Chris Yip 0:01 Welcome to Tell Me More: Coffee with Chris Yip, the official podcast of the Faculty of Applied Science and Engineering at the University of Toronto. In our second season, I want to focus on the journey, how people got to school, what they did during their time here, and where they've ended up after graduation. You will meet students, professors and alumni, and learn what places them at the heart of designing bold solutions for a better world. My guest today is alumnus Ajay Kochhar, president and CEO of Li-Cycle, the company which he co-founded a little more than five years ago is already the largest recycler of lithium ion batteries in North America, and has even more ambitious plans for the future. Ajay's story is a great example of how an engineering education provides a strong foundation for technical entrepreneurship in what is a rapidly changing world. Ajay, welcome to the podcast. Ajay Kochhar 0:58 Thanks, Chris. Great to be here. Chris Yip 0:59 So Ajay, we always have to go back. Give me a sense of really what helped discover engineering is the place for you. Ajay Kochhar 1:07 Yeah, it's always varied, right? And I think we all along our journey understand more what engineering is when you actually do it but for me, it was intense interest in chemistry in high school. I wasn't, I'd say super oriented, I'd say to physics but I could do it. But I wouldn't say that was like my main propensity. Yeah, I love chemistry. So very natural type of story, thought chemical engineering was a natural byproduct of that. And actually, for a while, even into chemical engineering, which was my undergrad, I actually wanted to be a doctor. So I've actually had almost gone to health sciences at McMaster. And that's actually what I chose between was Health Sciences, McMaster, and ultimately chemical engineering at U of T. So I think I made the right decision in the end. Chris Yip 1:52 Clearly! Ajay Kochhar 1:53 But yeah, I mean, obviously, what was interesting was getting into chemical engineering and understanding that it's a sliver of chemistry and a lot more about other things, which I eventually grew to love and actually figured I really like that too but that's the usual chemical engineering surprise. Chris Yip 2:09 I came into ChemEng in the same way. It was sort of that high school experience, right? In chemistry, that sort of, you know, learning about chemical reactions, and maybe doing a little organic chemistry in high school and that sort of gets you into this idea of applying chemistry into a practical context. Was there really a pivotal class in ChemEng that really helped sort of solidify that this was the discipline for you? Ajay Kochhar 2:30 You know, I think the one that really tipped it for me, albeit, it wasn't probably my best course but I think I enjoyed it probably the most was economic engineering, you know, kind of the full financial side of looking at industrial projects. And at the time, to be honest, it was not the easiest for me, probably, I didn't have the easiest understanding of it but I think I was starting to get, okay, well, there's mass flow in and out, and there's some consumption. Dollars are a little bit like that too. So those two things kind of went together and I think it was just a bit of a realization that, hey, this is a fantastic foundation and this can be used for many different things. Chris Yip 3:07 That's an amazing analogy. I think inputs, outputs, dollar flow in, dollar flow out, profit is product, how you do efficiencies tells you how well you were able to turn around an opportunity. I think this is one of the cool things about engineering is really taking kind of your pure science aside, but then also realizing that I've got a translation into product or an enterprise. Did you always want to be an entrepreneur or CEO, as you went down this path? Or was it that economics course that sort of triggered that in you? Ajay Kochhar 3:39 Yeah, I think that came from a different place and also everybody has their own life story and their background. So my background was, you know, born and brought up in Canada, but parents were immigrants, and both met here. I'm actually half Indian, half Irish and Iraqi so I'm very diverse in upbringing and I think that always kind of created a great foundation of perspective. And what came with that was also they were entrepreneurs themselves, and so they both left their careers, both physicist by background, and found myself when I was growing up, growing in a family business setting and this is often where these two things link up and I'll link it back to chemical engineering in a moment, but I think I always wanted to do something entrepreneurial, always wanted to step out and take that challenge. I think I knew that pretty early but what was missing was, this is often where people ask the question, but what is that thing that I have passion about to actually...it's really like jumping off the cliff ultimately. You take a bit of a leap and I think the light bulb that went on for me later on, much later on, it was basically the realization that a lot of the biggest challenges in our world today, the climate crisis, being first and foremost, we're living in really odd times, but all disciplines of engineering, but I think as an example, chemical engineering has a propensity to be able to solve those problems, industrial problems in a really, really fitting way. And that's where I found myself was the combination of those two things. That was the routing for me. It was knowing that I wanted to do that but then it was a bit of a jigsaw of okay, well, what is that thing? And what am I going to pursue? Chris Yip 