0:02

This is a branded podcast from Latitude

0:04

Studios. In

0:11

the early 2000s, Steve Cotton ran a

0:13

company serving the fast-growing data center industry

0:15

with backup battery systems. Most

0:17

battery energy storage systems, particularly for general data

0:19

centers like, think of a word, Netflix is

0:22

hosted and anything you do in

0:24

the web, we're all lead acid based. And

0:27

you would provide these big kilotons

0:30

of lead acid battery systems for

0:32

these sites. And when those

0:34

systems reach the end of their lives, the

0:36

company monetized kilotons of lead acid batteries by

0:38

sending them to recycling facilities, these industrial plants

0:41

that break down and burn the components. You

0:43

know, having the desire to understand what happens to

0:46

these batteries, I went to smelters and

0:48

they're a hellscape. It's very dangerous.

0:51

You've got lead dust all over the floor. You've

0:54

got a bunch of people wearing hot suits, literally

0:57

chucking batteries into high temperature

0:59

furnaces. And

1:01

it is not a healthy environment. It's

1:04

not a safe environment. And

1:06

there's got to be a better way. Two

1:08

decades later, the technology has shifted and

1:10

lithium ion batteries are now the dominant

1:12

form of storage. But recycling hasn't changed

1:15

a lot. Today, there are two types

1:17

of dominant battery recycling methods. One

1:19

is using high heat, similar to the process

1:21

that Steve witnessed at the lead acid facility.

1:24

And so that's also known as pyro.

1:27

And that really is high temperature

1:30

fossil fuels based. And

1:32

it doesn't recover all the materials. For example,

1:34

in lithium recycling, you burn the

1:36

lithium or you lose what lithium you

1:38

don't burn into what's called slag, which

1:40

is a solid waste stream that you

1:42

can't recover it. And

1:45

so pyro and smelting processes

1:47

have challenges. The other is

1:49

giving batteries a chemical bath in a

1:51

process known as hydrometallurgy. And

1:54

it's not really great when it comes to the

1:56

environment or worker safety. You've got

1:58

train loads of chemicals coming in. So

2:00

the economics of managing that, storing

2:02

those in massive tank farms, and

2:05

then spending tens of millions of

2:07

dollars to run a trash

2:09

dryer effectively to create what's called a

2:11

sodium sulfate waste stream is a real

2:13

challenge. Steve saw how big the

2:15

battery recycling waste problem could become. And

2:18

in 2015, after his data center power supply

2:20

company was acquired, he invested in a company

2:22

called Aqua Metal. And he became

2:24

so convinced by Aqua Metal's novel approach to

2:27

recycling, he became the CEO. What

2:29

we're doing is we're using electricity

2:32

to drive the process. And the

2:34

electricity itself comes from renewable resources,

2:37

and that can drive us with a

2:39

clean energy technology to

2:41

produce this metal supply chain with

2:44

a true opportunity to have a

2:46

net zero environmental impact. The

2:56

battery recycling industry is experiencing rapid growth,

2:58

as companies and countries like to build

3:00

secure circular supply chains for critical minerals.

3:03

In this episode, produced in partnership with

3:05

Aqua Metals, Steve Cotton sits down with

3:08

Steve and Lacey to talk about the

3:10

growing battery waste problem and the urgency

3:12

to invest in recycling techniques that don't

3:14

lock in new sources of waste. When

3:16

you produce many multiples more waste

3:18

and pollution than the valuable materials that

3:20

are recovered, is it really even recycling

3:22

is the way we look at it.

3:30

Let's talk about the scope of the problem.

3:32

We have around 100 million electric vehicle

3:35

batteries that could get retired in the

3:37

next decade. There's so much

3:39

volume coming, so much expected volume of material

3:41

that's going to need to be recycled over

3:44

the next decade as lithium-ion

3:46

batteries overtake transportation and the

3:48

grid. How do you wrap your arms around the

3:50

scope of that challenge? That's

3:53

a good rough estimate for what

3:56

is the horizon. The past 15 years,

3:58

plus the current. growing waves of

4:01

EVs that are being sold today

4:03

ultimately make their way to retirement. But

4:05

what a lot of people don't think

4:07

about is in addition, there's another major

4:10

source of lithium-ion batteries that need to

4:12

be recycled now. In

4:14

addition to all the consumer electronics, you know, what

4:16

do we do with all of our iPhone batteries

4:19

and laptop and everywhere you turn, there's

4:21

a lithium battery on a GoPro, you

4:23

name it. But the real

4:25

huge quantities that are coming today

4:27

are from these Gigafactories and

4:30

the Gigafactory battery plants themselves and

4:32

that's the form of production scrap.

