24 May 2018: Aqua Metals, the US recycling start-up that processes lead batteries without smelting, finally made a commercial dent into the lead recycling market on May 7. That day a 20 tonne batch of lead bullion was shipped to a Johnson Controls battery manufacturing plant.
Although 20 tonnes is not much in the worldwide business of recycling lead — and this contained an alloy of around two-thirds AquaRefined lead and priming lead bullion previously purchased for the refinery start-up at Tahoe Reno Industrial Center in Nevada — this is a pivotal moment for the firm.
Steve Cotton, incoming president of the firm — and former chief commercial officer of Aqua Metals from January 2015 to June 2017 — told BESB: “This is a key milestone getting AquaRefined lead shipping commercially and is a vindication of the technology. We intend to begin to ship pure AquaRefined lead soon to meet industry corroding lead specifications.”
Cotton says the near term goal is to get four of the 16 AquaRefining modules working around the clock and improve its efficiency. “On the basis of that steady state run experience we should be able to ramp up the remaining modules,” says Cotton.
On a 24-hour shift one module should be able to output two and a half tonnes of lead.
The relationship with JCI, which market rumours had said at the end of last year had been troubled, in fact appears to be in good health. In mid-April JCI agreed to extend their equipment supply agreement to June 30, 2019.
“We appreciate JCI’s continued support of Aqua Metals,” says Cotton, “and we look forward to continuing to grow our multi-dimensional relationship in the future.”
The equipment supply agreement details installation of new greenfield builds, as well as conversion of existing JCI’s (and certain strategic partners of JCI) existing lead smelters to a lead recycling process utilizing Aqua Metals’ know-how and services, according to a Aqua Metals statement.
“Continued ramp-up of our operations is dependent on two things,” says Cotton. “First, it’s getting the technology to work exactly the way we want it — in recent months, for a variety of reasons, the company has faced some challenges that we are still working through. However, the AquaRefining process is now fundamentally working and producing high quality AquaRefined lead that we are shipping but we have more plant integration work ahead to get to the scale that we’d originally anticipated.
“And, second, it’s getting the manpower in place. The AquaRefining process still requires skilled technicians, so hiring and training the required staff and supervisors will take time.”
That said, the first commercial shipment containing AquaRefined lead is of significance to some sceptics in the market who had attended site visits last summer.
One investor attendee at that time had privately told Batteries International that he had become deeply cynical of the technology. “I’ve visited other battery recycling plants and it was clear that much of the machinery on display had been little used,” he said.
“I thought, that it had even been switched on for the occasion and would be switched off, once we’d gone.”
The shake-up at the top of Aqua Metals’ management is almost over with the appointments of Frank Knuettel in April as chief financial officer and Steve Cotton in May as president, following the resignation of co-founder Steve Clarke on April 19 as chairman, president and chief executive.
Two of Clarke’s top three slots have been filled.
Shariq Yosufzai becomes the firm’s new non-executive chairman and lead independent director. Yosufzai, a vice president at Chevron for global diversity, has a long and an extensive pedigree with the corporation, including being president of Chevron Global Marketing and president of its Global Lubricants division.
The appointment of Shariq Yosufzai follows a proxy contest and related settlement agreement between Kanen Wealth Management, a shareholder in the firm and Aqua Metals. Kanen also succeeded in getting Sam Kapoor, former chief operations officer of Equinix, to join as an independent director. He is credited with being a key player in turning around, designing, constructing and operating the now $35 billion global 200+ datacentre operator from a similar valuation as Aqua Metals.
Cotton returned at the start of May as president of the firm. Cotton has an impressive background having taken his own monitored lead acid battery system start-up, Canara, literally from a garage start-up, to sell it as a company with annual sales of over $20 million and of course driving the initial commercial partnerships for Aqua Metals.
He said he was delighted to be back. “I’ve absolute confidence in what we’re doing — I wouldn’t have returned if that hadn’t been the case — we’ve had some stumbles in the past but now we’re ready and better equipped to reach our potential.”
The position of new chief executive has still to be filled.
A revamped board of independent directors has formed a CEO Search Committee. Its members are Shariq Yosufzai, Sam Kapoor, Vincent DiVito and Mark Stevenson.
“A short list of candidates is being drawn up,” says Cotton. “And, an announcement will be made in due course.” Of course, Cotton is one of the candidates.
The resignation of Clarke — regarded as a termination without cause under his employment agreement with Aqua Metals — puts pressure on Aqua Metals to find a replacement as chief executive officer that will be acceptable to Interstate Battery and Johnson Controls.
Under a so-called ‘key man’ clause, Aqua Metals would have to pay $2 million to Interstate Battery and $1 million to Johnson Controls if Clarke’s replacement is unacceptable.
Clarke is entitled to a severance benefit of approximately $900,000 over two years.
One industry commentator said that he thought that the firm had “gotten its ducks in a row” and was now looking well positioned for the future.
“The big question that remains to be answered is whether this technology will be commercially scalable,” he said. “And, if so, how JCI would want to pursue this. Their licensing model for development would be very attractive then.”