Startup Series: Nth Cycle

Mar 16

Today's guest is Megan O'Connor, CEO and Co-Founder of Nth Cycle.

Nth Cycle uses a metals processing technology that allows battery manufacturers to convert lower-grade critical metals into EV-battery grade on-site. The company’s approach obviates large portions of cumbersome and dirty metal supply chains for crucial EV battery metals like nickel. Megan claims that Nth Cycle's technology can be applied to existing batteries just as it can be to newly mined ore, thus accelerating circularity for the lithium-ion battery and battery recycling.

One significant component of the Inflation Reduction Act is the formalization of US EV tax credits, and a qualification requirement that automakers must source at least 40% of their EV battery components - by value - in the United States or countries with which the US has a free trade agreement starting this year, with escalation to 100% by 2029.

With this change in the backdrop, Megan and Cody have a great conversation about the state of EV battery metal supply chains and battery recycling today, how Megan started working on this problem in the first place, how Nth Cycle works, and what her plans are for the company. We have focused quite a bit recently on EV batteries and the underlying metals that power them on the podcast. If you want to learn more about the topic, check out past episodes with Simon Moores, Jigar Shah and Ajay Kochhar, and Impossible Metals.

Enjoy the show!

Get connected:
Cody Twitter / LinkedIn
Megan O’Connor / Nth Cycle
MCJ Podcast / Collective

*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.

Episode recorded on February 10, 2023.

In this episode, we cover:

[2:18] How a molecule of metal turns into a battery
[7:18] The embodied carbon in an EV
[10:03] Different refining mechanisms, their limitations and environmental justice concerns
[17:55] The origin of Nth Cycle
[23:21] How Megan gained the confidence to change her Ph.D. and focus on battery metals
[27:23] Megan's entrepreneurial journey as a grad student
[29:36] An overview of Nth Cycle's solution
[33:12] A description of the company's system
[35:20] How the Inflation Reduction Act is changing the supply chain for nickel and where Nth Cycle fits in
[37:35] How the technology can be applied to all critical metals
[41:56] The company's capital history
[43:40] Job opportunities with Nth Cycle
[46:14] Megan's predictions for the future

Jason Jacobs (00:01):
Hello, everyone. This is Jason Jacobs.
Cody Simms (00:04):
And I'm Cody Simms.
Jason Jacobs (00:05):
And welcome to My Climate Journey. This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:15):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (00:26):
We appreciate you tuning in, sharing this episode, and if you feel like it, leaving us a review to help more people find out about us so they can figure out where they fit in addressing the problem of climate change.
Cody Simms (00:40):
Today's guest is Megan O'Connor, CEO and co-founder of Nth Cycle, which is a company with a metals processing technology that allows battery manufacturers to convert lower grade critical metals into EV battery grade onsite, obviating large portions of cumbersome and dirty metal supply chains for key EV battery metals, like nickel. Megan claims that Nth Cycle's technology can be applied to existing batteries just as it can be to newly mined ore, thus accelerating circularity for the lithium ion battery and recycling.
(01:15):
One significant component of the Inflation Reduction Act is the formalization of US EV tax credits and a qualification requirement that automakers must source at least 40% of their EV battery components by value in the United States, or countries with which the US has a free trade agreement starting this year, with escalation to 100% by 2029. With this change in the backdrop, Megan and I have a great conversation about the state of EV battery metal supply chains today, the state of EV battery recycling today, how Megan started working on this problem in the first place, how Nth Cycle works, and what her plans are for the company. We have focused quite a bit recently on the pod on EV batteries and the underlying metals that power them. I've learned a ton from these conversations and it's all helped me understand the criticality of what Megan and Nth Cycle are attempting to do. Megan, welcome to the show.
Megan O’Connor (02:12):
Hi, Cody. Thanks for having me on today.
Cody Simms (02:18):
Before we dive into anything to do with what Nth Cycle is doing today, I'm so interested to have you explain to me the current state of how a piece of metal turns into a battery as a use case. So maybe walk us through. We all hear the supply chains for metals are complicated and carbon intensive and this that and the other, fraught politically from a geopolitics perspective. I think we all inherently or intuitively know that, but walk us through the specifics of that.
Megan O’Connor (02:52):
Yeah, absolutely. And it is complicated and it is very carbon intensive, and part of the reason for that is because certain pieces of the supply chain have only been built up in countries mostly in Asia because of environmental regulations or otherwise or because it was too expensive to do it here in the Western world. If we think about nickel as an example, we could mine a molecule of nickel up in Northern Canada, for example, close to the Arctic, and from there it has to be shipped down to Sudbury, generally, where it would be put through a smelter. The smelter basically takes a nickel concentrate, which is maybe a 1-2% grade nickel. Think of it's almost like dirt with 2% nickel in it. It would then go into a smelter or pyrometallurgy, where they use very high temperatures and pressures to pull out this intermediate grade nickel, which is nickel matte, typically.
(03:50):
The nickel matte in Sudbury, Canada would then have to be shipped over into Europe to be sort of the final finishing stages to bring it up to a Class 1 nickel, where it's 99.99% nickel. So then it's actually the nickel that you think of that you could see traded on say the London Metal Exchange. From there, it then has to be shipped to be produced into a cathode active material, which could be in South Korea or somewhere else in Asia. It then would have to be shipped to be put in a cathode, then would have to be shipped to be put in a battery, and then it's shipped back to the States. So it's made all of these trips around the world, literally halfway around the world, to be processed into whatever we need it to be, where then we finally receive it as the module or the pack where some US manufacturers will actually do that final assembly to put it into a car.