4:35

And so as battery components and these

4:37

cathode, what are called cathode materials, are

4:39

cut and formed, a significant amount

4:41

of that scrap is produced and sometimes that's as

4:43

high as 10 to 15 percent of the entire

4:45

production of the plant, especially in

4:47

their earlier days as they're dialing in their

4:49

processes. So in the

4:52

near term, this is a huge primary

4:54

source of recyclable materials for companies like

4:56

Aqua Metals. And you know,

4:58

from now until the end of the decade,

5:01

we think there's an estimated 10

5:04

million tons or so of combined

5:06

scrap material and end-of-life batteries that

5:09

are really going to be ready to be recycled. And

5:12

another data point that's interesting is

5:14

the US alone is

5:16

going to be increasing our Gigafactory

5:19

output by 200x just this decade.

5:21

And that's what started

5:24

as Tesla's Gigafactory 1 that's right

5:26

here by Aqua Metals in Tahoe,

5:29

Reno, Nevada, with

5:31

its original Gigafactory. And the

5:33

US is really rapidly standing

5:35

up Gigafactories all over the

5:37

country to reach that

5:39

200x production levels, which is just

5:41

a staggering stand-up of an entire

5:44

battery production industry right here in

5:46

the US. And

5:48

also the global market for lithium-ion

5:50

batteries is really accelerating at a

5:52

meteoric pace with demand

5:55

for these new electric vehicles really leading

5:57

the way. the

6:00

first time ever that in the US over

6:02

1 million EVs were sold and There's

6:05

already over a hundred models to

6:07

be offered in the coming year. So there's a

6:10

lot of momentum

6:12

in that space and It's

6:14

driving a lot of the battery gigafactory

6:16

builds and of course the production scrap

6:19

and then ultimately the end-of-life cells and

6:21

so along with that the availability of

6:23

end-of-life batteries and Manufacturing

6:25

scrap materials is quickly rising

6:28

and if you look at the global lithium battery

6:30

recycling market It's already

6:33

today roughly a five billion

6:35

dollar industry and we expect

6:37

it to grow by about five Fold just in

6:39

the coming few years to the end of the

6:41

decade to nearly 25 billion dollars

6:43

when you think about the material inside

6:47

the battery What

6:49

are the most valuable materials and

6:51

and where are those materials going

6:54

after they've been extracted and

6:56

reused? So the

6:58

materials that come out of lithium-ion batteries

7:01

are actually quite valuable And the

7:03

primary list of that is the

7:05

lithium and the nickel and the

7:07

cobalt And

7:09

there's also some copper and some

7:12

manganese that can be

7:14

recaptured from our recycling

7:16

process But if you

7:18

look at the three highest value minerals, which is

7:20

the lithium and the nickel and the cobalt That's

7:23

really what we're after when we're recovering

7:26

from the economic aspect of The

7:29

lithium batteries I'd say that the smaller amounts

7:31

of copper and manganese Is

7:34

reuse oriented so it's a multi

7:36

mineral recovery So it's very complex

7:38

to be able to get those

7:41

minerals and recapture them and get

7:43

them Inspect to go back into

7:45

new batteries with battery manufacturers Now

7:48

as people look to the future of battery

7:50

recycling, they often Look

7:53

at the lead acid battery recycling

7:56

industry where the vast majority of

7:58

materials in battery are reused.

