A 2020 study showed that a company needs to process at least 10,000 tpa of feedstock to be profitable. The price of LCE was about the same as it is now, maybe slightly less, but with inflation you can estimate it at around 12,000 tpa today.

Some companies, like Ecobat, operate near that threshold and are profitable, but they focus solely on producing black mass and selling it to black mass processors. They have a very streamlined operation with no major plans for expansion beyond adding more sites.

For companies like Lithion, they just couldn’t produce enough black mass to maintain profitability while simultaneously trying to expand to battery grade. This is different from, say, ABTC, which took a bigger hit upfront because, unlike the others, it focused on creating a black mass production platform that requires very little beyond the most basic solvent extraction to reach battery-grade output. They got the bulk of the initial CAPEX paid out, so they will require a lot less now to get to battery grade.

That is not to say ABTC is in the clear. If they do not get the battery-grade component online soon, in the next six months, they are going to be facing their own insolvency problems.