The Neometals Ltd (ASX: NMT) share price has jumped today after it took a step closer to building a battery recycling plant in Germany.
Management released the Engineering Cost Study (ECS) for the first stage shredding plant (Spoke). The first stage Spoke has the potential to process 50 tonnes per day of lithium-ion battery scrap.
The company said that the plant will be Europe's first integrated discharging and disassembly operation. As such, the facility can process larger modules from electric vehicles (EVs) and cell production scrap.
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Neometals share price powers up on ECS details
The Neometals share price rallied 3.5% in early trade to $1.64 but has slipped 0.3% to 1.58 at the time of writing. In contrast, the S&P/ASX All Ordinaries Index (ASX: XAO) has added 0.7%.
The operating cost is estimated at US$1,400 per tonne of feed. This assumes a mix of 70% modules from EVs and 30% cells.
The capital cost of the project is forecast at US$103.9 million, which includes buildings, plant and equipment, installation, infrastructure, pre-production and owner's costs – such as engineering, procurement, and construction (EPC).
The capital cost estimate also has a 20% contingency, in case things don't go to plan as often the case.
Second ECS expected by year end
The plant is owned by Primobius GmbH, which is a 50-50 joint venture between Neometals and MS group GmbH.
Investors' love for all things lithium has benefited the Neometals share price. The surging popularity of EVs will mean demand for battery recycling plants is set to grow strongly.
The ECS comprises two parts. The first is the Spoke and the second is the hydrometallurgical refinery Hub. The Hub will be co-located with the Spoke on a greenfields industrial park. The second part of the ECS is scheduled to be completed in December this year.
Lining up customer agreements
Primobius is looking to strike supply agreements with Mercedes-Benz and Stelco Holdings. The JV is hoping to have the signed agreements in place in 2023.
Neometals' managing director Chris Reed said:
The addition of a large manual discharging and disassembly operation for modules comes at a cost, that is outweighed by access to a larger market in the medium to long-term. It is also worth noting that we currently get paid to process modules whereas many American recyclers compete to buy purchase individual cells.
Our proprietary refining Hub is the largest value generator for Primobius and its customers. The Hub processes Black Mass into high-purity and higher-value battery materials which can be used in production of new batteries.
Neometals share price snapshot
The Neometals share price has jumped 92% over the past year compared with a 6% decline in the All Ordinaries.
Other ASX lithium-exposed shares have also outperformed on expectations that demand for the commodity will outstrip supply for years to come.