8:01

I think 95% of materials inside

8:03

lead acid batteries are reused. But

8:06

there's definitely a darker side to

8:08

that recycling story. What

8:11

is that? Yeah, so the positive

8:13

side of that is that the

8:15

lead recycling industry has done an

8:17

incredible job of building the infrastructure

8:19

to recycle nearly a hundred percent

8:21

of spent batteries. So

8:24

if you go and put in a new

8:26

car battery, like a new lead acid battery

8:28

or a new battery in a data center,

8:30

as an example I was referring to earlier,

8:33

the amount of metal in that battery that

8:35

came from a recycled source is about 80

8:37

to 90 percent. So those

8:39

new batteries are mostly old batteries

8:42

reborn as new batteries. And

8:44

if you contrast that today to a

8:46

new lithium battery that you get, regardless

8:49

of the application, whether it's an EV or

8:52

a piece of consumer electronics, etc., that

8:54

has under 1% of

8:57

the recycled lithium nickel or cobalt

8:59

in that new battery. It all

9:01

comes from mining sources today. And

9:03

that's going to change over time. And

9:06

as the lithium industry grows

9:08

and stabilizes and

9:11

the hyper growth curve stabilizes,

9:14

we make this transition. More and

9:16

more recycling infrastructure gets built. We

9:18

get closer and closer and migrate

9:21

from that less than 1% to 80

9:23

to 90 percent, just like what lead

9:25

has shown us. And it's really only

9:28

a couple decades of recycling, so it'll

9:30

happen fairly quickly. But really

9:32

the environmental and worker safety

9:34

impacts of lead recycling has

9:36

been a challenge through smelting

9:39

and has really put in incredible stress and

9:41

communities. And that's in the form

9:43

of massive pollution that goes into

9:45

the world in the

9:47

form of things like greenhouse gas and

9:49

CO2, but also the particulate matter material

9:52

and lead dust that could spread throughout

9:54

a community. Workers get

9:56

lead in their blood and

9:58

have injuries and deaths. And

10:01

we want to make sure that this

10:03

type of infrastructure is what doesn't get

10:05

built as we go from this 1%

10:08

to the 90% of lithium batteries

10:10

coming from recycled infrastructure in the

10:13

coming years. And I

10:15

think that we have a unique opportunity as an

10:18

industry and really the world to

10:20

build this massive lithium

10:22

battery recycling infrastructure right the first

10:25

time. So we're not talking about

10:27

going back and upgrading smelters

10:30

or standard hydro chemically intensive

10:32

processes with all the risks to

10:35

workers and waste streams. And

10:37

if you do that right the first time,

10:39

you've got the answer that we can be

10:42

really proud of in the future and really

10:44

make this transition a clean transition. So

10:46

that brings us to the aqua

10:49

metals recycling process. It replaces

10:52

chemical baths and high heat

10:55

with electricity to recover lithium

10:57

hydroxide, nickel cobalt, manganese dioxide.

10:59

The process has its roots

11:01

in the lead acid battery

11:03

industry. How does it

11:06

work? Yeah, so aqua refining is

11:08

what we call our suite of

11:10

technologies and it's all

11:12

our IP and our patent and patent

11:14

pending process. And what it does is

11:16

it utilizes a clean

11:19

electricity based which

11:21

could be renewable electricity closed

11:24

loop process. And that closed

11:26

loop process within the recycling

11:28

process produces high purity

11:31

metals from shredded lithium

11:33

ion batteries that we get

11:35

from what are called black

11:37

mass providers. And we can

11:40

deliver those raw materials right back

11:42

into the manufacturing supply chain with

11:44

aqua refining without the

11:46

emissions and really toxic

11:48

byproducts. And it really stands

11:51

out because we're recycling the

11:53

chemicals and regenerating the chemicals

11:56

through our innovative and unique processes

11:58

by using electricity. And we

12:00

use those chemicals over and over and

12:02

over again in that closed loop versus

12:05

a one-time use. And we don't

12:08

create these huge waste streams that

12:10

I was talking about earlier, like sodium

12:13

sulfate as an example, which can sometimes

12:15

exceed the amount of recycled materials. We

12:17

create none of that because we're reassembling

12:19

those molecules within our process over and

12:21

over again. And then ultimately

12:23

what does come out of the process

12:25

is things that we want to reuse

12:28

and put back into the battery supply chain

12:30

like lithium and cobalt and nickel

12:32

and copper and manganese. And

12:35

the other aspect of aqua refining

12:37

that's super critical and super important

12:40

is the working environment really only

12:42

requires safety goggles and a

12:44

lab coat. And you're working

12:46

in a room temperature area with

12:48

super clean facilities where

12:50

the temperatures really only reach about

12:53

hot tub temperatures in the isolated

12:55

tanks with pipes and pumps

12:57

and keeping everything away from the workers. And

12:59

that ultimately serves

13:01

our mission and goal of

13:04

creating jobs that members of

13:06

our own families and friends and

13:09

the general community actually want because people

13:11

don't want to go work in

13:14

a very difficult chemical or heat

13:16

intensive environment. And we

13:18

are, as a part of our mission, are

13:21

really trying to create desirable 21st century jobs

13:24

of the future. Yeah, so you've

13:26

got this pilot plant operating in Nevada right

13:29

now and what's the scale of

13:31

that plant? How much material are you processing?

