RecycLiCo Battery Materials Inc. (AMY.V) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the UBS Energy Transition Call hosted by Jon Windham. My name is Thomas, and I'm event manager for today. [Operator Instructions] This conference is being recorded. And now I would like to hand over to Jon. Please proceed.

Perfect. Thanks, Thomas, and welcome, everybody, to the latest installment of the UBS Energy Transition Call Series. So in this call series, we try to connect UBS institutional clients with energy experts and innovative companies that are in some way enabling or driving the energy transition. So as usual, this your host, Jon Windham. I head up Alternative Energy & Environmental Services Equity Research here at UBS. And today, we're going to be talking lithium battery cycling with RecycLiCo Battery Materials. It's actually American Manganese Inc., listed AMY, but is doing business as RecycLiCo Battery. They are a cathode materials company based in British Columbia, Canada, focused on upcycling Lithium-ion battery waste into high-value battery cathode materials using a closed loop patented process. So on this call today, we're going to discuss RecycLiCo Battery Materials' strategy and current trends, challenges and opportunities for the lithium battery recycling industry. Very happy to have with us today, Zarko Meseldzija, which [indiscernible] if I mess that up, all apologies, I'm a bit of a mumble mouth in general. So that's on me. He is the CTO and Director of American Manganese. Before I turn it over to Zarko, just a few logistical items. First, there are slides to accompany today's discussion. They were distributed via e-mail to preregistered UBS clients about 5 minutes ago. If you need a copy of that, do feel free to e-mail me. I'm sure if you found your way to this call, you have my e-mail address, it's [email protected]. Just to note, if you registered with a Gmail address or Yahoo!, I'm not able to send slides to you, there's a firewall essentially for UBS equity research. But if you have a work email and you send me an email, I will make sure the slides get to you or most of you should have gotten them in the last 5 minutes. All right. The format of today's call will be a presentation by Zarko, followed by Q&A. Thomas, the operator, will provide instructions and [ argue ] any questions after the presentation. And always, if you prefer, you can email me questions directly, and I will ask them anonymously for you as time permits. And now lastly, disclosure as UBS research analysts, we are replied to provide certain disclosures. The short of it is, this call is not a recommended -- sorry, this call in and of itself is not a recommendation by UBS to transact in any security. The full list of disclosures is available on ubs.com/disclosure. All right. Zarko, thank you so much for being here today. Let's get into the fun stop. Lithium-ion battery recycling. Not something that entered my life a lot before 2 years ago, and now it's between life cycle going public and just, I think people looking at the sustainability of this ramp in both batteries for EVs as well as batteries for the grid, really thinking through with the final solutions and just the TAM seems to be very large in the opportunity set for creating business models around creating sustainable solutions for lithium-ion batteries. So really appreciate you being here today. And with that, I will turn the floor over to you.

