Good day. My name is Britney and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Fourth Quarter and Full Year 2021 Li-Cycle Holdings Earnings Call and Webcast. [Operator Instructions] Thank you. I would now like to turn the call over to Nahla Azmy, Head of Investor Relations. Please go ahead..

Thank you Britney. Good morning and thank you everyone for joining us today for Li-Cycle’s review of our fourth quarter and full year 2021 results ended October 31. First, we will start today with a brief video.

Then we will follow with formal remarks from Tim Johnston, co-founder, Executive Chairman, Ajay Kochhar, co-founder, President and Bruce Macinnis Chief Financial Officer. Debbie Simpson our CFO effective February 01 is also joining us for the Q&A session that follows.

Ahead of this call Li-Cycle issued press releases, video and a presentation which can be found on investor relations section of our website at investors.li-cycle.com. On this call management will be making statements based on current expectations, plans, estimates and assumptions which are subject to significant risks and uncertainties.

Actual results could differ materially from our forward-looking statements. If any of our assumptions are incorrect including because of factors discussed in today’s press releases during this conference call and in our past reports and filing with the U.S. Securities and Exchange Commission, and the Ontario Securities Commission in Canada.

These documents can be found on our website@investors.lifecycle.com we do not undertake any duty to update any forward looking statements, whether written or oral leads during this call, or from time to time to reflect new information, future events or otherwise, except as required. With that I'm pleased to turn the call to Tim..

[Video Presentation] Thanks Nahla and good morning. We hope you enjoyed the video and came away with the sense of how mobilized and excited we are about Li-Cycle’s future growth prospects.

As you can see, we are positioning the company to be the leading, innovative and environmental recycler of lithium-ion batteries and a key secondary source of critical battery materials. Through these two roles, we are effectively closing the loop with the expanding battery materials supply chain in key growth markets.

2021 was a landmark vehicle Li-Cycle. It significantly and successfully ramped up the implementation of that Spoke and Hub Network Strategy, particularly in North America, addressing the growing market and customer need to secure supply domestically.

Before I review the highlights of the year, I would like to take the opportunity to welcome Debbie Simpson, who is taking over as CFO on February 1. Some time ago we announced that Bruce Macinnis plans to retire in January. We want to thank him for his contribution and key role in taking Li-Cycle public and we wish him well in his retirement.

Beginning on slide three for a review of our progress in key areas. First, on strategy. Starting off with a strong balance sheet, we made significant strides in long term strategic partnership arrangement with two leading global participants validating Li-Cycle business model.

The first is with coke and strategic platforms, which invested $100 million through the purchase of a convertible note. KSP has been rapidly growing in investments related to energy transformation, specifically within the electrification ecosystem.

In addition to the capital investment by KSP this partnership provided the Li-Cycle a strategic opportunity to deploy Koch’s engineering prowess, in spoke fabrication, spoke deployment and hub operational readiness. The second meaningful line is with LG Chem and LG Energy Solutions.

LGC is a leading global chemical company with expertise in active battery materials manufacturing. LGES is the largest global lithium-ion battery manufacturer for electric vehicles outside of China. By mid-March, both [Ph] have plans to invest a total of $50 million in Li-Cycle.

Upon completion of the commercial agreements for a battery supplier to add spokes, and off-take or nickel sulphate from our hub. In addition to the development of these key external stakeholder relationships, we have been building and aligning the internal leadership team.

We've made recent key business and finance leadership hires and realign to a regional structure to more effectively support the acceleration of the company's global growth plans.

Under the new structure, regional presidents will oversee recycling operation, commercial activities, and business development activities in the Americas, Europe, Middle East and Africa, and Asia Pacific. Quarter Li-Cycle’s operations is Health, Safety, Environment and Quality.

We are setting the foundation early to promote an HSEQ driven culture at all levels of the organization as we grow rapidly. On Health and Safety, we implemented an institutionalized an incident management system, providing an organizational wide incident communications framework which enables continuous improvement.

For environments and quality, we obtained key registrations for ISO 45001 pertaining to Health and Safety, 9001 pertaining to Quality Management Systems and 14001 pertaining to effective environmental management systems and R2 pertaining to Responsible Recycling.

For Kingston and Rochester operation maintained our ISO and R2 registration with zero and non-conformities. We completed all required environmental permits for the Arizona Spoke keeping the facility on track for operational start-up. Also per schedule, we have been advancing the permitting for the Alabama Spoke.

Regarding operational performance, the Kingston and Rochester Spokes continued their successful ramp up during the fourth quarter, bringing their full year black mass production ahead of our original target for fiscal year 2021.