(04:40):
And so, again, one of the main reasons why this model still exists today is because the Western world, and I think of North America and the EU when I say that, is we'd never invested in the infrastructure to chemically refine these materials into the high-grade metal or the CAM material or the cathode that we need to put into manufacturing itself. And so that's what we're now trying to pull back is so that we do not have to ship the beautiful nickel that we mined in Canada, or we have one nickel operating mine here in the States, all face the same problem. And it's not just nickel. It's copper, it's cobalt, it's the rare earth metals. All of these critical minerals that are the true building blocks for the clean energy economy all face the same issue that they have to be transported around several times before they're valuable in going back into the manufacturing stream.
Cody Simms (05:31):
And is part of that because earlier on in the refinement process there are, I guess, still buyers of these metals for other totally unrelated use cases? Nickel is used in a number of applications beyond just lithium ion batteries, obviously. And so were these supply chains really actually truly optimized for those use cases and then now the kind of hyper refinement that's required to actually work in a battery has been sort of bolted on top? Am I correct in understanding that?
Megan O’Connor (06:03):
Yeah, as you said, nickel in particular is used in a number of different applications in the clean energy space alone. I think batteries top of mind for a lot of folks in the space. But, yes. And the nickel supply chain was built out the way it was because the US, the EU, nobody wanted that dirty refinement in their backyard. And so we did what we always do and we pushed it out of sight out of mind and have been operating that way, because these materials weren't critical, as they're now on this list from the US and the EU, from a demand perspective, but also from a national security perspective, because we made the same mistake we have in the past where we push most of the things that we don't want to do from an environmental perspective or cost perspective over to Asia, where it was cheaper and they have lower standards for their environmental regulations.
(06:50):
So I wouldn't say it was necessarily optimized for any other application. It was just, similar to what we've done with other industries, is sort of push it off of our territory to somewhere else. And now that we do need this massive increase for these materials, we're now like, "Oh, crap. What do we do now? We have to figure out how to localize these materials." And there's a couple of different issues. It's not just the environmental permitting portion of it, but it's also the way that these centralized refineries work, which I can go into a little bit more as well.
Cody Simms (07:18):
Yeah, we're going to spend a ton of time on that for sure. And I'm curious, I think I've heard a stat, I don't know if it's accurate or not, but the embodied carbon in an EV that you buy is something like multiple years, seven years or something, worth of driving emissions. Meaning if you buy an EV today, you kind of need to own it for seven plus years to make up for the amount of emissions that were part of the manufacturing of that vehicle. Again, I don't know if that number is actually accurate, but it's not insignificant, I guess, is probably the more accurate way of saying that. How much of that is transport-related and how much of that is heat-related and the emissions of the heat needed for these processes?
Megan O’Connor (07:58):
That's a great question, and yes, a lot of folks hate that statistic. Whether people believe it or not, I think there is a dirty side to clean energy that people wish wasn't there, but it is. That's one of the things that we're trying to uncover and fix is we can't continue to make the same mistakes as we have in the past with how we build this new energy economy. We can't continue to build it on this dirty source of materials. And so a vast majority of those emissions is actually coming from how we chemically refine these processes.
(08:26):
And so one of the interesting stats that I saw came out of the EU and one of the places that we can get nickel around the world, actually one of the main places we can get nickel, is at Indonesia right now. They produce this material called MHP, which is a mixed hydroxide product. It's a very favored nickel product to make batteries from because it's cheaper than having to go to that Class 1 nickel I mentioned before. The EU actually cannot use or source from Indonesia because of how carbon intensive their process is to get that nickel out of the ground and into that MHP product.
Cody Simms (08:57):
Including deforestation, I'm sure, right? As part of that too?
Megan O’Connor (09:01):
Exactly. And so it's really these chemical refining processes. The mining is part of it, but it's that refining step that really adds to the carbon intensity of the whole supply chain for nickel.
Cody Simms (09:11):
And are these metals not typically used in internal combustion vehicles? Is nickel not found anywhere in an ICE car?
Megan O’Connor (09:20):
You will find it in some smaller components, but it's not as big as if when you have an EV and you have all of these different electronics, particularly the lithium ion battery.
Cody Simms (09:29):
Okay. Because people are going to say, "Oh, Cody, of course there's embodied emissions in a traditional automobile as well." And yes, of course there are, but it is different when it comes to the specific metals that are needed in an EV?
Megan O’Connor (09:42):
It is different. We're trying to build this truly clean energy economy and so why not build this future as clean as the one that we imagined, right? Why not try to solve this problem while we have the time instead of looking back in 20 years being like, "Oh, shit. We should have thought about this refining process back when we had the chance."
Cody Simms (10:03):
Super helpful explaining the supply chain and all the different, frankly, shenanigans that these metals have to go through in order to become ready for a battery. What are the actual refining mechanisms? You mentioned one that requires a ton of harsh chemicals to be applied. I think there's pyrometallurgy, there's hydrometallurgy. What are these things and what steps are taken to enable them?
Megan O’Connor (10:29):
Absolutely. So after the materials are mined, or even at the recycling stage, because I think what a lot of people don't realize is that the technology for chemically refining the material is exactly the same whether you're looking at mining or you're looking at recycling, so all the new companies in the recycling space are simply taking the technology that has existed for many decades in the refining flow sheets and sticking them in as battery recycling and just using batteries as the input. What's done there is it's typically going through a smelting step, so the pyrometallurgy. That's usually the first step. Some companies are trying to skip over that step altogether to save emissions, which is amazing. But it goes through that smelting step.