Yes. Thank you, Jon. And you're right, this really hits on a lot of hot topics right now related to EV, sustainability, metals, looking at the current supply chain as well. So -- we're going to talk about all that and how recycling really fits in. So like you said, everybody should have some slides with them. And I'll be going over all try to reference as much as I can for those of those just listening. But yes, we are recycled battery materials, are doing business as RecycLiCo Battery Materials, currently transitioning from our American Manganese Inc. name, and we are publicly listed, as Jon had mentioned. So as we get to the first -- or Slide #2, some quick background on us is, we're based here in Greater Vancouver and working on the lithium-ion battery recycling and upcycling. So we've been doing this since 2016. We have multiple publications and patents involved with the recycling work. So we have patents in the U.S., Korea, Japan, Canada, China and India. And really, with this technology play is where our business model fits in best as the technology is the licensing and joint development of our technology. And we have done really methodical approach in building up this technology and making sure we derisk it as we scale and ensuring efficient operations at these larger scales. So we've gone from initial theoretical work, some bench scale testing. And now we have a lot of updates on our demonstration plant work that's here in the Greater Vancouver area. If we go to the next slide, #3, just a quick overview and understanding of the lithium-ion battery industry and its components and costs. The lithium-ion battery being made up of cathode, anode, separator and electrolyte. But really, it's the cathode that we are focusing on where -- because that's where you have your composition of lithium, nickel, manganese and cobalt. And I'm sure you've read about these in the news, a lot supply chain restrictions, increase in prices as well over the last few years. So there's a big focus on recovering these materials, whether that's through primary or recycling. Because when we look at the estimated material cost that cathode component can make up over 50% or just about 50% of all the other material -- of all the material costs put together that go inside of a lithium-ion battery. And even going up more as these prices start to increase. And then when we go over to looking at Slide #4, where we have this the traditional supply chain. I say it's complex and it's linear. We mine lithium in South America. We get cobalt from Africa. We get nickel from Asia Pacific region. And all of this is really mine, process, shipped to specific refining locations are really all concentrated in mostly China, where these materials are converted into what we call metal salts, like nickel sulfate, cobalt sulfate and then these materials are further refined into a higher-value product, that's called the precursor cathode active material, or PCAM, and as well as like lithium hydroxide. And it's from these materials that you would then produce different cathode active materials that would go further into the battery manufacturing process and then finally, into electric vehicles. So many steps, a lot of transportation of these materials. And when we just think from the sustainability side of things and the mining of these materials, I think the local populations in each of these individual areas all have their concerns with the mining practice. So we really have to reach a point of recycled material in batteries to reduce our reliance on mining as well. But -- yes, I'm not -- it's a big environmental impact, and we're not going to get rid of mining tomorrow, but recycling is a complement to that. And further on that, on Slide 5, when I talk about China's dominance in this processing and refining space, they've really developed a mature industry. And then when we look at throughout the whole supply chain from the chemical processing and taking these mine materials into the production of those individual cathodes and anodes and as well as the lithium-ion battery manufacturing. China is well over 50% of all the world's capacity. And then as we see, there is going to be an exponential growth in electric vehicles. And with this we've become extremely reliant on China. And it's the -- there is a focus now in North America and Europe in growing gigafactory capacity. So that's the actual battery manufacturing as well as had the midstream components with the processing and refining of these chemical materials. And as you'd see in Slide 6, there's the different initiatives from European and North American gigafactories are being announced. According to Benchmark Minerals, there's over 1,400 gigawatt hours of lithium-ion battery capacity planned for by 2031. And every watt hour -- in this -- that's built is eventually going to need to be recycled, whether that is directly from the manufacturing process or later at the end of life of that battery. And many people surprised, there's 2 streams of material or feedstock that is a good potential for recycling. One is near-term and one is more of a longer vision. And I talk about the first being the off-spec battery production scrap as the near-term recycling opportunity. This is essentially when the lithium-ion battery is being made. There is a certain quality that needs to be achieved and that cannot be perfect every time. And then this material is disposed of as off spec, not good enough, and it's just more so treated as a waste, but it still has all of your valuable lithium, nickel, manganese and cobalt on there that you can recover. And essentially, what you're seeing on Slide 7 in that left picture is a mixture of those components coated on to an aluminum foil. And then this is where we focus our process on extracting that material into new high-value materials. The second potential feedstock is the black mass material, and this really comes from the end-of-life component of a lithium-ion battery. So this is where now the EV has reached its end of life, whether that's 10, 12, 15 years later and those cells and modules are shredded and separated. And essentially, what you get as the name indicates a black mass. And this -- within this black mass, you still have your valuable lithium, nickel, manganese and cobalt in there, which can be chemically extracted by our process and refined into really high-value materials. And as we go into -- when we talk about scrap and focusing on scrap first, we see that the off-spec production [ scrap ] -- from some examples found online is that these numbers can reach 30% to 40% on average. We assume more of a steady state of a 10% loss in battery production scrap. But even from a battery manufacturer's perspective, losing 30% to 40%, even 10% is a significant loss when you're trying to get out as many batteries as possible right now