In terms of projects and construction, as we glimpsed from a video, both the Alabama and Arizona Spokes remain on track to start up in 2022. Importantly, we also broke ground on the Rochester hub. Finally on the commercial front, we have made meaningful progress in both battery supply and end-product off-take.

On the supply side, we entered into a multiyear agreement with Ultium Cells, a joint venture of General Motors and LG Energy Solution to recycle the battery material scrap generated by the planned Ohio cell manufacturer. As part of this collaboration, we have plans to co-locate our fifth North American Spoke at this site.

We entered a major supply agreement through our partnership with Univar Solutions, a leader in waste management.

We are leveraging Univar’s expertise in collecting, sorting and managing waste of multiple OEM slots, and we will be the solution provider for lithium-ion battery waste coming from North American Electric Vehicle producers such as Mercedes Benz. By mid-March, we expect to have finalized long term agreements with LGC and LGES.

We will take their nickel bearing lithium-ion battery materials and supply them with nickel sulphate from our Rochester hub facility, closing the loop on their battery materials. Turning to slide four for a few additional commercial comments.

On the supply side, we increased and diversified the number of battery supply customers to approximately 85 this year. One of Li-Cycle competitive advantages is our IP-protected processing technology, which is agnostic lithium-ion battery recycling sources.

For example, recycling intake at our Spoke facilities has shifted predominately from consumer electronics in fiscal year 2020 to transportation OEM derived batteries, manufacturing scrap and end of life battery customers, including EV battery recalls in fiscal year 2021.

We are equipped to continue to be flexible in our pre-processing of recycled materials through our Spokes. As we approached mid-decade, we anticipated intake mix will tilt more heavily from battery manufacturing scrap. On the Off-take side, overall black mass production capacity was sold.

Beginning in 2022, all black mass production capacity will be sold under an off-take agreement until there's required for the Hub. Turning to slide five for operational highlights.

As depicted on the left side for the fourth quarter and full fiscal year, we saw an acceleration in black mass production year-on-year due to the ramp up of the Kingston and Rochester Spokes. On the right side, we have provided an example of how much battery material needs to be processed in order to generate an equivalent amount of black mass.

We have extended this to show the amount of high value critical battery end products that can be produced from black mass using chemical conversion rates. That concludes my formal remarks. Let me turn to Bruce for his financial review..

Thanks, Tim. Turning to slide six, I'll review results for the fourth quarter and full year. Please note that both periods reflect our fiscal year ending October 31, 2021. For the quarter in year, revenues increased to over $4 million and $7 million versus prior periods of $0.5 million and $0.8 million respectively.

This was driven by an increase in product sales, primarily as a result of increasing quantities of batteries and battery scrap processed at the Rochester Spoke as it ramps up. The continued on-boarding of new battery supply customers as well as higher recycling services.

Adjusted EBITDA loss was nearly $12 million and $25 million versus prior period loss of $4 million and $8 million respectively.

This was largely driven by hire personnel costs, professional fees, costs associated with running a public company and the increased network development costs such as raw materials and supplies related to the continued growth and expansion of the business. Finally, we ended with cash and cash equivalents of nearly $596 million at the end of period.

With that, let me turn it over to Ajay..

Thanks, Bruce. I will cover some recent strategic network developments in more detail and also discuss market trends and our business outlook. Turning to slide seven on our strategy. There are really two key takeaways here that I like to highlight.

First, we're focusing our near-to-medium term network growth investments in North America and Europe aligning with the market and customer needs. We will also be opportunist in exploring Asia Pacific. Second, manufacturing scrap continues to provide a strong base load for existing and future Spoke operations.

End-of-life battery volumes continue to rise steadily with anticipated acceleration, as early generation electric vehicles reached the end of their use-for-life. Turning to slide eight for a reminder of our stated 2025 integrated Spoke and Hub network targets.

We are reiterating that Li-Cycle is targeting annual processing capacity at our Spokes of at least 100,000 annual tonnes of lithium-ion battery equivalent input, which equates to approximately 20 gigawatt hours of battery materials.

After the Hub, reiterating that we are planning on a centralized network with at least 220,000 annual tonnes of lithium-ion battery equivalent input equivalent to approximately 45 gigawatt hours of battery materials. Next, I'll discuss some of the trends we are seeing as depicted on slides nine and 10.

Significant growth in battery mega factory supply chain investments in both North America and Europe has continued and accelerating pace. As consumer adoption of EVs is interesting, the global automotive OEMs are expanding manufacturing equipment to ensure market share of EV sales.