13:33

And then what is the commercial facility that

13:36

you're planning when the fully operational look like?

13:38

Yeah, so we took a unique approach, I

13:40

think, as compared to a lot of other

13:42

players that are trying to move perhaps too

13:45

quickly in this industry that's getting

13:47

stood up. And we decided

13:49

at the early on days of our

13:52

lithium aqua refining program to go through

13:54

lab scale, then bench scale, and then

13:56

pilot scale, and then commercial demonstration plant,

13:58

and then mass. of commercial plant.

14:01

So we've already gone through the lab

14:05

and the bench testing and we built

14:07

a pilot plant and for the last

14:10

year have been operating our pilot plant

14:12

successfully and demonstrating our

14:14

first of kind technology and

14:16

producing all these critical minerals from that pilot plant, which

14:18

this quarter is going to go to 24 hours a

14:21

day by seven day

14:23

a week operations as we continue to

14:25

build out our commercial plant I'll talk

14:28

about later. So

14:30

that pilot facility today generates between 75 and

14:32

100 tons of volume of material per year.

14:36

So it's not really an economic

14:38

purpose. It's a validation of technology

14:40

and getting the critical minerals in

14:43

the hands of battery manufacturers and

14:45

big auto and EV manufacturers and

14:48

informed the scale up of our

14:50

technology. We're currently producing those high

14:52

purity minerals and products in

14:55

the form of things like lithium in

14:57

the form of lithium hydroxide, which is a

14:59

white substance and

15:02

also lithium carbonate. We

15:04

can make both of those forms

15:06

of lithium. And as

15:08

an example, the lithium that was

15:10

produced from our pilot plant was

15:12

recently used by our partners right

15:15

down the road here in Tahoe

15:17

Reno, Nevada, called Dragonfly Energy. And

15:19

Dragonfly Energy successfully manufactured

15:22

and cycled and tested lithium

15:25

ion battery phosphate next

15:27

generation cells and

15:29

proved that our lithium from a

15:31

recycled source went into that process.

15:33

That's a huge thing, because that

15:35

might be the first lithium

15:38

cells built in the world that

15:40

were made from sustainably recycled lithium

15:43

at 100% level. So we're now building

15:46

out our workforce and expanding our team

15:49

and getting that pilot plant operating 24

15:52

by 7 in Q1 of this year, 2024, as we get our

15:54

commercial demonstration facility. the

16:00

Sierra Arc up and running, which will start

16:02

to come online beginning in late Q2 of

16:05

2024. This is

16:07

a space that has garnered a

16:09

lot of investor interest, a lot

16:11

of potential policy support.

16:14

More and more eyes are now on

16:17

the importance of lithium battery recycling, but

16:19

it's still a very immature

16:22

industry, especially compared to something like

16:24

the lead-acid battery recycling industry. How

16:28

do you define the current supply chain

16:30

from how you

16:32

source materials to selling the

16:34

recycled materials? How immature

16:36

is it and how could it be refined?

16:39

Yeah, so the current supply

16:41

chain is today in

16:43

terms of commercial scale really smelters and

16:45

these hydro processes. The hydro processes that

16:47

are up and running at any scale

16:50

are happening in China. The

16:52

smelting is happening mostly in Europe

16:54

and a lot here in the

16:56

US as well as it

16:59

gets started. But now that's really

17:01

less than 1%, like I

17:03

was mentioning earlier, of batteries that are

17:05

getting back into the supply chain through

17:07

those recycled processes. So therein lies the

17:09

opportunity to build this new

17:12

infrastructure. And aqua

17:14

refining is what we

17:16

believe is a technology suite that will

17:18

allow us to build that infrastructure so

17:20

it's clean, safe, and protects

17:22

the workers and all those great things.