because the demand for electric vehicles is just enormous. So this is where being able to recoup this material, not only recoup the material, but also achieve a truly green and sustainable supply chain, is another initiative for these battery manufacturers to start looking at, okay, what can we do with the scrap instead of selling it as a waste material. And then on -- to put that in reference and how much just the scrap material can be. On Slide 9, if we took that from the earlier slide where we said the North American and European market, expect to have about 1,400 gigawatt hours of battery production. If we just took 10% of that as scrap material, and this is on a per year basis. We just took 10% of that the equivalent amount of lithium, nickel, cobalt and manganese found in that just 10% scrap would be more than the mine production in individual countries that was mined in 2020. So for instance, the amount of nickel from 10% scrap in this North American European market would be 105,000 tonnes is estimated by our calculations versus the 49,000 tonnes of mined in Cuba in all of 2020. So putting this in perspective, this is the directly on site. This is material that with an efficient process can be recovered and reintroduced back into the supply chain. I guess you'll see kind of where I'm going with this when we get into talking about recyclical and how our business model aims to achieve and maximize this material. But first, on Slide 10, I'll also talk about the other streams. So what happens when the other 90 -- so we have 10% that goes into scrap. What happens to the other 90% when it actually goes into an electric vehicle and it goes through the rest -- goes through its whole life process and reaches its end of life after many years of driving or used as energy storage. And then those batteries, as I had mentioned, would go through these stages of collection, size reduction, so shredding these materials down into black mass. And all of that can be -- the nuance of the word recycling, all of that can really be defined as recycling. You'll see a lot. Sometimes the collection services are recycling the batteries, the mechanical shredding services are recycling the batteries, but then there's also the chemical treatment that's referred to as recycling. And there's a discrepancy in terms of how that is defined or it's not an apples-to-apples comparison when we're talking about collecting battery packs versus chemically treating black mass and producing really high-value and usable products. So I will tell you to keep that in mind as we go through this and you hear more news on recycling. There is that disconnect in terms of how those things are defined and a different level of know-how when it comes to these different processing steps. But when it comes to the chemical treatment or hydrometallurgical recycling of these batteries, what we've seen in a lot of these competing technologies is just the individual breakdown of the materials that's in the black mass to go back and almost into this intermediate product, as you've seen in the traditional supply chain that produces those cobalt sulfate and nickel sulfate, and still need to be further refined. Whereas our recyclical process, we call it recycling and upcycling. So it's taking this material and upcycling it. So producing a higher-value product, which would be that final or near final product, which is the precursor, the PCAM and the lithium hydroxide. So those are the 2 streams that we produce as a product that we go back into new lithium-ion battery manufacturing. And this is more of a -- another in-depth look when we see Page 11 and how our process compares to some of these competing or I see very conventional routes of recycling, looking at the competing routes. They have this chemical leaching process and you're talking in very large facilities with high capital costs, high energy costs. Again, as I mentioned, it's the production of an intermediate product with very low lithium recovery. And there's just multiple steps. They increase the complexity and practicality of recovering these materials, especially if you're going to break these materials down into their individual streams only to recombine them again, to make the higher-value precursor materials. And then with that comes more processing steps, more chemical consumption, with that comes an extensive liquid and waste production and just large consumption of chemicals. Whereas our process, we have our patented recyclical leach. And from that, once we pull all the metals into solution, we adjust and are able to, what we call co-precipitate directly into that precursor cathode-active material, that PCAM, and as well as have over 99% or even up to 100% extraction of even lithium, nickel, manganese and cobalt that's within these battery materials or battery waste, and as well as through a proprietary process of our lithium recovery, we also regenerate the process chemicals. So what we find is that there's a large benefit to cost using less chemicals as well as environmental impact, which we've recently shown in our LCA, our Life Cycle Assessment report that was done by an independent party called Minviro. So what they did within this Life Cycle Assessment is go through our model data where we've submitted over 1,500 streams of inputs and outputs of our process flow sheet and looked at every fine detail, every output, every input, what comes out, where are the emissions. And we're looking at Scope 1, Scope 2 and Scope 3 emissions. And we compare our process to what we see as these competing hydrometallurgical battery recycling processes and as well as primary extraction. Obviously, we can -- we know that the primary extraction, we've definitely more and more efficient to recycle versus the mining, processing, shipping and throughout the world and multiple times around the world. But when we compare to the competing hydrometallurgical battery recycling, we see 166% reduction in those CO2 equivalent emissions. This is known as the global warming potential. Now what -- putting that in context, like what does that mean 166% reduction, from our calculations, the best way we can express this is that, if we were to recycle 1 gigawatt hour of battery material with the competing hydrometallurgical battery recycling process, that variance from between hours and then [ computing ] would be an additional 17,000 tonnes of CO2 emissions or equivalent to 3,700 vehicles per year on average. Now put that in context to the -- just in North American and European markets, where we have projections of battery production to go up to 1,400 gigawatt hours. Now like I said, every gigawatt hour every watt hour is going to need to be recycled, and we need to be conscious of what methods we're using because saving on CO2 emissions through the life of this vehicle, we're going to lose it once we