(11:08):
So the battery is taken or the ore is taken, it's shredded or ground into some type of smaller particle size, it goes through the pyro or the smelting step into that intermediate product I mentioned, and then it will go through the hydrometallurgical where they use cycles and cycles of acid and different solvents to pull these different metals out one at a time, again, whether it's from recycled or mined material to get the final, usually it's a sulfate. So like a metal salt that can then go back into a battery, or I should say a cathode, or any other type of material that uses nickel, cobalt, copper. All of these materials use those basic three steps, like the shredding, grinding, pyrometallurgy, then hydrometallurgy.
Cody Simms (11:47):
And whether you're refining ore or you're, as you mentioned, recycling a battery, you're kind of taking the metals through these steps. Do you have to choose upfront which of the metals you are trying to optimize for as you take them through the step? If it's a battery, it's got multiple valuable metals in it, for example. What happens to the other metals that are part of that initial input?
Megan O’Connor (12:09):
Absolutely. One of the major limitations with this old pyrometallurgy and old hydrometallurgy and these centralized models is that they can be up to a billion dollars, and some smelters are $4 billion, massive CapEx to build these up. And they're very inflexible in what they can take in. They're built out to accept a very narrow band of materials, because typically in mining they would be set up next to one mine, so they knew exactly what that composition would look like. And recyclers are struggling because, as you know, and probably lots of listeners know, there's tens, if not more, types of cathode chemistries that will come in. So it's not just can we recover the cobalt, nickel and manganese, but what ratios are they in? Is there a higher level of copper in some? Is there a higher level of nickel?
(12:53):
Consumer electronics don't have nickel, they have more cobalt. So it's difficult to continue to use this centralized model because it costs quite a bit of additional CapEx to change that flow sheet once it's built out. And so they can recover all the materials in there, but it's hard for them to switch, say from one battery type to another.
Cody Simms (13:13):
Because you either need to heat up the facility to a different temperature, depending on the metal that you're going after, or you're using different acids or whatnot to extract from the material. Is that correct?
Megan O’Connor (13:26):
Yes. It's usually they have to put a whole other flow sheet in for the different solvents to pull out these different metals or the different ratios of metals.
Cody Simms (13:33):
What happens to these solvents or these acids at the end of the process today?
Megan O’Connor (13:38):
Some can be reused. Most of it is wasted. It depends on the process, depends on the input and what's sort of left over in terms of the waste product. But part of the reason and part of that carbon footprint that we mentioned before is how much of this material is, A, created? So you have to look at the embedded carbon in making all of these solvents and making all of this acid and then on the back end how we treat it as a waste product and where we store that and all of the processes that go into that waste management as well.
Cody Simms (14:05):
How is it often created?
Megan O’Connor (14:07):
It depends on the chemical, but, for example, sodium hydroxide is one of the most caustic materials to make and it's typically done with a process that actually creates a lot of chlorine gas. And so one of the major issues for regardless of what metal you are targeting, you usually need sodium hydroxide, which is used in the process to precipitate out certain metals, because you can add a certain amount to target different types of materials. And in that process, again, there's lots of chlorine gas and it can only be done, as you can imagine from just the chlorine gas comment, it has to be done in very remote locations at a very large scale. And so then just trucking that material to and from your remote site, whether you're a recycler or a miner, again, usually not done in a convenient location, is a huge part of the overall mission. That's the transport piece. And then this is the creation of sodium hydroxide and then you have sulfuric acid and the different solvents. And so there's chemicals upon chemicals that are needed for all of these different materials.
Cody Simms (15:05):
This really hammers home to me as well the notion of environmental justice when it comes to these processes, because both the inputs, it sounds like, the creation of the inputs and then obviously dealing with the waste of the outputs are impacting communities near these plants, which as you mentioned, the US and other countries, like in Western Europe, have mostly pushed out to Asia at this point. And so it shows that environmental justice has very real world impacts locally, near the point of production of these materials.
Megan O’Connor (15:40):
Absolutely.
Cody Simms (15:41):
Super helpful framing of the problem space we live in, because presumably without change to these methodologies we're dealing with exponential amounts of growth in these problems that we've just outlined over the coming decades as the world scales to a primarily EV-oriented world. And that's just EVs. Then when you talk about large-scale energy storage for grid utilities and whatnot, you are continuing to exacerbate this problem, I'm guessing. As we electrify everything, this problem left unabated would only grow in a relatively large order of magnitude, I'm guessing.
Megan O’Connor (16:17):
That's right. We have to get these materials from somewhere. Unfortunately, we don't have enough of any critical mineral in circulation today to suffice demands that's projected over the next 10, 20. Because, like you said, if we really are going to electrify everything, these are the metals that we are building this entire economy on. I like to think of it as the new oil. It's like how are we going to get enough of these materials in? Recycling can be part of that solution, but we have to continue to mine. And so if we don't figure out a way to mine more sustainably, this problem is just going to explode.
Cody Simms (16:46):
We're going to take a short break right now so our partner Yin can share more about the MCJ membership option.
Yin Lu (16:53):
Hey, folks. Yin here, a partner at MCJ Collective. Want to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019. It has since then grown to 2,000 members globally. Each week, we're inspired by people who join with differing backgrounds and perspectives. And while those perspectives are different, what we all share in common is a deep curiosity to learn and bias to action around ways to accelerate solutions to climate change.