17:25

And so we've structured our business model

17:27

to help this industry really

17:29

stand up by creating an

17:32

intrinsic set of our own IP and

17:34

our own patents and building our own

17:37

facility, which today our first commercial facility

17:39

we call the Sierra Arc because

17:41

it's in the Tahoe-Reno area so it's right

17:44

by the Sierras. And the Arc stands for

17:46

Aqua Refining Recycling Center. And

17:49

that Sierra Arc will prove the technology

17:51

at scale. So then

17:53

with our IP we can joint

17:55

venture, license, and partner with other

17:57

players in the world to... develop

18:00

new recycling centers utilizing the superior

18:02

suite of technologies. We've already evidenced

18:05

that with a first licensee partner

18:07

of ours that's in Korea called

18:09

Yulho materials that made an investment

18:12

in AquaMuddles last year is

18:14

turning on right now a pretty

18:17

large lithium ion battery crushing and

18:19

shredding facility to create that black

18:21

mass that is the input into

18:23

our process. And they'll be building

18:26

basically a twin of our Sierra

18:28

arc in South Korea just

18:30

south of Seoul in the

18:32

coming years. And that will be the first

18:34

example of what we believe will be many

18:37

of partners that we can work with

18:39

to propagate what we believe is the

18:41

proper technology to do this recycling. So

18:43

we started this conversation by talking about

18:45

how important it is to lock

18:49

in cleaner infrastructure now,

18:51

because if we lock in more polluting methods,

18:53

it's going to be very hard to

18:56

displace as this industry scales and battery

18:59

waste mounts. So I want

19:01

to end this conversation with two scenarios.

19:03

One is just what

19:05

you think that the battery recycling industry looks like

19:07

or the pollution problem looks like if we don't

19:09

get this right. If if

19:12

we focus on solutions that you say are

19:14

problematic. And what is a well

19:16

managed clean circular battery

19:19

recycling industry look like? So walk me

19:21

through those two potential scenarios if we

19:23

are sitting at this really critical moment.

19:27

Yeah, there's really two alternate

19:29

future scenarios here. One

19:31

is that we continue to smelt and

19:34

run really chemical intensive and

19:37

waste producing and greenhouse

19:40

gas producing waste streams.

19:43

And that will create what

19:46

is already one of the top 10 most

19:48

pollutive industries in the world smelting times 10.

19:51

And we will not have

19:54

solved any problems in this

19:56

grand electrification transition from fossil fuels

19:58

to a world of. the battery age

20:01

and renewable energy storage and electric

20:03

vehicles that are powered by renewable

20:05

energy sources in the future. If

20:09

we recycle in the back office

20:11

all that stuff with a dirty

20:13

process, we won't have solved

20:15

these problems at all and we're gonna be

20:17

apologizing to our kids and grandkids that we

20:19

had a great idea but we didn't execute

20:22

it properly. The alternative universe is that we

20:24

find the right way to dig up these

20:26

minerals once from

20:28

the mining processes and reuse them

20:30

over and over and over infinitely as

20:33

we build and grow our capacities

20:36

of battery energy storage in the

20:38

form of massive quantities of EV

20:40

fleets and battery energy storage systems.

20:43

And by reusing those minerals and

20:45

doing that in a clean way

20:47

that doesn't impact the environment but

20:50

is very favorable to the environment is

20:52

gonna be that alternative universe that

20:55

we're certainly pursuing. And

20:57

that is something that we can brag

20:59

about to our kids and

21:01

grandkids that this great transition was

21:04

done by this generation and

21:06

really truly made the difference

21:08

for the climate and worker

21:10

environment and the real

21:13

battery age and utopian view of

21:15

society being powered by renewable energy.

21:17

Steve Gotton, President and CEO of

21:19

Aqua Metals. Thank you so much.

21:22

Thank you. Aqua

21:24

Metals is pioneering cleaner

21:26

and safer battery metals recycling through

21:28

innovation. The company is

21:30

building the first sustainable battery recycling

21:32

operation in North America in

21:35

Tahoe, Reno, expanding breakthrough tech that

21:38

can deliver high value raw materials while

21:41

reducing emissions and toxic byproducts. If you

21:43

wanna learn more about the sustainable closed-loop

21:45

metal recycling process from Aqua Metals, go

21:48

to aquametals.com. Thank

21:53

you.