5:14 So as you came along this path, you mentioned it sort of took a while to kind of to get to that. How did your post graduation career opportunities kind of help along in that way? I mean, you've got quite a diverse path, you've moved through a number different companies and so on, was that really helpful? Ajay Kochhar 5:30 Yeah, so out of school, and that was one of my summer jobs while I was at U of T, I worked at Hatch and Hatch is one of those amazing foundational engineering construction management firms, Canadian headquartered, founded, global firm. And so that's where I found myself. I've realized in our world today we're really in this clean industrial revolution and that clean industrial revolution needs really fundamental skill sets that are actually very similar to traditional industries, like, for example, the making of metal bearing materials or chemicals. The principle that's followed me all throughout my life is just, forget the ego, no matter what level, whatever job I'm given, this is my co-founder, and I both carry ourselves as we're going to do the best at it, we're going to do it excellently. And so that sort of attitude led me progressively into situations where I was learning more and more and more about materials that ultimately are really critical for the electrification of our world and that's lithium, that's nickel, that's cobalt. So again, these things, it's always a bit of luck, always a bit of a chance, it's a bit of kismet, but that's where I found myself was just following a path of really trying to understand the fundamentals of how you execute projects, engineering, and how that fits into that and being pretty agnostic to what it did. You know, accepting, you know, whatever came across my desk, I'll do it. Those are some of the principles, I think that are really important. Chris Yip 6:55 As you mentioned, the various minerals that are important now as we move into this electrification world, right? I think this is also a bit of a question around timing. I think the opportunities are here, right now we're dealing with these issues of sustainability and clean tech. When did that idea come up? How many years before you sort of say, "Okay, now we're going to go and launch Li-Cycle"? Ajay Kochhar 7:15 So these are the two things that came together. I knew I wanted to do something entrepreneurial. I knew that I needed to get my chops up from a technical perspective and then I met this great guy named Tim Johnston, who's from Australia, he's not a UFC engineer. I met him at Hatch and he got me super passionate about lithium. He'd also walked on to lithium and if you think about what's happening in our world has been enabled by the lithium ion battery, which is a rechargeable batter, and that's very new. And there's some traditional materials like nickel and cobalt that are used in some lithium battery types but lithium is theconstant. And that as a result became very different, different demand profile, Hatch, engineering firm with different verticals, but strong metallurgical materials production capabilities, basically started creating business around that and Tim was very core to that and that's how I met and that was 10 years ago. So got me super interested, I'm like "Oh, that's pretty cool, yeah". Lithium. It's like new industry, like uncharted territory, very different than the mature kind of materials. And, you know, project to project, I then switched careers within Hatch into management consulting, and that came from just being like, you know, this is kind of what I want to do, and just saying, yes, when things came across my desk, and I work closely with Tim there. And so long story short, what happened was, we were seeing different gaps in the industry and whenever you're close to something, which is evolving, emerging, growing, you see the opportunity, you also see the gaps. And one of the gaps was this question around end of life batteries but also, as you make batteries that's not perfect and so what happens to that production reject level as you go along that path. And so it was really Tim, who came to me and he's like, "Hey, man, I have this idea. You know, I've really been wondering about this," and I knew I wanted to do something entrepreneurial so I took it away, thought about it. And then there's this moment, right? Where you got to say, "Okay, let's go do it" because you can't do it, obviously, in a full time job. So that was it. That was November 2016. But these are the sorts of moments I think some people when they're trying to figure out their entrepreneurial journey, and they know they want to be an entrepreneur. That's the struggle. What is that catalyst? What I would just say about that is as long as you have a curiosity about it, you don't need to be passionate about it off the bat, it will probably lead you to or could lead you to your passion. And that's what happened to me. Chris Yip 9:40 Li-Cycle has been around, as you mentioned, sort of about five years. Last November, Fast Company named Li-Cycle to its list of the next big things in tech so maybe tell our listeners a little bit more about what really makes this unique. What does the cool chem eng that lies behind this process? Ajay Kochhar 9:56 Yeah, so what happened was basically, it always starts with the idea and that idea can be super obvious. And lithium battery recycling, to be frank, it is obvious, right? I think it's pretty natural to say, "Hey, we're going to use all these batteries, and at some point, they're going to need to go somewhere." so that's what started it. Then it led into us digging in and I'll frame up the problem and I'll talk about what we