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Nano One battery partnership and investment deal with Rio Tinto

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Nano One Materials Corp (TSX:NANO) has signed a strategic partnership deal with Rio Tinto (LSE:RIO), providing for iron and lithium products, collaboration and a US$10M investment into Nano One by the mining giant.

The partnership and funding is intended to accelerate Nano One’s multi-cathode (multi-CAM) commercialisation strategy. It should also help to support cathode active materials (CAM) manufacturing in Canada, helping to achieve a cleaner and more efficient battery supply chain for North American and overseas markets.

“The global transition to a low-carbon electrified economy will require millions of tonnes of battery materials, so it is critically important to produce these materials efficiently and with the lowest environmental footprint,” said Dan Blondal, CEO of Nano One.

Rio Tinto’s partnership and support complement Nano One’s recent announcement to acquire Johnson Matthey’s LFP business in the nearby community of Candiac, Québec and amplifies the Government of Canada’s Mines-to-Mobility initiative, which aims to encourage a localised battery ecosystem to serve the broader North American market.  Rio Tinto brings deep experience in high volume production and technology commercialisation to the partnership, as well as a growing battery metals business.

“Localised, clean and secure supply chains are critical for the success of the energy transition that is now underway and this requires partnerships with innovative companies like Nano One to help us differentiate, disrupt and accelerate the path to a net-zero future,” said Marnie Finlayson, Managing Director of Rio Tinto’s Battery Materials portfolio.

Nano One’s patented One Pot Process and metal to cathode active material (M2CAM) technologies form a unique manufacturing platform that enables nickel-rich (NMC), iron-rich (LFP) and manganese-rich (LNMO) lithium-ion cathode active materials to be made sulfate-free from a range of battery metal sources with fewer steps, lower costs, less complexity and a much smaller environmental footprint.

The technology applies to all lithium-ion battery chemistries for applications in electric vehicles, renewable energy storage and portable electronics.

Equity investment from Rio Tinto

Rio Tinto has made a strategic equity investment into Nano One for gross proceeds of US$10M, equivalent to C$12,536,500. On closing, Nano One will issue a total of 4,643,148 common shares, approximately 4.9% of the current issued and outstanding shares of Nano One, at C$2.70 per share in a non-brokered private placement. This investment will be directed towards technology and supply chain development, commercialisation, Nano One’s acquisition of the Candiac facility in Québec (announced 25 May 2022 pending completion), its conversion to One-Pot lithium iron phosphate (LFP) and industrial scale piloting of other Nano One CAM technologies, and for working capital purposes.

Provisions of the investment agreement with Rio Tinto include participation rights in any future equity financings to maintain pro rata ownership interest for a period of five years from the date of closing; a lock up on securities dispositions and a standstill for a period of 12 months from the date of closing, subject to certain exemptions.

“Canada has positioned itself as a global leader in critical minerals and batteries, and with partnerships like the one we see here today with Nano One, Rio Tinto and our government, we continue to see the growing success of the Canadian electric vehicle battery market,” said Francois-Philippe Champagne, Minister of Innovation, Science and Industry, on news of the deal. “Throughout recent years, our government has supported Nano One with over $10 million in funding to help bring their unique innovation to market, doubling down on Canadian innovation and Canadian workers’ expertise in the critical minerals sector.”

Strategic collaboration agreement

Rio Tinto and Nano One will on closing, enter into a strategic collaboration agreement that includes a study of Rio Tinto’s battery metal products, including iron powders from the Rio Tinto Fer et Titane facility in Sorel-Tracy, Québec, as feedstock for the production of Nano One’s cathode materials. Rio Tinto will contribute know-how from its Critical Minerals and Technology Centre, which has developed a unique expertise in the extraction and processing of critical minerals such as lithium and scandium, as well as minerals from Canada, the United States, and other international sources to further drive localization of the lithium ion battery value chain.

Rio Tinto will collaborate on technical and business matters as may be required in developing, designing, constructing and operating cathode production facilities. Nano One will issue to Rio Tinto 1,000,000 non-transferrable share purchase warrants as consideration for their technical and support services. Each warrant shall entitle Rio Tinto to purchase one Share at an exercise price of C$4.00 for a period of 12 months from the date of issuance.

“Critical minerals are a generational opportunity for Canada, and our government is committed to developing an end-to-end Canadian battery supply chain, from exploration to recycling. This is why the partnership between Nano One and Rio Tinto is so promising — it’s an example of the collaboration we need to develop a globally competitive supply chain that will position Canada to lead in the global energy transition. By leveraging Canada’s wealth of critical minerals and our skilled workforce, we can create good jobs, drive clean growth and ensure economic opportunities for communities across the country.”

Jonathan Wilkinson, Minister of Natural Resources, Canada

Nano One’s CEO Dan Blondal will be returning to The Armchair Trader podcast imminently. If you are an AT+ subscriber and want us to put a question to him, please use your member services contact email.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

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