start -- if we're recycling with inefficient methods, high heat, high waste production. So this is a very important topic to show. And this has been third-party validated as well as gone through the ISO compliance. So now I'm on Slide 13, and is really getting into more details of what we're all about, talking about our all-in-one circular solution. So going waste to capital. So this is that final product. And when I talk about recycling, that's up to 100% leach extraction of the lithium, nickel, manganese and cobalt and as well to emphasize on that upcycling. So the synthesis of high-value specifically engineered cathode precursors and lithium chemicals. And you'll see one image with the capital precursors, some of the really finer details when it comes into what a precursor material there just from a microscopic image, you'll know from the spherical shape of the balls, the density, the distribution of these particles, the size of these particles. And then when you look at physical characteristics such as tap into the current efficiencies, these are very important factors that need to be considered to be usable in a lithium-ion battery. So these are really fine details that our team has shown to achieve. And summarizing that earlier supply chain, we saw really reducing those steps on Slide 14. We show what an integrated battery recycling technology can look like, and why integrate this battery recycling technology? Because as I mentioned, our business model is the licensing and joint development. So for lithium-ion battery manufacturers, electric vehicle OEMs, chemical companies that are within the supply chain. This is an opportunity for them to take advanced recycling technologies and incorporated within their supply chain, co-locate the plant or directly on-site or near site to take waste materials, recover them into high-value materials and then have that go back through into battery production. And this way, we can keep these valuable materials, the lithium, nickel, manganese and cobalt really within the same footprint as a gigafactory. Many benefits to that. You're closing the loop. And when we talk about closing the loop, there's different ways you can close the loop. You can have a small loop you can have a very large loop. Eventually, the material will make its way around. This is a very small loop, and it's directly situated or nearby where these materials are, as well as you reduce your reliance on mine materials. We see that there's a lot of growing pain and bringing new mines online -- that's been a challenge. We -- in many different countries, permitting issues, and we rely on that supply. So for a battery manufacturer and electric vehicle company that needs more lithium, that needs more nickel can look to their own supplies, recover these materials not send them to an independent recycling company that will then process it and sell it into the market. This is a way where we see long-term companies are going to want a more integrated approach. And we're seeing this now where never before have I seen a vehicle company interested in mining, but the interest is there. And I think recycling naturally fits in. Integrated also lowers the environmental impact if we think about transportation of these materials. If these materials don't have to go very far and there's processing on-site or nearby, and these materials can be circulated back without having to go from North America to Asia and then into Europe to make batteries in back. These are also some major benefits and you're recovering the maximum value, right? If you own your material and you're not selling it at -- selling it for some lower value as a waste to an independent recycler. You recover maximum value here from these materials. And finally, on Slide 15, just a quick note on our road to commercialization and understanding kind of these steps. So like I mentioned, since 2016, we have been going through pilot plants and just continuous R&D work improving. There's just so many fine details working through all of those really diligently, understanding each step and making sure that it's practical -- scales and it's practical. And now we're at this demonstration plant scale where we've moved into the 500-kilogram per day input capacity, and that's of the input materials I discussed earlier. And with this demonstration plant -- as it is in the name, we've demonstrated whether is the scaled-up operating conditions, those real-world operating conditions. And this is something really important to potential partners, collaborators who are looking at how our process scales, how our process works. They want to see it that we've demonstrated what we can do on bench scale and pilot, and we've sent materials to different third parties as well. But I think part of any due diligence process as well as -- and before licensing or joint developing with the technologies, I really want to see how it pans out on these large scales. And that's where we look to qualify with these potential strategic partners, the output materials, see how the quality of it at this continuous operating scale and very large operating conditions. And then -- and as well as just validate that -- those steps. So we do have a lot of visitors to our demonstration plant, seeing how things are working. And then as well from that we would license and joint develop technology. So we're looking at whether it's multiple locations around the world with different battery manufacturers, EV manufacturers, chemical companies, this is where we're going through these steps. And sometimes, we get that common, we see we put out pictures, videos, they see our equipment and the sale looks like there's actually work being done. There's a lot of material being processed through. And right now, we're even processing cathode scrap material like I showed you in the pictures, on the slides there. So there is continuous work being done when we have the demonstration plant running. We're running day and night. We're analyzing as we go as well. Just we're working through all those finer details and trying to make sure that the parameters we achieved with that up to 100% extraction rates and purities of material that we're also achieving that at this scale. So making sure all that is lined up is a critical step and one I think industry understands. And then yes, that's the end here on Slide 16. You'll see more pictures of our demonstration plant. If you're in the area, you always feel free to contact me. We're always happy to have visitors. We put out regular updates on our progress and you'll find out on our website as well with the demonstration plant work and anything else new happening at the company. So Jon, I don't know if that gives us enough time. I think we're still good. So I'll kind of pass it over to you if there's any questions, I always go back to some slides.