(17:22):
Some awesome initiatives have come out of the community. A number of founding teams have met, nonprofits have been established, a bunch of hiring has been done. Many early stage investments have been made, as well as ongoing events and programming, like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more. So whether you've been in climate for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and then click on the Members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (17:55):
All right. Back to the show. So let's talk about you. I don't know. Did you realize this whole problem and then think I need to come up with a solution to it? Or did you discover a solution and then realize there was a large problem? What's the origin of Nth Cycle, which we haven't even described what Nth Cycle does today, and how did you come upon it?
Megan O’Connor (18:15):
It was sort of a combination of both. I was lucky in just meeting my co-founder randomly at an academic conference. And then I also, about two months later, was able to sit in with a bunch of industry leaders in the green electronic space to talk about sustainability issues they saw coming down the line. And so back in 2014, I met my co-founder, Chad Vecitis, who was a full-time professor at Harvard. He was the original inventor of Nth Cycle's technology, electro-extraction, which I'm sure I'll go over in just a few minutes. He had developed it for a completely different application in wastewater treatment. I just saw him give an academic talk and I thought, wow, this guy, super smart to have thought to combine these novel processes into targeting this application in the wastewater treatment space, and I sort of walked away and left it at that for a while.
(19:01):
And then again, two, three months later, in early 2015, I was able to sort of stumble into this green electronic summit, where folks from Apple and Dell, all the major consumer electronics companies had come to the university to really talk about what they saw coming down the line in terms of sustainability issues to help direct this particular center's research for the next five to 10 years. As I was sitting in that room, I heard over and over again that all of these big manufacturers are worried about where their materials are going to come from. The battery in your cell phone uses the same materials as the battery in electric vehicles. And then they even said in the room, which made me laugh, is like they're small potatoes in terms of how much cobalt they consume compared to how much cobalt an EV consumes right, orders of magnitude difference.
(19:49):
And so they said, "If we're worried about this, with all of these EVs coming, we can only imagine how the auto industry feels." Especially in the past six months where we've seen almost every OEM say that they want to become fully electric in the next five to 10 years. And so paired with that was all of these manufacturers also said, "Look, we know we push new phones, new watches," new whatever gadget that they have on you every single year, and what do you do with all of these at their end of life? This is just creating a bigger electronics waste problem. And what people aren't realizing is that an electric vehicle is also going to become e-waste, a wind turbine is also going to become e-waste, your solar panels on your roof are going to become e-waste. How are we going to manage this entirely new form of waste that we have never had to deal with before?
(20:33):
Very similarly to how I explained where we ship metals overseas to be refined because we don't want to deal with it, we do the same thing with waste, we do the same thing with electronics waste. It was, "Recyclers here in the States are legally allowed to ship waste overseas." So how are we going to continue to deal with all these materials responsibly and transparently as the companies I mentioned are usually trying to push the forefront of what a transparent company looks like? And so I walked into that meeting and I thought, why are we not thinking about this more from a technology perspective? If people are, I hadn't seen it, and I really wanted to figure out a way to get more materials here from a supply chain perspective. How do we truly localize supply?
(21:12):
And then from the waste management perspective, we have all these great materials. It's sort of like urban mining is what recycling is in a sense of the chemical refining process. How could we do that and then creating a new source from essentially the waste materials that we don't know what to do with? Killing two birds with one stone. And so I walked out of that meeting... and I actually was already three years into my PhD at the time, working on a completely different project in the oil and gas industry, and I hated it... so I walked into my advisor's office, I said, "Look, I want to work on this problem. I have no idea how I'm going to solve it, but I met this really cool guy named Chad Vecitis. I think you know him." Just from the industry. It's not very big in the environmental engineering world in academia. And I said, "I really want to work on this with Chad. What do you think?"
(21:53):
She was like, "Well, you're crazy. You're probably never going to graduate on time. But if you want to do it, ask Chad and go for it." And Chad was like, "I love it. I've always wanted a student to do this, but they've never been interested in metals, so let's do it." And so that day I changed my PhD project and for the next three years we worked on it and finally got it to work in 2017, about six months before I was graduating. We sat down and had a serious conversation at a bar in Harvard Square, for folks in the Boston area who are listening to this, and said, "Listen, these are the pros. It works. All the science itself." Because Chad invented this back in 2009. So even when I came in the picture, he had already been working on it for five years. And so a lot of that really nitty-gritty, basic science work that usually trips up entrepreneurs was done.
(22:37):
So now we just really had to scale it. And I thought to myself, I don't know how to do that, but I'm sure there's a lot of smart people out there that I could recruit who can do this and put the right team around me to make this successful. Because the refining process, in my mind, was the clear pain point in the industry of why all these big challenges were happening. And if we could really solve that and rethink what metal supply chains look like and be really creative, not just from a technology perspective, but also then the business model that goes along with that, I felt like this was the change that the industry needed to see if we really wanted to push this industry forward and, I'm going to say this again, create the clean energy economy as clean as the one that we've always imagined. So that's sort of our origin story and here we are five and a half years later with a technology that's scaled and we're going out into our first commercial project this year.
Cody Simms (23:21):
What amazing foresight in 2014, 2015 to have seen that presentation and to have recognized not just how important it was in the existing consumer electronics industry, but EVs were still not for sure happening at that point in time. There wasn't the inevitability of it that there is today. Hybrid cars felt pretty inevitable at that point, but unclear that a pure EV was even a thing. How did you get the confidence to say, "I'm going to sacrifice years of work that I've done on my PhD and I'm going to go all in on this because I believe that it has to happen"?