do. Simply put, what we were finding after digging deeply, this is after we had left Hatch and started the company, was that basically these batteries have been going to legacy facilities and lithium ion batteries contain different metals and materials. One of those commonly in our consumer devices is cobalt so potentially higher cobalt and consumer device style batteries. So that material was ending up its way basically in base metal, smelters and refineries. And remember, we're coming at it, we were coming at it from a lithium perspective. Now it's going to get a little more technical for a moment but when you put a lithium ion battery, ultimately through a thermal process, a pyrometallurgical process, lithium is white and so it deports with materials that are like it. And that tends to be in the slag layer, which is the the refuse are typically the waste layer, as opposed to the stuff you're trying to capture, which in that context for nickel would be like nickel and cobalt and byproducts, cobalt and copper. So when we're looking at that, we're like, "Wait, hold on". We're helping these lithium miners and specialty chemical producers that are really trying to grow and we're super material constrained, there's a lot of lithium in the ground, but the constraint is how to get into that form that goes into a battery. And so why would that be the way like it's not good economically, it's not good environmentally. So that was the aha moment where it's like, okay, we can start from a clean sheet here and do something much better. So Li-Cycle, in a nutshell, this evolved over time, but if I put it simply, we have a two phase model. It's mechanical, it's quite chemistry in nature. Really simply, we break down batteries close to the source so this is the spoke and hub model. Think of it like Amazon, it's like the reverse of Amazon instead of hub and spoke, material flows from the hubs and spokes, it's reverse, because you want to get close to where batteries are. Why does it matter? It cuts down this big issue around logistics. Batteries are heavy, you don't want to transport them halfway around the world. So that was the first product we did. That's the mechanical process. Tim's a mechanical engineer, my co founder, so he dreamed that up. It's iterated a lot since then, but we're commercial about it now. The second step of what we do and lastly is the hub. And that's a hydrometallurgical wet chemistry approach. Again, family of approaches lots of different methods of processing, devil's in the detail, how do you actually do it. And that's where we take the intermediate product we generate from the network of spokes, and transform it back into battery grade materials. So lithium carbonate, nickel sulfate, cobalt sulfate, we came up with the technology, we came up with the flow sheet, our training at Hatch helped us to take a rigorous stage gated approach to be like, "Okay, we're going to gradually prove this out and bring the engineering along and bring the economics along with the customers." And entrepreneurship, I'm sure we're going to get into this is pretty open and vague and scary at the beginning and it's kind of like, where do we go here? But in retrospect, that's what saw us through in terms of really proving this out and scaling it up thoughtfully, but in a way that we were taking in feedback from customers and other places to basically optimize the model. Chris Yip 13:26 There's a bunch of technical questions like what kind of batteries can you take in. Is it mainly sort of the consumer batteries that we're looking at from your laptops and so on? Or are there larger scale batteries? Because I guess they're even power packs off cars and things like that now, or is it any sort of lithium ion battery that you can bring in? Ajay Kochhar 13:42 Exactly. So there are three key premises to when we started the business and how we wanted to evolve the technology. There are really three key simple things and what you just said is part of it. First is safety. Lithium batteries are known to have a propensity to have some volatility. The second is environmental good, right? So we actually want to have a net benefit. And the third was, of course, it has to be sustainable economically. And so part of that is as we scale up, we can't just have one facility type for one type of lithium ion battery. There's oodles and oodles of types of lithium batteries. The technology is still evolving. We wanted to have a network that could deal with the variability across different sources, small batteries, take the smallest you can like in your Apple Watch all the way to the biggest we probably received is like a bus battery. That's been very important for us to scale with the need and be agnostic to what's happening in the market and where these batteries are being used. Chris Yip 14:41 I love your hub and spoke or inverse Amazon model for frame it. I guess the question there is, and you mentioned you take in different types of batteries, so how does the consumer get their battery to Li-Cycle? Ajay Kochhar 14:52 Yeah, so I'd say there's really two pathways if I just break it down simply. And before I talk about those pathways, I would just say what happened in terms of why we're growing so quickly is actually our main battery material source is manufacturing scrap. But it's b2b, it's actually business to business and groups like LG energy solution, that's kind of like our base load and then there's what you would think of the consumer part of it on top. There are programs that collect lithium ion batteries and other types of batteries. There are few of them, to be super blunt, they haven't worked very well historically. And