Yes. Zarko, thank you for that, that was great. Thomas, can you provide participants on instructions on how they can log any questions and then I will get the conversation started?

[Operator Instructions]

Perfect. I guess I just want to start just with some clarifications on the business model. And I into think the idea here, as you ramp up commercial is to do it in partnership with the actual battery manufacturers. So like thinking like a JV structure or -- which involves you putting in some capital into the equipment? Or is it more a licensing model? Just a little bit of talk about the business model would be helpful.

Yes. So I mean, we've been in both discussions really. And I think one that I see a potential for is like a cofinancing of a commercial plant with a strategic partner. That's where we are able to bring in our patent to technology and the strategic partner is able to bring in a vast network of logistics, operating capabilities, location of -- the supply of these materials and also the use of these materials. And the reason we go with this business models, I think short-term companies are going to be looking to get rid of their waste. Right now, if you're a battery company or an EV company, our focus is to make batteries and you're focused to make EVs. You're making -- you're producing waste, but that's maybe not as very high volumes right now, and you're not -- it's not something maybe as big of a priority. But in the future, we see that those companies at the end of the day are going to be the gatekeepers of the material that goes into the recycling stream. So if they decide, a major TV company decides they're going to do it themselves, that's not going to go to an independent recycling facility. They're going to build it themselves, and they're going to manage their own material. And then we see that with the legislation as well pushing towards an extended producer responsibility, especially in Europe and Asia. That's what we want to focus on making sure we have the best technology. So taking our time through demonstration scale, not building big commercial facilities and planning for or forecasting for a certain tonnage of material that would -- that we would need to recycle, but we want to build more of a build for purpose. So understanding what strategic potential strategic partners needs are in terms of how much waste they expect to be producing and build to a scale like that and have more of a homogenous feed in and then a known quality out that can be cycled directly back.

Got it. And then in terms of strategic partners to date or customers to date or when investors should think about sort of the timing of those types of announcements?

Yes. When it comes to -- I mean, we have made some announcements in terms of MOUs. We have -- Italvolt is on Gigafactory in Europe that was announced in talking about this model of having recycling integrated within the battery production. In other terms, there's -- I mean, some a lot of third parties we talk to are under NDA, but I'd say the discussion is kind of spread out everywhere where some are more in advanced discussions, some more early discussions, but the process of doing this is where a company will maybe send us a few samples of theirs of black mass or scrap material, we'll process that. We'll understand what spec of material they're looking for in terms of like their lithium spec or their precursor spec. We'll send that back to them as well for the -- testing the physical characteristics of the battery. So I mean, I can't disclose names, but I mean we've sent materials to Europe, Asia and North America. So timing-wise, I think everybody is a little different, but it's -- at this point, we have our head down and do the work. And just with good technology, we believe things will fall into place.

Yes. It's interesting in your sort of model, it seems different than some other players that have the -- let's build the capacity first on the idea that volumes [ come ] where you're seeing more sort of bespoke, we'll build the capacity as the demand is there. Along that, just would love your insight on what you're seeing in terms of supply chain constraints for your customers. There's obviously anyone who's trying to buy an EV in the United States. We'll quickly realize that it's pretty long lag times. Is that what you're seeing on your end? Are you seeing production ramp starting to come back online? Just any thoughts about the pace of the takeoff here after what was a pretty delayed start, I think, for a lot of the battery manufacturers and the EV manufacturers.