Megan O’Connor (24:01):
I ask myself that every day. I don't know. Because I kept hearing over and over again how all these people in industry were having this problem but couldn't think of a technological solution. They're like, "Oh, recycling is too expensive. It happens overseas." Like, "Oh, mining. Nobody wants it in their backyard." But we're going to need these materials. There was no way around it. And I was just very frustrated that more people weren't taking the bold step of just trying to solve it and, I don't know, just taking the risk. And so I felt like it was the right time in my career. I felt very passionate, and I still feel very passionate about what we're doing. Because I think it's a really hard problem, but if we don't solve the hard problems, we're not going to make change.
(24:39):
And so in order to really move forward away from fossil to clean energy, this is a problem that has to be solved. And so I felt like even if it wasn't me, at least maybe I could spark something in someone else who might have had a better idea or a better technology and at least get that conversation started. And so I'm very thankful that it worked out in our favor. The technology is amazing. I'm very proud of the team I put together. But I still think there's a lot of work to be done in other parts of the supply chain and excited to be at least one piece of that.
Cody Simms (25:07):
And just so I understand, your PhD advisor said, "Hey, you're not going to graduate on time." Were you even thinking I'm actually going to switch my PhD? Or were you thinking this has been great, but I'm going to go commercialize this thing? At what point did that switch flip for you as well?
Megan O’Connor (25:24):
I originally went to grad school not to stay in academia. I actually knew before I even started grad school that being a professor was not in the cards for me. I don't want to offend anyone when I say this, but I didn't want to go and just write academic papers that nobody was ever going to read. I wanted to build technology that was meaningful, which is actually I was a chemistry undergrad. I switched to environmental engineering to work with super smart people. I loved how interdisciplinary it was. Get to interact with the business students and I get to interact with the hardcore physicists and with my chemistry engineering brain be somewhere in the middle to help put the pieces together to try and solve problems, like the one that we're tackling here at Nth Cycle. And so I didn't necessarily care that I might be in grad school for another one or two years.
(26:05):
At the time, I was probably mentally suffering, because anyone listening to this who's gone through a PhD, it's like, my God, another year is so much torture. But I was just so determined, because for the first time in grad school I felt like here's a problem, I've heard it directly from these OEMs' mouths, and now I want to try and build a technology. Because I had seen a lot of companies, I tried to talk to a lot of people, not really knowing what I wanted to do after graduation, and I heard a lot of horror stories of amazing technology being built, but there was not a real pain point, and so it never made it into the world. And so I was like, "I don't want to work on a technology that doesn't have a place, it isn't needed." And so when I heard this need, I was was like, all right, my mind was scrambling to figure out what I had seen in the past.
(26:47):
And then Chad popped into my brain and it was like, wow. I don't know if this will work, but he's done a lot of work on this. These OEMs are saying that they need it, so why not give it a shot? And then I had another similar serious conversation with my advisor. And I love her, because she's great at pro-cons list, very much an engineer. She was like, "Well, you know, if you become an entrepreneur, you won't have a steady salary, you won't have a retirement fund, you won't have health insurance. You're not married, so you can't use your," my now husband's health insurance. And I was like, "Eh." I'm like, "I'm 26 years old. Who needs health insurance?" And now I'm like, "Oh, my god, I can't believe I thought that way." All real things. But I joke.
(27:23):
And I've said this before, but I really think grad students make the best entrepreneurs, because we are used to being poor and not having access to many things in life, and B, we are used to failing all the time and learning from failure. That is one of, I think, the key things that you learn as a PhD student. I laugh saying that now, even though I was crying at the time, but, I mean, it's true. You have to learn how to learn from your failures and how to iterate. And that's all a startup is. You run into a wall and you have to figure out where to go next. Do I push through that wall or do I make a left turn, a right turn, or do I turn around completely? So I think that trained me mentally to be the poor entrepreneur I have been for the past five years.
Cody Simms (28:02):
What an amazing recollection of the journey, Megan. Did you know from the start that you were going to be the CEO? That you were going to dive in and learn that on the job too as you went?
Megan O’Connor (28:11):
Yeah. I actually applied to a number of executive MBA programs, the ones where you go every weekend, every couple weekends, because for some reason I thought I needed more schooling, which my husband was like, "Please don't. Please don't go back to any more schooling." So I asked a bunch of people, serial entrepreneurs, and I said, "Do I need an MBA or are there online classes or short courses or just people I can help bring around me that can teach me what I need to know when I need to know it?" And they said, "Listen, MBAs are great and we've all done them, but you should just go find people who have done this before, because there's so many people out there who would love to support you in this journey." And so that's what I did. I went, instead of getting my MBA, I decided to just find a fantastic group of mentors and learn as I go.
(28:55):
And I said to myself and I said to my early investors, I said, "Look, I'm the CEO now. I really enjoy the communication of science to real-world applications. I feel like my people skills lend well to this position. But if five years down the line it's time for me to step down, I will be open to making that decision. I'm not going to push back on getting in the way and not letting the company grow to where I think it can grow." And so I think I've done well and learning as we go, but it's not been easy. It's definitely a rollercoaster and new things pop up every hour of every day.
Cody Simms (29:25):
Well, we're more than five years later, so you've hit that mark. Congrats on that. All right. What is Nth Cycle? All of this buildup, explain to us what the company is doing.
Megan O’Connor (29:36):
So all of the issues I talked about with the supply chain really leads to two issues in that centralized metal refining is inflexible from what it can accept, as I explained earlier. It's built out to accept a very narrow band of materials. And here in the Western world, so again North America and in Europe, we don't have quite enough of one input material. We don't have quite enough mined material. We don't have quite enough batteries at their end of life for recycling or other types of recycled materials. And so building out an entirely centralized facility for one of those materials just didn't make sense to us. We will not reach capacities to reach that cost parity level for those centralized facilities for many decades. And on top of that, you have to ship all of the materials to the centralized facilities. You can't put a centralized facility around every part of the US. And so the transportation from a carbon perspective is horrendous.
