AQMS - AQUA METALS: TRANSFORMING THE METALS RECYCLING INDUSTRY
04 JAN AQUA METALS: TRANSFORMING THE METALS RECYCLING INDUSTRY
Aqua Metals, Inc. (NASDAQ: AQMS), a Company that is reinventing metals recycling with its AquaRefining™ technology, announced it has completed equipment installation and is now operating its first-of-a-kind lithium battery recycling facility, utilizing electricity to recycle instead of intensive chemical processes, fossil fuels, or high-temperature furnaces.
Steve Cotton, President and CEO, Aqua Metals, commented,
“This is an unprecedented accomplishment for Aqua Metals, and for the global push toward electrification. We believe that Aqua Metals is the first company to take a vision beyond the laboratory, by establishing an industrial-scale, dedicated, US-based recycling facility, built to continuously produce metric tons of high-purity minerals from spent lithium-ion batteries. We are confident that Aqua Metals is now positioned to be the first metals recycling facility in North America to recover battery-grade lithium hydroxide from spent batteries in commercial quantities, and to initiate sales of recycled critical minerals into both metals markets and the lithium-ion battery supply chain.”
Aqua Metals, Inc. (NASDAQ: AQMS)
Market Cap: $90.15M; Current Share Price: $1.15
Data by YCharts
The Company
Aqua Metals, Inc. is primarily known for its patented hydrometallurgical AquaRefining™ technology. Unlike smelting, AquaRefining is a room temperature, water-based process that emits less pollution. The modular Aqualyzers™ cleanly generates ultra-pure metal one atom at a time, closing the sustainability loop for the rapidly growing energy storage economy. The Company’s offerings include equipment supply, services, and licensing of the AquaRefining technology to recyclers across the globe.
We take a comprehensive look at the Company via SWOT analysis.
Strength
Since 2015, Aqua Metals has developed breakthrough metal recycling technologies that utilize a clean, closed-loop process that can produce ultra-high purity metal. Their innovative approach, AquaRefining, delivers raw materials back into the manufacturing supply chain while reducing emissions and toxic byproducts and creating a safer work environment.
As of today, there is a surging demand for EVs, mobile devices, solar storage – and all of these use batteries.
Image Source: Company
The minerals for making modern batteries are rare, expensive, and frequently mined in unfriendly regions. In fact, 99% of raw and component materials for Li-ion Batteries (LiBs) are produced outside the U.S., and China is increasingly creating a monopoly. Hence, as demand for EV batteries grows, countries are racing to build domestic supply chains.
In such circumstances, the AquaRefining technology is a boon as it recovers pure minerals, including Manganese (which costs $3,000/MT) and Lithium (which costs $80,000/MT) – these are not recovered by competing methods.
Image Source: Company
At the same time, AquaRefining reduces emissions and toxic byproducts to create a safer work environment. It replaces furnaces and heavy chemical use with 100% renewable electricity, creating a fundamentally non-polluting, cost-efficient solution that generates minimal waste.
To be more precise, it offers ~95% reduction in chemical waste streams and ~96% reduction in carbon reduction compared to standard hydro processes, as well as ~99% carbon reduction over pyro. In fact, it is the only recycling method that promises carbon neutral and zero emission.
Finally, the Company has strong IP protection with 73 global patents and their modular systems have already demonstrated how they can scale lead-acid battery recycling capacity.
Weakness
The Company has a limited operating history and it has only recently commenced revenue producing operations. Therefore, it is difficult for potential investors to evaluate the business.
Aqua Metals was formed in June 2014. From inception through December 31, 2021, they generated a total of $11.7 million of revenue, all of which was derived primarily from the sale of lead compounds and plastics and, to a lesser extent, the sale of lead bullion and AquaRefined lead. To date, operations have primarily consisted of the development, testing, and limited operations of the AquaRefining process, the construction of the initial LAB recycling facility at TRIC, the continuing development of LAB recycling operations at TRIC and limited revenue producing operations as those LAB recycling operations were brought online.
It is difficult to estimate when the Company expects to commence any meaningful commercial or revenue producing operations from their licensing model. Limited operating history makes it difficult for potential investors to evaluate the technology or prospective operations. As an early stage company, Aqua Metals is subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays in a new business.
Opportunity
Li-ion Batteries (LiB) recycling is predicted to hit $6.55B by 2028 with 18.5% CAGR vs. $1.7B in 2020, and by 2030 an estimated 15M tons of LiBs will reach end of life and need to be recycled.
Aqua Metals has already made strategic decisions to apply their proven, clean, closed-loop hydrometallurgical and electro-chemical recycling experience to lithium-ion battery recycling – this will greatly help to meet the growing demand for critical metals driven by the global transition to electric vehicles, growth in Internet data centers, and alternative energy applications including solar, wind, and grid-scale storage.
More specifically, there is a $18 Billion addressable market in 2025 for both Pb and Li battery recycling for AquaRefining. Aqua Metals seems poised to take advantage of the same, as proved by the following measures taken by the Company.
In August 2021, Aqua Metals established an Innovation Center focused on applying their proven technology to lithium-ion battery recycling research and development and prototype system activities.
In November 2021, Aqua Metals and LINICO signed a collaboration agreement which sets the parameters for future research and development cooperation, as both companies expand into lithium-ion battery recycling and advance their technologies designed to recycle lithium-ion batteries cost-effectively and sustainably.
Most recently, in July 2022, Aqua Metals signed a letter of intent with Dragonfly Energy Corporation, a leader in lithium-ion deep cycle batteries, pursuant to which Dragonfly would purchase commercial quantities of lithium hydroxide for ongoing development of solid-state lithium-ion battery technologies and future manufacturing activities.
Overall, the Company is in discussions with more than 10 EV manufacturers, cell component manufacturers, and CAM manufacturers for additional partnerships. All these initiatives prove that Aqua Metals is cognizant of upcoming opportunities and is thus well prepared to benefit by converting black mass into solid revenue streams.
Threat
Currently, the Company has secured 8 US patents, 63 international patents, and 3 allowances (two international, one US). However, there can be no assurance that any patents will be issued from any of their current or any future applications. Also, any patents that may issue may not survive a legal challenge to their scope, validity, or enforceability, or provide significant protection for the Company. Competitors may work around the patents, so they are not infringing. The Company’s patent portfolio and their existing policy and procedures safeguarding trade secrets nonetheless may face challenges so that competitors can copy the AquaRefining process.
The Company’s operations and the operations of licensees in the United States will be subject to the federal, state, and local environmental, health and safety laws applicable to the reclamation of LABs and Lithium based batteries. While the reclamation process itself is generally not subject to federal permitting requirements, depending on how any particular operation is structured, Company facilities and the facilities of licensees may have to obtain environmental permits or approvals from federal, state or local regulators to operate, including permits or regulatory approvals related to air emissions, water discharges, waste management, and the storage of batteries on-site should that become necessary.
Aqua Metals may face opposition from local residents or public interest groups to the installation and operation of their, or licensee’s facilities. Failure to secure (or significant delays in securing) the necessary approvals could prevent the Company from pursuing some planned operations and adversely affect the business, financial results, and growth prospects.
Key Takeaways:
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Click here to please visit our detailed disclosure
Reference:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1621832/000143774922004317/aqms20211231_10k.htm
https://ir.aquametals.com/company-information
https://www.sec.gov/ix?doc=/Archives/edgar/data/1621832/000143774922025754/aqms20220930_10q.htm