So if I understand the question, you're asking what we're seeing in terms of battery like manufacturing capacity or scrap or -- sorry, maybe...

Yes. Sorry, it's a long-winded bad question. What are you seeing in terms of battery or actual production ramp in the United States?

Yes. So I think the definitely, as we're also all probably reading there is -- there is a lot of production delays in getting materials we're seeing mines taking longer to get online as well. And what was originally planned is not really there. And then as well when it comes to the recycling side of things and planning for that production, like you had mentioned, our model is different, where we're not forecasting for a certain production because as we can see, that's changing. So you build a plant that's 10,000 tonnes. And then that's not coming. You've got A [ ghost ] plant until that ramps up or now you're bidding higher for more material because there's not as much out there or you have a certain preference to a different chemistry because that one has a higher -- highest cobalt or nickel that you'd like to extract. So yes, it kind of fits into our model where it's still really uncertain. So we want to build to what's needed because things are changing. These projections are changing every day. I think I update this presentation quite often and then still end up being wrong or very different projections as month by month. And it's still very unexpected. I don't think they still come to a steady state where there is material. I mean, we can see from the prices, it's just kind of yoyo. So that would be some indication as well. And I believe a lot more stockpiling of materials now expecting prices to go higher. So then that's also constraining supply. So I hope that helped answer. I know I was a little long-winded answer, but -- yes.

Yes. No, it absolutely did. I have some e-mailed questions and I have a few more, but before I get to those, Thomas, can we check to see if there's questions on the line?

There is a question in the queue, and it's coming from William Grippin.

First one, you started to touch on this a bit. I was on the impact of volatility in commodity prices for these recycled materials. Are you expecting to pass that volatility on -- if you're co-locating a plant, passing that volatility on to your customers? Or do you anticipate having some exposure to price changes? And how do you manage that?

Yes. I guess I don't think it would pass on the volatile to them, but it would help manage it better. Because right now, if we're like operating as like an independent recycling facility and terms on buying these materials are based on kind of like a payable on the hot commodity, whether it's nickel and cobalt payables or that's primarily the focus right now and what some of these technologies can recover the nickel and cobalt and very little of lithium. So a lot of the pricing is based on there. And then if you're going off of trailing averages and you look at nickel price before, then the black mass would cost you more a few months ago than it does now. And then that's constantly that exchange because you're dealing independently, you're taking in materials and then you're buying a first [indiscernible] content. And by the time you process the material and look at selling a nickel sulfate or cobalt sulfate, that value may have changed as well, right? And depending on how these payment terms are, there's a lot of volatility there. But integrating, I believe it's, for example, a battery manufacturer, they have every intention to make more batteries and they have waste material with these materials in there, and they can recycle that. That's -- you have like a theoretical change in that value. But at the end of the day, you still need a certain tonnage of lithium, they need a certain tonnage of cobalt and the [indiscernible] they can get from their own supply of waste. It's, I guess, a little working on the volatility together, but I think that's just all theoretical to [indiscernible] they're going to need the materials.

Sure. And another one here on how you're seeing the cost of recovered to recycled materials today relative to the cost of mining virgin material? And where do you see -- as you start to scale and commercialize some plants, where are the opportunities in this process just to take some costs out? Or is that even necessary?

Yes. You know what, there's obviously a lot of cost savings when we look at depending on -- when we talk about primary extraction like mining, I guess it all depends where are you mining the material and where is that material going? And how is it being mined? It will change even if you're mining a tonne of nickel in 2 different locations, those parameters can be different. But there's still a lot of opportunity to maximize on the savings in recycling, where transportation is one of those big ones, transporting batteries. I mean if they considered as a hazardous waste. There's certain requirements for that as well. So being as close as possible to this waste stream is the savings that we see there. And that's also another benefit to an integrated model. And then as well as kind of where the chemical reagents you're using, I showed the environmental benefit, but I believe there's also a cost benefit there. And I don't put those numbers. I just don't think there's as reliable public data out there in terms of how the cost per tonne of some of these plants are operating. But just looking at the chemical consumption and that's involved, I see a big discrepancy there and variance between cost of recycling processes. So there's an opportunity there. But yes, I think from an environmental standpoint environmental and cost standpoint compared to primary extraction, there's savings, definite savings and even further opportunity to improve on that. As I showed, not all processes are the same.

