The Neometals Ltd (ASX: NMT) share price is looking a little low on charge this morning after the company announced a memorandum of understanding (MOU) for its battery recycling capabilities.
Following the announcement, shares have ticked down 2.7% to 36 cents. However, the Neometals share price is still up over 105% in the last 6 months.
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Steps in the right direction
Through Primobius (Neometals' joint venture with SMS Group), Neometals has entered into a non-binding MOU with the Japanese multinational company known as Itochu Corporation. Non-binding MOU's are quite loose agreements, but it indicates that Neometals is making progress towards an established battery recycling company.
The announcement specified that the MOU provides a framework for establishing a corporation for battery recycling. Primobius's role would then be contributing its lithium battery processing capabilities.
Formally, Itochu will assess Primobius' technology by providing stationary energy storage batteries to Primobius' demonstration plant. From here, Primobius (Neometals/SMS Group) will run the demonstration plant on Itochu's provided batteries to hopefully produce recycled products.
The goal is that Neometals will successfully recycle cathode materials that can then be reused by Itochu in its battery manufacturing. The advantageous outcome would be a subsequent drop in the cost of the batteries made.
What's the timeline?
Based on the details of the announcement, Neometals is already in discussions with Itochu to prepare the demonstration plant. The demonstration plant, which will be evaluated by Itochu and be the make or break, is slated to kick off in the June quarter of this year.
Neometals plans to proceed with legally binding agreements in the future to formally outline what the company's cut of proceeds from any recycled batteries would be.
Today's announced MOU is effective until 31 December 2022.
Neometals share price recap
The Neometals share price has been on a tear over the past year. Any shareholder that remained steadfast would be sitting on returns of 123% in the last year.
As interest grows in the electric vehicle (EV) space, many have been turning to investments to benefit from the boom. A big hindrance for EVs still is the high cost of the battery component. If Neometals can help reduce that by implementing a cost-effective recycling technology, they could gain traction.
Based on the current Neometals share price, the company now has a market capitalisation of $202 million.