(30:29):
And then B, it's simply not economic to ship a lot of the low-grade ores or low-grade scrap feedstocks. I'm talking like slag from the steel industry. Really, the dirtiest of the dirty scrap materials that we have here in North America. Didn't make sense to ship them to those centralized facilities, nor could they handle them from a technology perspective. And so we thought how do we get around that and how do we, instead of trying to shove this old refining model into this new world economy of where all these materials can come from here, if we truly want to bring these metal supply chains back to the Western world, how do we accommodate all these different types of materials in all these different locations?
(31:08):
I like to use the word flexible. It has to be flexible. It has to be created where it's needed and when it's needed. We're usually in a world of over capacity or under capacity and so we have these massive fluctuations. I don't know if you follow the nickel world, but the nickel world imploded last March because of things like this. And so we built our technology, which is called electro-extraction, to be the refining technology for metals that the world needs and does not have. And so our system uses only electricity and water, so from a carbon perspective, 92% cleaner than traditional refining technologies and 44% cleaner from the uses of hydro and pyrometallurgy for recycling.
(31:46):
And then the second benefit, which I think is the biggest benefit, is that it can scale. We have the same unit economics with one of our units onsite at a customer. We can bring the refining capacity to the actual feedstock, to the scrap, or to the mine, and have a single unit that can process a thousand tons per year. It has the same unit economics as if we were to put a thousand of these onsite at a mine site. So we can scale to the opportunity of wherever these materials are so that we can de-risk it from an economics perspective. We can go and get the smaller scrap material, but we can also go to the mine and be much closer onsite with them, so you don't have to worry about shipping that uneconomical material and you really reduce the carbon footprint by doing that.
(32:27):
And so that's what we're doing here at Nth Cycle. We're very excited to be at commercial scale, going out into the recycling space first, because from a volume perspective that's really where a lot of the, say, nickel is. Given the new compliant regulations with the Inflation Reduction Act, OEMs are under pretty aggressive deadlines to get domestic localized material and one of the first companies to provide that domestic nickel for them later this year.
Cody Simms (32:52):
So I've seen enough '90s action movies to be able to envision in my head what a industrial facility looks like that processes metals. Like a big, gnarly, I'm picturing Arnold in Terminator 2 going down into the big, hot vat of stuff. What does your system look like?
Megan O’Connor (33:12):
It's a great question. Our system looks like a big, I like to say accordion, which not a lot of people like that example. But think of an accordion. It's called a filter press. It's about 30 feet long and six feet high and it just looks like about 140 cards stacked in series, or if you pulled open an accordion, that's what it looks like. Basically, what we do is we take shredded material, whether it's from a mine, so shredded up dirt with metals in it, or a shredded up battery or other, we take any type of heavy industrial waste that has nickel or cobalt or copper in it and we stick it into a water-based solution to get it into a liquid form, and then the liquid form will actually go through that 140 filters in series that looks like that accordion. And then on the other side we get a metal powder that can go right back into the supply chain.
(34:03):
And so again, because we can shrink this down to less than 2,000 square feet... so think of the size of a house, for example, a pretty big house, 2,000 square feet... all of our equipment, the core tech, which we call the OYSTER, which is that accordion-looking thing I mentioned, and then the pre-processing where we turn it into a liquid, all that fits in 2,000 square feet. So very easily can go onsite with any of our partner facilities and does not disrupt existing operations. So it's a much cleaner end-to-end process. All of our waste goes right back into the system, so we actually have a closed loop. So very minimal waste that's generated on site as well.
Cody Simms (34:38):
Does this obviate out certain parts of the big convoluted supply chain you walked us through at the beginning? Does it obviate out entire sections of that supply chain completely or do you imagine your technology living at each of these sections along the path?
Megan O’Connor (34:54):
Great question. We can completely eliminate the need for smelting. And so smelting pyrometallurgy is the highest carbon process in that whole supply chain that I mentioned. And so just eliminating that is massive in terms of the GHG reduction potential. And then we can actually shorten the hydrometallurgical process and so significantly reducing the amount of chemicals that are needed to create that very final 99.99% material.
Cody Simms (35:20):
So if I'm thinking there's been all these big investments in battery gigafactories happening across the US over the last year or so and the Inflation Reduction Act is going to trigger a bunch more of them, presumably, and so given that, what I'm imagining then is that any of these gigafactories would start to, or should be incentivized, to start to actually have a product like yours as part of their facility so that they could intake existing batteries and transform them into the metals that they would then use to produce new batteries. Is that correct?
Megan O’Connor (35:54):
Absolutely. As I mentioned before, over 80% of the world's nickel supply will come from Indonesia and they create that MHP product that I mentioned, which is the preferred sort of precursor, if you will, to battery manufacturing. The Inflation Reduction Act has said you can no longer source from Indonesia, because 80% of that nickel goes into China to be refined. So from a national security perspective, no longer can you source from Indonesia. Massive companies, like Ford and many others, had publicly announced that all of their nickel would come, or a large portion of their nickel, would come from Indonesia, and so now they're scrambling because they have to hit a target of 40% of every metal that goes into a battery has to come from a domestic source. It could be mined or recycled, or from a country with a fair trade agreement, which let me tell you, there are not many that we have a fair trade agreement with.