Li-Cycle is strategically and expeditiously positioning it’s Spoke and Hub network focusing on customer needs in North America and Europe, alongside an opportunistic approach in Asia Pacific.

We are locating our facilities close to centers where demand is clustered, while also securing base load key commercial customer partnerships that will underpin returns on our capital investment. Deceleration of cell, module and pack manufacturing is driving increasing needs for scrap recycling.

Approximately and at least 5% to 10% of lithium-ion battery manufacturing volumes are typically lost and scrapped. In North America, as seen on slide nine, manufacturing investments are now expected to surpass 500 gigawatt hours of capacity by 2025.

That suggests the addressable market for scrap is expected to be between 125,000 tonnes to 250,000 tonnes of manufacturing scrap by 2025. In Europe as shown on slide 10, this market is further along in terms of ED penetration and battery manufacturing relative to North America.

As expected by 2030, Europe will be two times the size of the North American market. As with our strategy in North America we are strategically developing sites close to demand centers while also securing key commercial contracts. Moving to slide 11, to discuss our Spoke expansion pipeline.

Our Spoke IP protected technology is capital light as a low environmental footprint in size. As you saw in the video, we are able to largely replicate each Spoke in a modular Lego built fashion, thereby scaling up both with pace and cost efficiently as the battery supply chain is rapidly growing.

Further, we are able to accommodate changing battery chemistries, and [Indiscernible] Spokes in Ohio in Norway, we will have approximately 55,000 tonnes per year of lithium-ion battery processing capacity underpinned by strong, commercial partnerships. Further, we are in advanced planning stages for a second Spoke in Europe, specifically in Germany.

Consistent with our strategy, we anticipate updating on this site upon additional progress. Turning to slide 12 for a review of our newly announced Ohio Spoke site. This Spoke site will be co-located on the same site as Ultium cells, battery cell manufacturing mega factory, currently under construction in Warren, Ohio.

On the background when fully operational in 2022, the $2.3 billion Ultium cells plant will span 3 million square feet with annual capacity of approximately 35 gigawatt hours. Ultium cells will construct a new building for the company's recycling facility and Li-Cycle will install and operate this proprietary Spoke technology at the new facility.

The new Spoke will have an annual processing capacity of approximately 15,000 tonnes and is expected to be operational in early 2023. The co-location will substantially reduce the costs associated with inbound logistics given our facilities processor [Ph] location relative to Ultium cells mega-factory.

Turning to slide 13, for a discussion of our recently announced first Spoke launch into Europe. This Spoke will be located in Norway, through joint-venture ECO STOR and Morrow Batteries. ECO STOR is a leading second-life energy storage business focused on repurposing lithium-ion batteries into stationary energy storage systems.

Morrow batteries is building the state-of-the art battery cell manufacturing plant with an annual capacity of over 40 gigawatt hours. We floated [Ph] in Norway strategically due to its nearly 75% EV penetration rate, which is the highest EV penetration rate in the world.

It is projected that EV sales in Norway will reach 100% as early as spring of this year. We will be the majority owner of the joint-venture with ECO STOR and Morrow being minority owners.

We will be responsible for the construction and operation of facility which is expected to come online by early 2023 with processing capacity of 10,000 tonnes per year of lithium-ion batteries.

We've also engaged Koch Engineered Solutions to construct, test, and ship the modular Spoke facility which is an extension of Koch’s strategic relationship with Li-Cycle The facility will have the capability to process battery manufacturing scrap, full EV packs and energy storage systems.

ECO STOR will provide a joint-venture with end-of-life lithium-ion batteries and Morrow will provide battery manufacturing scrap. Briefly to recap our Rochester Hub project on slide 14.

Utilizing Li-Cycles IP-protected hydrometallurgical technology in a centralized location and leveraging historic infrastructure, we are able to achieve a number of key competitive advantages. These include higher resource recovery, lower capital intensity, lower environmental footprint, and greater employee safety.

While the product is based on uniquely designed processing technology, it does not require first in the kind department. In addition to breaking ground on the project, we have frozen our process engineering design, and consequently pulled forward all orders for long lead equipment.

We are securing construction equipment and materials to maintain schedule and costs. We contracted Hatch as the EPCM contractor and are finalizing our general contractor selection in the next few weeks.

As we approach mechanical completion and commissioning in 2023, we intend to continue seeking opportunities to engage with Koch Engineering Solutions as part of our operational readiness strategy. Over the course of 2022 and 2023, we will provide updates on the development of the Rochester Hub.

Turning to slide 15, to address our key objectives and business outlook for 2022. The leadership team is directly aligned with shareholders based on these key objectives. First, we expect to continue to build on our balance sheet in support of our growth, to provide us with a strong base and optionality.