this actually, by the way, goes for all recyclables. It's difficult, right? Like, how do you solve that problem. So those are our suppliers, or the groups that actually facilitate those programs. You know, they're doing their best and they're a couple of leading ones, but it's been a challenge. And then the second way, the second pathway, would be, say you have an electric vehicle, typically what we're getting back, let's say from Mercedes Benz, or others, are batteries that are coming through the dealer network. So say you have a problem, it's in warranty, go to the dealer, say, hey, fix my battery, or my car, instead of being left with this battery pack and that's what we're picking up. So that's why that spoke model works so well, is where are those batteries? There were people on so that distributed model is extremely helpful for the economics and scalability. Chris Yip 16:08 So majority of your sites would be located near a manufacturing site so you're basically getting off spec battery packs that are made. Ajay Kochhar 16:16 Yeah, that's right. Yeah. So I'll give the example of Ultium. Ultium is the joint venture between LG and GM and it's been really fascinating to watch how quickly that whole manufacturing base has been fanning out. So that you see in different business models, one of them is like LG's, they make their own batteries and their own factories, they're also joint venturing actively. So in that case, we've actually announced this back in January, we are actually building an on site, so the onsite spoke. So the [unintelligible] is in some industries, you have like industrial gases that are made on site, and that's a model where they can [unintelligible] pretty similar, basically there to deal with the scrap that's coming out. One other thing on that lastly is a big - and this is often a question that people say, "Hey, like, what is that? Is it quality rejects or...where's it coming from and won't that diminish over time?" Sure, part of it's quality, but part of it is just how batteries are made. The analogy is kind of like a stamping plant for material out of a sheet of material we like, and it leaves scraps. And basically geometrically, there's aspects of it can be dealt with, right? It's almost like making a cookie. So that is, I'd say 60 to 75% of the scrap input that we're actually getting and so hence, that's not going away, typically, and that's a really good baseload for us to build where battery factories are going and then scale in lockstep as electrification grows. Chris Yip 17:40 As Li-Cycle has grown over the past five years, you've taken in a lot of our PEY, our professional experience year co-op students, and how has that been helpful? Ajay Kochhar 17:51 We've hired a lot of PEYs and in fact, it's been really rewarding for me and I think the whole team. A lot of PEYs that we've hired have gone on to be full time employees with us. I think the longest standing we have now, they've been with us for four, we only been around for five, six years, so they've been around with us from almost the early days, and yeah, it's been awesome. Chris Yip 18:13 So Li-Cycle's got - Kingston's your first hub and spoke, and you've got others, I think there's one in New York. Is that right? One in New York State? Ajay Kochhar 18:20 Yeah, Rochester, Arizona is opening, Alabama, Ohio. We've also now announced Norway, Germany. Chris Yip 18:29 So I was just going to get you on that, which was just opportunities for our PEYs within those other sites as well. Ajay Kochhar 18:35 Yeah, I would say definitely our opportunities are global in nature, albeit like we're...one of the big skillsets we took away from Hatch was project management and that's what we're doing, right? At the end of the day we have numerous capital projects, folks are relatively smaller and then they have some larger ones, which are the hubs. And so we need all disciplines from engineering. Now that typically is in engineering oriented offices, but the projects themselves are being deployed all over the world. And then on the operation side, if somebody has a propensity to want to be in the operations, and yeah, I mean, they're everywhere in anywhere. Each spoke has about 30 to 40 people which is primarily operations oriented, but there's sometimes some engineering support there, and then I'd say the big hiring effort we have is on the hub, and that is level up on sophistication, and very reminiscent of a typical sophisticated hydrometallurgical facility. Chris Yip 19:31 So journey all the way from sort of engineer, sort of like economics a little bit and realize there's a value through your analyst and consultant role, your experience at hatch to now your role as present CEO, what were the biggest lessons that you learned along the way? There's probably more than one. Ajay Kochhar 19:51 Probably so many, but I'll try to keep it to two maybe. So I think one that definitely builds great rigor in engineering is resilience. I think everyone, I think it's just human nature, you do things and you feel like, hey, I've got to like 100% of it, you know, after, like everything I'm doing and the reality is that's not going to be the case, right? You're going to do things, be it school, be it work, be it life that are, you know, maybe it's 50%, truly, you have a gravitation to but if you have resilience and obviously that has a theme throughout engineering school, different disciplines, different years notoriously tough depends which discipline but that's a fantastic muscle. It feels painful, painful in the moment but it builds such ability to say, hey, I can do this, and you go to work, and it's different