(36:41):
And so they're scrambling to figure out where are they going to get this MHP from, because, again, over 80% of the world's nickel has been cut off from what is considered compliant now. And that's what Nth Cycle makes. Nth Cycle makes that nickel MHP, again, for all of these OEMs who are planning to use or can now use that in their supply chain or their manufacturing process. And so we're very excited to be the sole producer of MHP here in the States within the next again, 12 months.
Cody Simms (37:07):
Wow. That seems like a huge milestone for the company, and then the MHP, obviously, given that is massive focus for you. We did talk about how the legacy systems are really optimized for producing one type of metal only out of their process because of either temperature or input requirements, like the acid you use or whatnot. Does your OYSTER system enable optimization of multiple metal inputs and outputs?
Megan O’Connor (37:35):
It does. It does. One of the benefits of the technology that I forgot to mention before is that in addition to localizing the supply and the refining where it's needed, we also have designed the system to have what I like to say the widest funnel possible for input material. We can accept any type of lithium ion battery, any type of nickel scrap. We take the dirtiest of the dirtiest and can process it into the same consistent compliant MHP product, if we're thinking about nickel for example. But on top of that, we can also process cobalt, copper. We're looking at the platinum group metals, so think catalytic converter recycling from traditional internal combustion engine cars. We can look at the rare earth metals, so recycling of the magnets in EV motors, the magnets in wind turbines, the magnets that are likely in my headphones right now. They're everywhere and they're all considered critical metals.
(38:24):
And so the technology is, I hate to use this phrase, but is a platform technology at its core. And so after we tackle the sort of battery metal world, we are moving on to all the other critical minerals. Because that's really the mission of the company, is to create secure supply chains for all of these. Unfortunately, there's about 35 of them on the list today, so we have a ways to go.
Cody Simms (38:43):
How would that work in practice? If I'm a gigafactory, I'm bringing in batteries, I'm recycling them, running them through Nth Cycle's system, getting this MHP as an output that I can then use as nickel in the next round of battery manufacturing I'm doing, but I've still got this additional byproduct of stuff, would I just schedule certain runs of the materials to produce other metals or would I set up multiple instances of Nth Cycle on site?
Megan O’Connor (39:14):
There's a couple different ways, and it really depends on what the strategy is for the particular partner we're working with. We're flexible in how we can work with you as well. We have a couple customers now or partners now who have the batteries or other type of nickel waste. They have their permanent magnets they want us to look at and the catalytic converters. In that sense, we'll set up the units to tackle the different metals. So regardless of where the nickel comes from, one unit will be dedicated to nickel, one unit will be dedicated to the rare earths, and then we have another unit that's dedicated to the platinum and rhodium and the other good metals that are in the catalytic converters.
(39:47):
It's easy for us to put those starter units on site, and then as they start to get more of that feedstock, we can simply add units in parallel to accommodate larger volumes. And so that's also how we're helping the industry really build into the battery recycling world is because, as you probably know, there's not much that's coming off the road in terms of spent batteries today, but projected a huge volume in the next 10 years. But our partners don't necessarily want to invest in, again, these massive centralized facilities and have underutilized assets just sitting there, and so helping them to build that volume over time is something that's really attractive to them.
Cody Simms (40:23):
What's the general investment cost for them to get up and running with you? Relative to building a whole facility, it sounds like this is a relatively small warehouse at their existing facility that they could convert to use for this process. What's the cost for them to get to at least an initial proof of concept type scale that they can be starting to optimize production runs through?
Megan O’Connor (40:46):
It costs them nothing. Nth Cycle actually owns and operates our systems for them. That's the sort of service side that we bring. We'll take the operational burden and simply hand the material right back to you at spec. And so we simply do a very traditional tolling model, where we just charge a fee per pound or kilogram of material that we process. And so that's really the value that we bring, is that there's no upfront investment needed. We can come right on site and just simply start with that fee as soon as we get up and running.
Cody Simms (41:14):
So they need to provide the land and the facility or the building and then whatever technical specs you need to utilize that building and then you install the hardware and, other than the initial cost of setup, they only pay when you deliver the goods?
Megan O’Connor (41:30):
Exactly. It's a relatively easy setup, because nothing in our system, except for the filters that I mentioned, are custom. Everything is off-the-shelf equipment that they likely already have in their facility, so it's very easy to hook up. Usually, does not require any retrofitting on their side. Again, we don't want to disrupt any existing operations. They're simply there to be an upgrading partner to help them with, again, whatever their strategy is to get those final metals out for the supply chain.
Cody Simms (41:56):
How did you get this system funded to the point where you could make these large-scale production runs? Talk to us about the capital history of the company.
Megan O’Connor (42:05):
Absolutely. The initial funding was all non-dilutive from the US government. We were lucky enough to be asked to join, if you've heard of Cyclotron Road or Activate, there's a sister program down in Tennessee at the Oak Ridge National Lab called Innovation Crossroads. And so we were in that. That was just a DOE-funded site, similar to Cyclotron Road. And so that was an initial just over $500,000 to again get our feet wet in terms of scaling the system. Once we are able to get some traction there, we got another non-dilutive grant from National Science Foundation and some matching funds from the State of Tennessee. And then once we were at the bench scale or scale large enough to attract some private equity, we went into our seed rounds and that was led by Clean Energy Ventures, so we moved up to Boston.