It will also manage operating expenses as we build our business towards a path to profitability. Second, as mentioned in Tim's remarks, Health, Safety, Environmental Quality are core to Li-Cycle’s culture, values, and operating disciplines.

We are are establishing a strong foundation early at all of our locations that we can continue to implement and refine for new sites from development through operation. Third, we will continue to execute on the Rochester Hub on time and on budget to support start up in 2023.

Fourth, we expect to deliver on our black mass production target range of 6,500 tonnes to 7,500 tonnes in fiscal year 2022 once he had been note on this metric. So more to this past year, we've anticipate production to ramp in the second half of fiscal 2022 with an acceleration into early 2023.

That would include continued optimization of the Kingston and Rochester Spokes, and wrapping up the Arizona and Alabama facilities. We will continue to make progress on development of Spokes in Ohio, Norway, and Germany. Before Q&A, I would like to conclude on some key points on slide 16.

We are experiencing a growth inflection point for the battery materials supply chain. We are moving strategically and expeditiously with our customers and the market demand, and have significantly advanced our Spoke and Hub network, particularly in North America and Europe.

We executed on a number of partnerships with leading commercial partners and we have a strong balance sheet to support our pipeline of growth projects. Jim and I are extremely thankful and proud of the team's achievements, and continued focus on execution. This concludes our formal remarks and we are looking forward to your questions..

[Operator Instructions] And we will take our first question from Brian Dobson with Chardan Capital Markets. Your line is now open..

Hi, good morning. Maybe we can take it up to 30,000 feet per minute.

Would you mind elaborating on what you see as the key megatrends shaping the sector over the next few years and how you’ve positioned like to see that benefit from that evolving landscape?.

Yes, hi, Brian. It's Ajay here and I'll start and then Tim and can add on if needed. So look, it's an extremely, extremely exciting time in the electrification market. We're seeing unprecedented shifts and acceleration and deployment of facilities and capital from our customers. To give you an example.

This week we -- of course today announced our colocation with Ultium. On Tuesday, folks would have likely picked up but they announced a third mega factory beyond Ohio, which will be in Michigan, which is going to be bigger than the one in Ohio.

Starting it folks look at EV targets, the acceleration of our customers, trying to meet customer demand, the pace continues to grow. And so we're being prudent and thoughtful how we continue to match up with that.

But the really exciting thing about that the mega trend is it provides contracted baseload for us, along with those tier one partners, for us to drive our network and ultimately, financial returns. So that's one large, mega trend, I would say is dominating from our perspective. The second is on the flip side.

And it's related is, of course, critical materials. So we've seen continued tightness in the supply of critical materials to meet that demand. That of course bodes well for Li-Cycle sitting at the intersection of those megatrends, our products are lithium and nickel and cobalt, ultimately, that go back into lithium-ion batteries.

So that also bodes very well for us. So we're seeing the demand and the macro, from the market benefits on both sides of the equation..

And then just add on to that, I think the other thing that we're seeing is increased focus on how the materials are produced. I mean, we've seen all sorts of geopolitical instability and the supply of lithium in particular, over the last couple of weeks, and in Europe and in South America.

And so as we continue to work closely with our partners, we're in a benefited position because of our technology. And when we look at our Spoke facilities, we don't generate any wastewater, don't generate a meaningful air emissions, we move forward to our hub facilities, once again, with zero liquid discharge, we have no thermal processes.

And so this is closely aligned with what not only our customers want to see, but communities and governments around the world. So we're highly confident that we'll be able to continue to benefit from this general trend. The other two factors that would add on is the domestic supply.

And we talked about Europe, and we talked about South America just now. But of course, here in North America, the need to be able to produce materials domestically, is growing in terms of critical consciousness.

At government levels, at the customer level, the groups that actually make the batteries, and need the materials, they're highly aware of the need for domestic supply. And then the final thing is one thing that we're really seeing a move towards in particularly in Europe, is the need for recycled material. So you overlap all these things.

And then you have on top of that, a push with the back battery directive to include recycle material, a minimum amount in the batteries that are produced, and go into vehicles and other end product users. So we see a whole range of items that are highly beneficial for industry. And we'll continue to leverage that as we build out our network..

Great, thank you. That's very helpful. And just as a brief follow up.

So your two new Spoke facilities announced in the past 24 hours, one is co-located, the other standalone, as you continue to roll out new locations, do you think that you'll favor one strategy versus the other? What should we expect?.