pressures, and you develop other skills and same thing in entrepreneurship, obviously, that's where you need it the most and I'll link this into the second one but I think when folks are looking at that journey and saying I want to do something, you know, with opportunity comes risk and with both those extremes come extremes in the good times and the times that are challenging. And if you have an attitude, this is the second part, a learning oriented attitude, positive mindset, throughout all that, then the results and the impact that one will have no matter what that is you decide to dedicate your costs to will be 10x what it could have been. Chris Yip 21:22 This one's going to be probably hard because I hope you don't say you remember how to use derivatives but what is something that you learned at U of T Engineering that you use still today? Ajay Kochhar 21:33 I think the one that I was alluding to is just basic mass balance, right? And actually, it's just interesting, the way that even we've been asked to build financial models and that's a lot of what was learned a little bit in U of T ChemEng, a lot at Hatch and we've had to carry over here. A lot of the principles are mass balancing, and the way that we - how does our business work? Our businesses, we take the material, recover material out of it, separate it, there's costs put in between and consumables in between, make a product, we sell that product, and the product has a price associated to the lithium, nickel, cobalt and so the traceability of all that is associated heavily with the mass and energy balance. Chris Yip 22:11 I'm going to have to use this analogy for our students when they do some of their stuff is to figure out what this mass balance looks like, and where are the various inputs. So the big question for Li-Cycle, what's on the horizon? You're moving into Europe, you're into Norway, in the Nordic countries, what's on the horizon? Ajay Kochhar 22:28 We are in such an unprecedented time right around this whole electrification ramp and it's not easy. None of this is easy. These are physical assets, you've got to build them, and so that's obviously our full focus on execution and getting this built up. But the whole theme is sooner, bigger, more audacious, in terms of our customers and what they're doing and it's not stopping. I have been so pleasantly and fully surprised. Three years, you know, critical after we kind of did that core r&d, and you're quite connected commercially. Where it's, you know, there was a lot of wait and see from a lot of the participants in the supply chain and wow, I mean, how has that changed diametrically opposite. So now it's all about speed. It's all about, and then obviously, then what it means for us is we have to be prudent. We're a public company, we have a lot of, you know, there's ton of opportunity, but also comes a lot of responsibility. You know, in a perfect world, we can build 100 facilities at once and get them all on but we don't live in a perfect world, right? So this is a once in a generation shift, q4 of last year, 10% almost as sales in, say a weighted average of jurisdictions for SUVs like EVs...like where did that come from, right? Like it's real. So that means this is happening, consumers want these vehicles, and so then, for us, we just have to keep pace. And the nice thing about our industry segment is, as we grow with manufacturing scrap, that's real, it's there, it's real demand we will just grow in lockstep. And hey, we're getting the 10%, whatever it is that output out of that factory, well, that 90% is there, we know it's there. It's out there somewhere and it's going to need to come back one day and so we know, we can build a sustainable business and the challenges as I've been saying, it's just how to do that with speed, with scale, safely. You know, it's with good social license, and the right environmental footprint and benefit. Yeah, it's been a great ride thus far, but we're just that we're on top of the first inning and ready to go. Chris Yip 24:35 Terrific opportunity, and congratulations on such success. It's just truly remarkable. So yeah, thanks, Ajay. This has been just an amazing conversation and I really want to thank you for taking time today just to speak to me about the success of Li-Cycle and the journey you've taken. Ajay Kochhar 24:53 Yeah, thanks, Chris. I mean, you know, I would just say for anybody out there that's looking to follow their entrepreneurial journey and also those from the engineering community is I really truly believe when I said there about resilience and attitude. I think that goes for any part of life and I think in a world where hopefully we can check the ego, and just continue to drive great impact, and that's why I carry my life., that's how my co-founder carries his life. So I hope everybody can bring that same energy to all these wonderful problems and opportunities that engineering is so fit to help solve. Chris Yip 25:29 Thanks again for listening to Coffee with Chris Yip. If you want to catch up on past episodes, or make sure that you don't miss the next one, please subscribe. We're on Apple Podcasts, Spotify, and more. Just look for Coffee with Chris Yip. You can also check out @UofTengineering on Twitter, Facebook, Instagram and LinkedIn for more stories about how our community is building a better world. And finally, if you'd be inspired to join us, we'd love to welcome you. Whether you're thinking of taking a degree or working with us on our research project. You can find us online at engineering.utoronto.ca. Or you can visit our beautiful campus in Toronto, Ontario, Canada. I hope I can join you for Coffee soon.