(42:51):
That wasn't a requirement, but we found Boston to be a perfect place for us and have our headquarters there now. And with that initial seed funding, which was just over 3.2 million, we were able to scale up to our pilot unit. And once we had that pilot unit, we raised our series A, which was actually just about a year ago we closed, the final closed. That was 12 and a half million to get us into the commercial scale. So, again, the only piece that we've had to scale is really that electrochemical filter that I mentioned, and the rest of it is really off-the-shelf. We've used external engineering firms to help us with the rest of the sort of process flows and matching all that to the cells.
Cody Simms (43:25):
Fantastic. And then so you're growing and scaling. How much of the hardware are you developing in-house? As you look to grow and scale, is deep hardware expertise highly needed at Nth Cycle on the team? Where are you looking for help?
Megan O’Connor (43:40):
Yes, so we do the engineering of the, we call it the core tech. So really the only custom piece of our system is the electrochemical cell and then everything else is off-the-shelf. And so we have had to hire lots of very smart engineers who have experience both from the electrical engineering and from the chemical processing world, and we will soon be looking for a VP of operations to really help us now that the system is engineered to a point where we can go out into the field with it, somebody who can really help us execute on the operational side. We'll definitely be looking for help there and then we'll be looking for a bunch of other engineers to help us both on the chemistry side of our lab as well as continued development on the core technology.
Cody Simms (44:21):
We've talked about how the Inflation Reduction Act was a landmark for your company in terms of creating federal level regulation. It seems like a lot of the gigafactory creation has been hugely focused and dependent on local governments, state governors or whatnot, kind of lobbying to get a plant built in their geography. Are you seeing other regulation or other sort of government programs that are driving adoption for you in particular?
Megan O’Connor (44:52):
I think the Inflation Reduction Act and then IIJA from earlier last year were the two driving forces that we saw have the biggest impact, at least for where we sit. And then over in Europe we see very similar aggressive regulation. So from the Inflation Reduction Act and the US's perspective, we care much more about where the material is coming from. There's sort of a cutoff for geography in where the material is sourced. And from Europe's perspective, that's a piece of it, but they more so care about the carbon embedded in the metals that they're using, because they have carbon reduction goals for each battery that is produced.
(45:27):
And so that from the EU's perspective, as I mentioned, the Indonesian MHP earlier, the US had cut it off from a geography perspective, but the EU has cut it off because it actually produces too much carbon. They cannot get the numbers to work out to meet their targets if they use that nickel because of the process they use. It's much too environmentally damaging to meet their carbon reduction goals. And so you're seeing very similar regulation in all parts of the Western world, just from different angles, but essentially gets to the same conclusion of you have to pay attention to where this material is coming from, how it's processed, and let's try to localize this as close to home, as close to where it's going to be manufactured as possible to truly start to create that circular economy that I think we all started to talk about a while ago and can now start to see how that becomes reality.
Cody Simms (46:12):
Megan, what other predictions do you have?
Megan O’Connor (46:14):
I don't know. I think we'll start to see more investment in the space and I think that you'll start to see more states being involved, as you mentioned. We're already starting to see that. I think a lot more folks will start leaning in. I predict we're going to start seeing more regulation come through and I think the aggressive targets need to be there. Some people say, "Is it impossible to meet the targets that the Inflation Reduction Act has laid out?" And the answer is no. And I'm not just saying technologies, like Nth Cycle's, but the entirety of the climate tech space, or whatever we want to call the space that Nth Cycle sits in, we're all working on these fabulous technologies that can be implemented. It just requires capital and thinking about how to utilize the capital in a much different way than I think traditional venture capital did at the time, at least for companies like ours that are pre-revenue.
(46:58):
And so I think it'll be a very interesting time both from our company's standpoint and other peers in the space in how we scale and grow to meet these very near-term targets now. I think everybody knew that this stuff needed to be solved and now there's just a much more aggressive target on what that looks like. And so I think you'll start to see the industry leaning in more. You'll start to see government leaning in more, and we're excited to see where the next two years leads us. I think it's a necessary step. Aggressive, but we are super excited when it actually passed.
Cody Simms (47:26):
Megan, how deployed are you today? You mentioned that you've got this sort of exclusive ability to develop this MHP material in the US. How much material should we be expecting to see come out of Nth Cycle in the coming year two, three, four, five?
Megan O’Connor (47:42):
Great question. The first unit that we're setting up in the Midwest right now will be producing about 400 tons of MHP per year. And so we're expecting to put out at least greater than 50 units, I would say, over the next two years. And so what's 50 times 400? So we're very excited to be scaling very quickly, but at least next 12 months targeting one unit out into the field.
Cody Simms (48:06):
Fantastic. Anything I should have asked today that I didn't?
Megan O’Connor (48:09):
No, I think we covered everything. It was great explaining the supply chain and how we can help and hopefully be a solution, or part of the solution, for this very grand challenge we have, and it's just been fantastic speaking with you today.
Cody Simms (48:20):
Well, it's inspiring to hear your story, the leap that you chose to take, and I'm so glad that you did, and thanks for all that you're doing to, as you said, help clean energy realize its actually clean potential.
Megan O’Connor (48:31):
I love that. Thanks so much, Cody.
Jason Jacobs (48:34):
Thanks again for joining us on My Climate Journey podcast.
Cody Simms (48:38):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem-solving capacity. To do this, we focus on three main pillars, content, like this podcast and our weekly newsletter, capital to fund companies that are working to address climate change, and our member community to bring people together, as Yin described earlier.
Jason Jacobs (49:00):
If you'd like to learn more about MCJ Collective, visit us at www.mcjcollective.com, and if you have guest suggestions, feel free to let us know on Twitter @mcjpod.
Cody Simms (49:15):
Thanks and see you next episode.