Thanks, Brian, I'll start and then Tim should add on. So I think it's a mix of both. And as articulated in the presentation we have co-located and merchants. However, one thing that doesn't change amongst all that is we're always looking for a contracted base load to feed the facility to drive the ultimate black mass production.

To that of course, coming to our [Indiscernible]. So whether it's, approximately located thus recalling “Merchant”, taking supply from numerous different suppliers, or co-located as a captain source, for example, co-located with mega factories, that first principle doesn't change associated with contracted base load..

And I’d just add to that having an existing network of facilities where we can actually bring customers to our facility, to show them what they're doing.

We are able to give with confidence and we went through this process with Ultium and LG, -- where, whereby we had to demonstrate that we actually do what we say that we effectively we do what we say that we do.

And that confidence is one of the critical aspects of course bringing any additional operation onto a new onto an existing site with an existing business is something that they take extremely seriously. And so as Ajay said, it will be continue to be a mix.

And the benefit of that technology is we have that flexibility to be able to go directly onto the site with minimal impact, and be able to do it in a safe and efficient way. Or we can be a standalone facility and service a range of customers as we do, for example, in Kingston, Rochester..

Great, thank you. Thank you very much..

We will take our next question from PJ Juvekar with Citi. Your line is now open..

Good morning, guys. Just a couple of questions. First, on the Rochester Hub, you upsize that to 35,000 tonnes of black mass. And you talked about, being within budget for capital. But, we're seeing labor shortages, we're seeing sort of raw material inflation, the Fed is talking about it.

Are you seeing any of that in all the construction that you're doing? Is labor an issue? Can you just talk about what you're seeing out there in the real conditions there?.

Yes, no problems PJ happy to answer that. And so let me address it in two parts, in relation to materials and equipment. We identified this early in the process. And I think that was really a very critical step for the organization.

And so what we did was we actually brought forth a lot of our procurement activities into the front end of the project, in order to guarantee pricing and supply. The traditional way of building a project like this wouldn't be just in time delivery of these materials and equipment. For that PJ we went against that.

And we secured a warehouse, for example, we are able to address that through our procurement strategy. Labor is another very important one as we've been going through the process of selecting our general contractor.

And we expect as Ajay said in his earlier remarks to finalize that process in the next few weeks, we've actually gone through the process and done quite detailed labor studies.

But we're also looking to work with a contractor that has the ability to impart what we call self-perform the work which provides a certain level of reassurance in relation to that labor supply.

We are fortunate to be in Rochester, Rochester is the basin for the surrounding area in the northeast, we have the ability to pull labor from Buffalo or Syracuse and, and other approximate cities to Rochester. So at this point in time, we don't see an issue.

With that PJ we have gone through, we've done the work, we understand what the costs are, we understand what the expected increase in inflation cost, the labor are likely to be through the project. And all of that is budgeted in our plan..

Great. Thanks, Tim. And then the Ohio plant is co-located with Ultium cells. Is that under a long term take or pay contract because it is co-located. Is that sort of strategy different than your other Spokes. And then as you expand into Europe, and go into Germany, would you look for similar partners as you did in Norway? Thank you..

Thanks, PJ. I'll take that one. It's Ajay. So this co-location is basically an augmentation of our existing contract that was announced last year, with Ultium. And in just to elucidate a little bit, when we do this, of course, as I articulated we want contracted base load fee.

So we want the access to the manufacturer and rejects yield loss that's being kicked off. And, and that's a critical part of our overall equation. In December, we announced of course, the forthcoming transaction with LG that is extremely transformative for the business.

So these are the anchor partners that we're growing with, whether it be broadly speaking from a high level, North America, Europe and around the world. So the Ultium co-location is not quite different in that regard. I would just say it's an augmentation and a very exciting augmentation of us being a captive co-located recycler.

For Europe, in general, again, as I said, same strategy we have a mix of different supply sources. In Norway, for example, that's the end-of-life, largest EV market in the world from a constriction perspective, and manufacturing scrap.

So whenever we make these decisions to site we'll always be looking to who are those anchor partners that -- from our perspective, the reason they go there and that doesn't change, rather co-located or if it's merchant, or on a standalone basis..

Great, thank you..

And we will take our next question from Robin Fiedler with BMO Capital Markets. Your line is now open..

Good morning, everyone. My first question geographic expansion plans. Hey Ajay. Clearly there's a shift to North America and Europe.

Now, is it fair to assume that if the feedstock can be secure that the vast majority or even all of the 2025 capacity targets can be met with North American Europe?.

I'll start on that and perhaps -- can start on. Yes, so we were very conscious today, I think folks would have picked up to very clearly reiterate our 2025 targets. One thing we've been saying, as I think folks have been attuned to in the past quarters or months, is the market is shifting.

