EXCLUSIVE: Federal Support Is 'Essential' For Lithium Production, Says American Battery Technology CEO (CORRECTED)

American Battery Technology ABAT CEO Ryan Melsert spoke to Benzinga about the latest company milestones, the state of the market and what it means to be a vital metals supplier for the burgeoning green energy sector.

BZ: What’s your relationship like with the retail investment community?

Melsert: We’re definitely in the spotlight with retail investors. We also work with several different strategic partners, including big corporations that sell us products or feed and buy our products. It's important to have a balance between both. We’ve experienced significant growth over the past few years. The validation we’ve received from winning several corporate awards and securing various government projects has provided the community with technical validation of what we're doing and our business plan as we scale up.

BZ: How does the company operate in three pillars: battery recycling, metal manufacturing, and resource development?

Melsert: On the battery recycling side, we completed the design about two years ago, and we built our first commercial factory last year, which is now up and running. We’re receiving large amounts of end-of-life waste from the field and are actually producing significant quantities of recycled battery-grade product that we're selling back into the market. The recycling plant is fully operational, and we're working to establish a closed-loop system within the U.S.

Last summer, we signed a partnership agreement with BASF BASFY, one of North America’s largest battery metals customers. Working with them to receive material and sell our recycled products has been great. Recycling is crucial for closing the loop and ensuring that once materials are in the field, they stay there. However, because the number of batteries is growing so quickly, we also need to fill that loop for the first time, which is why we have our other business units.

For lithium specifically, there is almost zero production in the U.S. We have many resources, but very few refineries can access them, especially those considered unconventional. A few years ago, we analyzed various types of lithium resources within the U.S. and identified a sedimentary resource, or claystone, that holds large amounts of lithium. However, no one has yet developed a technology to access the lithium in that claystone. We worked at the laboratory and bench scales and developed our own mechanisms to access this lithium. We secured a Department of Energy grant to use that data to build a fully integrated pilot plant to process hundreds of tons of material and produce battery-grade product. Then, just last year, we won another grant with a federal cost share of $57 million to build a commercial refinery project.

Developing the claystone itself is one skill set—how we develop that mine and excavate that surface resource. But we've also developed our own refining technology, so we’re constructing a refinery right on top of it. We finished the pilot plant just a few months ago. In June, we announced that we are producing battery-grade product from this pilot facility.

BZ: We've seen automotive companies engage with commodity producers to secure supplies. Are you open to different kinds of partnerships, perhaps more downstream, directly with vehicle manufacturers?

Melsert: Every week, we have a customer or strategic partner, often a big automotive OEM, on-site touring the facility. There are so few operations in the U.S. that can produce this battery-grade lithium product. So, there's a lot of interest in sourcing the output from this commercial refinery. It's very likely that we'll enter into a partnership with an OEM regarding the off-take of our primary lithium going forward.

BZ: There is only one active lithium mine in the U.S.; Data shows it takes about 29 years to develop a mine. Was this one of the catalysts for you to focus on recycling?

Melsert: That was indeed a catalyst for us to focus on both. Recycling can be very quick to market. We produce nine different products from our recycling plant, which makes us more diversified than a typical mining operation. However, in terms of scale, our primary lithium claystone process will produce much more than the entire U.S. recycling industry combined. While recycling is great for time to market, when you want to scale, these primary systems will deliver that in the near term.

BZ: Is there a danger if battery manufacturing and recycling don't eventually balance out? Could we end up with piles of old batteries lying around?

Melsert: Definitely. For a closed-loop economy, all sections of the loop need to be balanced and have a similar throughput. In the past few years, we've added dramatic amounts of capacity for battery manufacturing but very little for battery recycling. This imbalance could result in batteries being exported abroad to be recycled elsewhere, which wouldn't help our strategic mineral situation. Or, they might not be recycled at all and end up in landfills in the U.S. That's why we work so closely with partners in the battery manufacturing and automotive manufacturing sectors to ensure our throughput aligns with their facilities.

BZ: Major oil producers like Exxon are venturing into lithium production and experimenting with direct lithium extraction. What do you think about these initiatives?

Melsert: In the past year or so, many big oil companies have gotten involved in this space. I think it's great to see large corporations investing and recognizing the need to bring domestic resources to market. They bring different skill sets, particularly in chemical processing, and have mostly focused on brine-based resources due to the overlap with conventional oil extraction.

BZ: You've previously met with President Joe Biden and spoken about issues in the sector. Are you currently engaged with the government?

Melsert: Yes, we have several grants underway with the Department of Energy, and we're always in contact with them about future opportunities as well. Ramping up critical material production is one of the few issues both political parties agree on. There's a real need to bring this capacity to U.S. shores, and we've received quite a bit of support from the federal government. I believe there are still a lot of programs moving forward.

BZ: Lithium prices are now around $10,000 per metric ton, which is about where they were in 2019. Where do you see the market going from here?

Melsert: Everyone is trying to predict the future regarding market prices. The important thing is that there's still a large demand for electric vehicles and stationary grid storage batteries in the U.S. As long as those end-use demand sectors keep growing, they'll continue to pull on the upstream systems to ramp up capacity. It can be very quick, less than two years, to put up an electric vehicle factory or battery factory, but it takes many years to bring a primary resource online. So, as demand picks up, the limiting factor will be how quickly these primary resources can come online.

BZ: BCA Research Chief Strategist Marko Papic told Benzinga that we're entering a capex-driven commodity super cycle. Where do you see opportunities for the fastest domestic commodity development outside of your own project?

Melsert: The biggest factor in speeding up product development is permit reform at the federal level. Just a few weeks ago, the Senate put forward a bill that would streamline permitting operations specifically for these types of critical materials. Having a more efficient system could help these projects in the U.S. come online much more quickly, and it would open up the business case for more resources to be developed domestically.

BZ: What's next for your company?

Melsert: The most important thing to watch for in this industry is who forms partnerships and alliances with other sectors, such as battery manufacturers and vehicle OEMs. I'd recommend keeping an eye on which companies are building the best relationships with those other strategic players in the sector as we move forward. I'm confident in our projects and have recently boosted my stake by an additional 390,000 shares.

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Editor’s Note: This interview has been edited to reflect the correct cost of a commercial refinery project.