Great. And last one for me. Do you see -- I guess, is permitting of a co-located plant with the customer easier than permitting maybe a stand-alone more centralized plant, which I know some of your peers are pursuing. Does that provide you with an advantage there?

So we haven't gone through a permitting process or commercial development yet. So it's under our belief and what we see that would simplify the process being in a current operating area that's dealing with the similar materials, so a similar class of materials, even some of the same chemicals. So that, I believe, is an advantage versus going through the logistics of permitting and handling these materials and understanding kind of everything that needs to be done versus already an industrial zone or even an area of a factory where this has already kind of been hashed out. So -- yes, I believe so, but we haven't gone through the permitting process here ourselves.

Thanks. Thomas, anyone else on the line?

Yes, there is one more question, it's coming from Lance Mar.

I guess maybe -- to follow up on one of those questions there around cost, you clarified that you haven't given operating cost savings ballpark. But you also mentioned that there's capital cost relative advantage versus other hydrometallurgical processes. Can you give us any sort of ballpark estimate as to the cost savings on a comparable sized plant?

So I guess where I was getting at when we talked about the competing technologies and their high capital costs. When we're looking at the model of like an independent recycling facility, you're looking at building one large or maybe a few very large hydrometallurgical plants to achieve more of that economies of scale benefit of processing these materials, right? So you get a mixture of different feedstocks, and it's all going into one central location where really our first outlook -- so this is talking thousands of tonnes where we look at our first kind of potential commercial design being more in that 3 to 5 tonnes per day range. So that's more suitable for individual applications, so it allows more of a consistent feed of material in. If we're dealing with one battery manufacturers a specific chemistry, so we know what's coming in. And then they'll know what's coming out, and it's more of a direct relationship. I think that's the savings there as well versus when we have one large facility and you're operating really big facilities. You're getting laptop batteries, you're getting cell phone batteries, you're getting EV batteries, and all different sorts of different chemistries. And then that requires a really mixed feed, and I think that has its complications as well in the processing of it. So I don't think there's like a comparable -- or comparable size because I think from -- we would build more smaller but more strategically located facilities versus more one central one where material is sent to. We do have some in-house estimates on what that 3 to 5 tonnes can be. But again, this is information that will get further refined as we go through demonstration plants work. And I think there's increasing costs and everything. So I try and avoid kind of quoting any numbers until we go through a more detailed engineering review. But we do have in-house estimates and we find that were -- there's a big advantage to our cost.

Okay. Understood. And if I could, one more. It's kind of a related question on the various inputs and outputs, but -- and maybe you addressed it with the plan here is to be much more strategic with individual producers. But -- can you talk a little bit more about the process and your ability to optimize the output of the precursor cathode materials? And do you have ultimate flexibility there to whether the customer wants 811, 622, 523 or -- and are you able to achieve or optimize the process for LFP as well?

Yes. So when it comes to -- maybe for other listeners, maybe don't understand like NMC 811 or 622, I guess, the composition of the nickel, manganese and cobalt that's within these batteries and older generation would be more of like a 111 where is it an equal composition of nickel, manganese and cobalt. And now we're transitioning more into these modern next-generation batteries where it's a lot more nickel, nickel heavy with less cobalt and manganese. And with that, I mean, that's important because the first batteries that will be recycled are the older generation. And then if we're going back into precursor, we don't want to go back to something that's out of date. So in our testing, we actually have taken like black mass they came from like a mix like 532 and 622 NMC. And what we've done once we reach into solution, we're able to actually adjust that solution before we co-precipitate out. So we'll add in additional nickel to bump up that content of nickel to more of an 811 composition. And then that's what would be synthesized or co-precipitated out as an 811 and to that. So we have that flexibility there. And then some of these advantages in how we're able to achieve this through our leaching process, which we have patented, and we do have publications out there, all this is shared on our website. So we are very transparent. And you can really dive into the technical details through these sources and then as well when it comes to the regeneration of our process chemicals and the lithium production. This is where we see some major savings in environmental and cost. When it comes to LFP. So we have -- when it comes to recycling these NMC and CA like those chemistries, we've moved further along with those because we just see a higher value potential. When it came to LFP, from a value perspective, we didn't see a big opportunity, but we obviously now recognize that LFP is a growing market, and we are looking at potential opportunities there. But nothing at the current scale we are at now with the demonstration plant. So there's -- we have been putting thought into that. But -- yes, I think the value driver for LFP is not there at the moment.