And our customers are shifting, demand is shifting, and they're being nimble. And a lot of that has to do with pronounced and accelerated growth in both North America and Europe, as everybody has seen.

So ultimately for us, what are we doing, we're processing battery materials to generate and products and returning to the economy, the battery supply chain, to drive ultimate financial return. But a change, it's a little bit agnostic of location.

And so our articulation today was very again, intentional, obviously, to focus on the near term investments being focused and prioritized in North American Europe, again, just following our customers. [Indiscernible] but not at the same time you need this downward approach.

You cannot ignore that the battery epicentres of the world are in Asia Pacific, right are important customers and those that are driving a lot of what's happening in the world, are also in Asia Pacific. So there's a balanced approach. But there is a focus on where we put steel in the ground, per se, with assets following our customers.

And we do see a pronounced shift more in North America and Europe..

That’s great. And maybe just as a follow I just want to ask a bit on near term earnings.

Maybe you can address some of the expected incremental costs year-over-year in 2022 now with respect to help development construction, and also speak to how much of the black mass production will actually be tribute to sales and how much will be inventory build ahead of the Hub commissioning next year.

And then with all that in mind, do you expect 2022 EBITDA to be better or worse than 2021?.

Yes, so I'll start with the first. And then as needed Debbie and Tim can add on. So let me start with the black mass question. So as articulated in this webcast, we will actually continue to sell black mass for fiscal 2022.

And folks who think this is a high level, when we switch that black mass in defeating the hub, it's just a diversion right from when we do that from selling it to third parties versus being diverted to feeder and help capture value. So in 2022, fiscal 2022 we do not see doing that, they will continue to sell.

But of course, as we approach the Hub we’ll continue to assess that diversion and the associated value capture vis-à-vis the fee to the Hub. In terms of capital spend and high level commentary on the year for the Hub, I can start and Tim can perhaps add onto that.

So we qualitatively commented on the webcast or the script that we will see an acceleration the back half of 2022, much like what we saw in 2021. So that goes for capital spending, that goes for Hub and Spokes for other black mass for producing some of course peanut butter spread it is a back-half loading with a further acceleration into early 2023.

So from a high level, if you think about the profile of the spend and the profile of overdoing it is again, accelerating her back half loaded in the latter half of the year..

And, Robin maybe just to add on to that. I think there's a couple of things to layer in. In terms of capital spend we ended the fiscal year with almost $600 million of cash and cash equivalents on hand.

We're well financed for the capital projects that we've outlaid that capital spend for the Hub is accelerated in terms of the early procurement strategy, but it is a spend over effectively two years. And we're very conscious of that.

On our backside that the key thing in terms of fiscal year 2022, we are in another build yet, one of the key things is we continue to add people in order to support the growth that's needed within the organization and operations that will be coming online in 2023, particularly around the half.

So today, we stand at about 200 people, just over 200 people within the organization. We expect that to grow to approximately 400 by the end of the year, as we continue to prepare to scale the operations..

Yes, just putting that together, back to your question Robin on EBITDA. Look, I think we've provided the key building blocks. Get there, including production, including a lot of our dollar spend is to disarticulated is going to be heavily on CapEx. So think about this year, something key to pay attention to.

And then as Tim just articulated the other pieces, one of the drivers of the OpEx as well. We provided the building blocks from our perspective to get to that color..

And we will take our next question from David Ives [Ph] with Wedbush. Your line is now open..

Thanks. So. So I think can you hit on when we think about some of the conversations you're having with OEMs specifically in the U.S.

can you just comparing the interest whether it is today to maybe even a year ago, just seeing what we're, watching from EV perspective?.

Thanks, Dan. And appreciate the question. Yes, I think the tone has shifted to further and further proactive further and further pulling investments for activity for care about recycling, because of all the things we actually spoke about in the beginning of the call or the Q&A here, rather. And so we it's a big shift.

I mean, last year say even two years ago, recycling was important. I think, as they were thinking through electrification strategy, and it was always part of the thinking.

But in some ways until you start making batteries and generating scrap and referred, some of our customers saying that they realize that getting into battery making you as a result make scrapping actually the fact you're getting the recycling business, not in terms of recycling themselves, but the need for recycling.

So I think has that all been actually physically realized? There's been an acceleration in the desire and the tone, to need to be very practical on that front.

And then what happens is, you scan the market, you say, well, who's doing this? Right, who actually adapted from the ground, technology combined with strong commercial partnerships and validated that will take time, right, you can't just get a recycler, say you're going to do this and then -- it batteries.

