performed on this critical infrastructure project and are disappointed by Li-Cycle’s decision to pause construction. We have supported Li-Cycle and the union labor and are deeply concerned by the impact that this shutdown has had on the local labor force and their families. Our subsidiaries employ thousands of union members throughout the United States, and we are actively working with Li-Cycle to help them re-start this important project. We are very concerned about the misinformation concerning our role as we do not control the funding for this project, and we look forward to correcting the record.”
