Fisking Canary Media’s Article about Ascend Elements’ Bankruptcy
When it comes to renewables and the energy transition, there is no other media outlet that is more comprehensive with their coverage than Canary Media That is why I was really surprised at what could best be described as a half-assed report about Ascend Elements’ Chapter 11 filing. It honestly looks like they wanted to get something out before the weekend and tossed the assignment to an intern that had access to ChatGPT.
“The startup Ascend Elements has outlasted several rivals…”
That sentence sets up a rather bleak tone, especially when it does not include that this is a Chapter 11 bankruptcy. And what is that? Chapter 11 lets a struggling company restructure its debts under court supervision while staying open for business, with the goal of emerging financially stable rather than shutting down entirely. The company is not sugarcoating it, however, and I did see that a liquidation package has already been submitted in case the primary and secondary goals are not achieved.
Now, the primary goal is to find someone to step in and buy the company or a major stake. Next, they are looking for stopgaps to give them more time to settle debts by producing and selling products. The last, and unwanted, outcome is that if neither of those happens, they would liquidate.
For those who were watching, like me, an indicator that something was going sideways was when SK Ecoplant sold its position in the company and construction on APEX 1 in Kentucky was paused. An investigation into a procedural violation of a Section 106 review of the APEX 1 site, which looks to be about the company and DOE not performing proper due diligence, did not help much. That led to a non-profit seeking a $50,000 “donation” to drop the investigation. This of course was a direct result of the fast and loose DOE of the Biden administration and the previous management’s inexperience when it came to large scale projects.
I will go into more detail later about the former leadership at Ascend in a separate piece, but for now I will leave it at this: this is what happens when a company tries to transition from pilot to commercial scale under leadership rooted more in tech and academia than in large-scale industrial execution, with a CEO whose previous role was Executive Director of Corporate Strategy at A123 Systems.
As for the “viable technology,” you need to be specific. Granted, due to a lawsuit, the company was forced to transition from a black mass production platform that used a low-pressure drying stage to evaporate the electrolyte and deposit the lithium in it back into the black mass, to a carbonation method that was developed in-house that uses the graphite to convert the lithium into lithium carbonate in situ.
That is what is running in Georgia and is the first commercial scale battery-grade output from secondary sources in North America. The problem is the boondoggle that caused them to switch technologies also looks to have pushed the facility to its maximum when it comes to utilities, and they did not have the funding to fix that problem. As for hydro-to-cathode and other tech like recovering and regenerating the graphite, that has not been implemented at scale, but the early-stage lithium recovery has.
The VC paragraph that has the “100% recovery” is just slop. Lithium-ion recycling itself is not hard. China has built a recycling infrastructure that now sits at overcapacity, with some reports listing overcapacity for secondary lithium carbonate at 6:1. The issue is implementation at scale, and it is what can be seen in mining and recycling as well. In the United States there is a stigma about mining due to misinformation and the fact the country has just forgotten how to do it. And recycling is hampered by that narrative, but also another one that recycled material is inferior to virgin sourced, an idea that a team led by one of the founders of Ascend Elements disproved by showing that cathode active material produced from recycled material is actually superior to virgin sourced due to the recycling process.
These narratives have created a very unattractive investment landscape that many investors do not want to deal with. It is not that latter-day “alchemists” over-exaggerated what they could do, rather they could not secure the funding to make it happen. Plenty of MOUs and LOIs, but nothing binding. On a bar chart of investment across the supply chain, the recycling column would look like a rounding error.
Now onto a few other things in this “article”:
Cirba Solutions is not 35 years old; it in fact came to be a few years back when three different companies merged. The original was the battery recycling arm of the Kinsbursky Brothers, a battery and precious metals recycler in California, which acquired and consolidated Toxco’s lithium recycling assets into what became Retriev Technologies. That platform largely stagnated for years until it was later merged with Battery Solutions and Heritage Battery Recycling to form Cirba Solutions as a consolidated platform.
They are building a full lithium-ion recycling facility in Ohio with partial funding from the DOE, but for now they have just repurposed legacy battery recycling equipment at one site to produce black mass.
Redwood Materials has gotten a lot of attention lately because they have shifted toward cascade utilization after hitting bottlenecks of their own. This mostly comes from trying to repurpose their old churn and burn setup for recycling batteries into a thermal pre-treatment and black mass production system. They have made progress, including producing a mixed metal sulfate and lithium sulfate monohydrate, but that is still intermediary material and not battery grade.
They did avoid a major pitfall that snagged Ascend, who had the final $100 million of a DOE $316 million cash match grant terminated for their APEX 1 construction. Before the last election they walked away from a $2 billion DOE loan.
Some think it was due to them seeing the pullback in the EV industry, and this was before the ESS emergence, and they didn’t want to be beholden to an administration that looked to be very negative on EVs and anything renewable.
I also think they looked at the problems they were having and knew that they had made missteps and would need to once again reinvent themselves, and didn’t want the Trump administration having a say in the growth or even course change they were planning. Politics aside, the current Department of Energy is very unstable, and this results in the unpredictability that investors detest.
They were able to replace that federal funding with private, but once again I think they had decided back then that they had to shift away from recycling and engineered products to cascade utilization, and this is actually an example of a latter-day alchemist promising more than they could deliver.
So we are looking at a fledgling lithium-ion recycling industry that is mostly bogged down with inadequate and inexperienced leadership when it comes to building out large projects, and an investing community very averse to the risks inherent in base material production that is only compounded by the fact that the market is almost completely dominated and manipulated by a country that has spent the better part of a decade creating state-sanctioned overcapacity.
Since this was meant as a note/X post and went long I really did not have any media lined up for it. So here is Abe next to a 1024wh power box from EcoFlow that will most likely last 10+ years before it needs to be sent to the recycler.
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DISCLAIMER: This article should not be construed as an offering of investment advice, nor should any statements (by the author or by other persons and/or entities that the author has included) in this article be taken as investment advice or recommendations of any investment strategy. The information in this article is for educational purposes only. The author did not receive compensation from any of the companies mentioned to be included in the article.