The market is not necessarily very broad for the parties that can actually fulfill that. So we continue to see strong benefits. We are in the right place, the right technology and the right commercial partnerships that have taken time to get there to benefit from that tone change. And that mind-set change that's evolved in the last year plus..

And so when used in a competitive process, like just how important is it, you know Tim even Hub and Spoke and obviously the Rochester build out seems like on target for 2023.

Like, how big is that? When there's so many other competitors going after some of the same opportunities? Maybe you could or you can just give us or name the customer like some real life example of competitive process..

No problem, Dan. I mean, I think one of the great examples there is what we announced with LG. I mean that we talked before, a lot about the tailwinds that are driving. But at the moment it’s security of raw materials.

And, and so what we're seeing is our ability and the fact that we're now in construction, and we're moving forward with our facility, our Hub in Rochester, that has become a key factor for us to be able to negotiate these contracts.

Because I see the holes in their supply chains coming forward as they continue to announce new plants and want to bring on more cell manufacturing capacity. And they see us as a way of filling in plod in that gap that they have. So I would say it's critical. People often ask us Daniel what's more important is a Spoke or the Hub? It's really hard.

I mean, you need the funnel you need to be able to receive and process those battery materials on the front end. But the Hub is the enabler that ensures that they're able to impart meet that gap in terms of the critical materials..

Great, thanks..

And we will take our next question from Ben Kallo with Baird. Your line is open..

Hey guys, thank you very much for taking my question, and good morning. I just want to know, maybe following on Dan's question there just about the discussions with customers and not to name a names.

But how's that evolved? Because you signed several different ones, but how have the terms on that evolved? If at you can talk about like, fixed volumes and or pricing, is it the same? Or is it change over time? That's my first question. Thanks..

Thanks, and happy to address that subject. So I would say as Tim just said, we just continue to find ourselves in better and better position, vis-à-vis the steps we've taken on the technology now being commercially operational, to be prepared to take that volume.

And so bodes extremely well, when you have a lot more material than there is actually homes for it to go to. And that's, frankly, what's happening now, some ways, and it will continue. We're seeing us needing to keep up and continue our build out associated with that on going so manufacturing base, which is a lot of our material, of course.

So we have not seem to be clear and address the question for now. We've not seen a deterioration in terms in thinking any worse, we're in a great position. What I would say, on the back of that is if I think as we go forward, for the economics of the business, one thing to remind folks that we also have an inherent hedge.

On the specialty materials, sometimes when we're getting, for example, manufacturing scrap, it is priced typically at both, depending on the material form, price based on the content of those materials, at a fixed integral discount, typically. And then we're making and then reproducing, ultimately, those materials to go back to the supply chain.

So it's as though we have a high fixed cost base that is going to be in big trouble if prices go to a different place. Of course, we're in a very bullish market are critical materials. But we have an inherent hedge in the business no matter what that we benefit, ultimately, it can move as those critical material trends evolve..

Yes. And just to add on to that, Ben, in terms of the trend that we're seeing on the customer side, we're definitely seeing an increase in sophistication and a move towards this model, which is much more favorable from our perspective. As Ajay said to provide that that natural, natural hedge..

And just on that front, what type of contract lengths are people willing to sign and has that changed?.

Yes, it's a multi-year, it actually keeps getting even better posted as seen in December. That's a 10-year contract. And we're in process of finalizing with LG. So the lengths have actually, broadly speaking, you either stay the same or continue to grow.

And I think that speaks to what they're trying to get at, which is security of supply back and also security of a home for the material to go to be dealt with as they continue to....

And sorry, if I missed this, but the LGs I think focus on nickel.

And I just want to understand how this is different than other stuff that you do with the other with the Hub in Rochester? Why it's only nickel, to sell that to lithium and cobalt and other materials to other people or, or is that just you're just using that those that off-take to produce lithium, I mean, produce nickel? Apologies..

Alright, that's a great question. Just to clarify, so 100% of our volume from the Rochester Hub will be going to track this for lithium, nickel, cobalt, manganese and graphite. So that's contracted, what we produce will be bought.

Disagreement with LG and then any other downstream where it goes and then comes back to supply chain to be clear is actually downstream in practice. However, we have the ability and workflows to access to allocate the product with those. So that's just a little bit of the flow.

In terms of why nickel for LG? A lot of their chemistry in their production base is high nickel. And since there is a focus on nickel, that said, it does not preclude us from exploring other opportunities broadly speaking on other materials..

[Indiscernible] materials. Sorry about the sense that we will be producing all those other material there's nothing special about the LG material that precludes us from producing the respective amounts of cobalt and lithium and the like..