All right. Great. And then we've only got about 7 minutes left. So I'll sort of roll up, I think probably the most common e-mail question, which was e-mailed in sort of various different formats. [indiscernible] was just asking if you can talk a little bit about the competitive landscape that it seems like there's a lot of capital like business is looking to exploit this opportunity, some specific names mentioned where Ascend Elements, Redwood and Life Cycle. So can you just talk a little bit about how you're seeing the competitive dynamic? Is this -- there's enough room for everyone given the growth? Or there's going to be some winners and losers. Just how you sort of think about how you fit in and how this evolves over time?

Yes. I mean, see those companies and we're all doing a very honorable thing, I think. And then it's a great mission to be after and competing in. And -- but I think they're structured off of a different business model, which I was really emphasizing during the call of integrated versus independent. And I think when we look at what's going on with those companies, there's a lot of expansion right now in capacity. And I believe right now, a lot of it is on the front end, what would be called the mechanical shredding of the batteries to produce the black mass. But I think when it comes to the hydrometallurgical processing capacity. I don't think that is yet developed at scale. I think there's a lot of front-end work going on right now, the collection to disassembly shredding of batteries. But I don't believe that the hydrometallurgical side is -- has caught up to scale, and I think it's using a lot of the competing like the conventional methods of -- like I've shown in the slides, like solvent extraction and producing the individual metal salts. So you'll see a lot of pictures of nickel sulfate and cobalt sulfate and remind people that this is also now needs further refining into precursor material. So we are producing different products. We see we're producing a higher value product and fewer amount of steps. And then as well, so going off of that model, I think the biggest thing is those companies are more competing amongst themselves right now in terms of who's going to get the supply contract, whereas I think we look to come through the back door and integrate our technology to a point where there is no RFP for the supply of the waste materials. It's being done in-house using recyclical technology. So I don't think our company is at the scale or has the resources to be bidding on waste batteries and to be processing those, but we do have a patented technology and a very advanced technology. And I think that will be recognized in the long-term. But I think short-term, right now, companies are looking to get rid of their waste and there's a business model for that as well. And I think there's room for everybody. There's going to be some companies who don't have the capacity to have an integrated process because they just don't produce enough waste and they'll send it off to somebody else. And there are some like the EV companies and the battery companies who are going to be producing thousands of tonnes, and I think it's going to be in their best interest to integrate. So I'm always following along and wish all those companies the best success. And I think we're going to different approaches and are going to offer -- trying to offer best solutions. So -- yes.

Got it. Perfect. And with that, we're getting close to the top of the hour, so I'm going to start to wrap. I would just remind everyone, I think this call is to go on for another hour. It's very interesting. But these calls are meant a lot of times will be an introduction to some of the companies. So I do believe that Zarko provided some contact option there on the last slide of how you can learn more about American Manganese, which is operating as RecycLiCo Battery. So with that, Zarko, thank you so much for being here. Really appreciate it. I am going to give you the final word here in a moment, but I just want to thank Thomas, the operator, for helping us out as well as all participants who ask questions live on the call, e-mail -- really appreciate your help and really appreciate your interest and support of the UBS Energy Transition Call Series. So Zarko, the final word is George. Thank you so much for being here.

Thank you. I guess just the way I started thinking for those looking at the leading edge and next generation of technologies will be in focus when we look at sustainability, when we look EVs, metals, circular economy, recycling really covers all of those points. And I know the markets are going through a very tough time now, but this is future looking, towards a better future. And I think these are the kind of technologies that we're going to need. So I just want to thank everybody for listening and yes, please feel free to contact me, and we have all of our information on our website, and I'm readily available. So thank you so much.

Thank you. Everyone, that concludes your conference call for today. You may now disconnect. Thank you for joining, and enjoy the rest of your day.