Great. And my follow on was just on the Koch release should be called that out for them helping with the procurement maybe engineering of in Europe. Is that going to be the status quo going forward? Or is that because of the location.

And does that have any impact on your current operations, so I think you had a kind of a build and ship facility for the Spoke, Spokes before..

No, it's an add on basically, Ben. So as we said, in Kingston, through our own build facility that you're referring to, we have the ability to produce approximately six Spoke facilities for a year from that facility.

The benefit of working with Clark [Ph] is that they have a large engineering team, we had to update some of the engineering aspects to make it compliant with European standards, which they are helping us with. And we're continuing to work with them as a secondary outlet to take some of that pressure off.

We have a lot of plans to build in the years to come. And, and having that additional bandwidth on the build capacity, which is being highly valuable..

Great. Thank you guys..

And we will take our next question from Jeff Osborne with Cowen & Company. Your line is now open..

Hey, good morning, guys. Just a couple quick ones, on my end, a lot of content on the call here. Circling back to the CapEx commentary, I think on the prior call, with the LG contract you had mentioned the total CapEx was 485 for the Hub facility.

Can you give us a sense of maybe a third of that is in 2022, and two thirds in 2023, or any type of scope?.

Yes, so I'll start Jeff and maybe Tim can add on. So I'd say for sure this is a big dolger [ph]. Probably speaking back half loaded in the latter half of 2022. We have said, of course that the facilities targeted to be commissioned, or commissioning in 2023. So that is unchanged. That's the general comment this is the filter, too much data..

Yes. So I think that it's reasonable to assume that the majority of the materials will be and equipment will be bought in FY 2022. One of the things that we will be providing in the future is more detailed updates in terms of how we're progressing on spend and completion.

But, as we look at the breakdown, I would say that focus on the materials and equipment in FY 2022, of course, will be have people the general contractor will be well underway here in the next couple of months is definitely front loaded to 2022..

Got it. That’s helpful.

And I think that same call last month, you had referenced pursuing government funding, Have you submitted any applications or had any discussion with the American government about funding for the facility?.

That could catch up, so I can't comment on specific opportunities. But maybe Debbie can add if she wants to some broader balancing strategy. But [Indiscernible] we would potentially fit well for something like that. But I won't comment on any specific programs, and getting me out here a little bit to the broader stand here..

Hey Jeff, the intention is to take a look at. So we're working on multiple options for funding and what will be important for us is to prioritize next to our non-dilutive options. So in the end, what we really need to do is build a flexible balance sheet here that funds us for the future growth.

So we have a balance sheet right now, that funds us for all the CapEx and all the plans, including Germany that we just that we just talked about.

With a current balance sheet, but what we really need to do based on what Ajay and Tim said earlier, it was beyond that to how do we build a structure that's flexible for this great opportunities, it's ahead of what we've already committed to..

Got it, makes perfect sense. The last one I had is just the commentary around 2022, and the production relative to the time of the SPAC.

Is that the delta there solely just the pace of Spoke conditions and what's operational versus under construction, or are there any other aspects that we should be aware of?.

Yes I like that number that we've done everything we do down with all fiscal year, fall -- in the October 31. So I'm saying that I think, yes, folks can go back and see of course, focused on what's moving forward. But there was a different time basis or I believe calendar originally..

Got it. Thank you..

And we will take our final question from Evan [Indiscernible] with Morgan Stanley. Your line is now open..

Good morning, guys. Evan on behalf of Adam Jonas.

When we think about the newly announced Spokes, are you kind of seeing the same type of cost inflation that you're seeing with the announcement of the upsized Rochester Hub? If I think back a couple of months ago, when he talked about Spoke costs and believe, like incremental Spoke was like 6 million to 10 million total, any commentary there would be helpful? Thank you..

I'll start and Tim can add. I think the short answer is no, not as pronounced. And there's, of course, very different plants there lumpsum turnkey, Lego build style. And Tim can add here, but no in short..

I would say that the other aspect is that we have made technical improvements to the plant to be able to bring down the capital intensity. I'll give you a direct example. And that is the traditionally we will focus on 5000 tonnes per year of battery materials as being a single what we would call a single line processing facility.

We've been able to make advancements and we're now moving forward with a 10,000 tonne per year single line facility and that really has helped bring down that capital intensity even more than where it was before. So we expect to be able to continue to -- be able to make further improvements..

Thank you..

And there are no further questions in queue. This concludes today's Li-Cycle Holdings fourth quarter and full year 2021 earnings call and webcast. Please disconnect your line at this time, and have a wonderful day..