Disruptive Tech Startup Aqua Metals Should Be Starting Production In October

…potentially revolutionizing the $22 billion lead market

Aqua Metals, a publicly traded, NASDAQ-listed startup with a $141 million valuation (NASDAQ: AQMS), should be starting recycled lead production via its proprietary, patent-pending electro-chemical technology “AquaRefining™” over the next few weeks. In fact, a press release by the startup should be imminent. Management and outside parties have long guided October as the kickoff date for what should be one of the single most disruptive raw/refined-materials technology advances in decades.

While this might sound exaggerative or overly superlative, it simply is NOT. AquaRefining™ is truly disruptive, or could be rather, in a rare instance where usage of the word is appropriate. Being that I make a living providing research and consulting services (with a good portion of that living providing R&C on early stage, startup-level opportunities), I’m almost never willing to step out on the risk curve for a technology that is completely unproven (at something of scale). I find myself not only doing that in the instance of Aqua Metals, but actively trying to tether my reputation to the startup as much as possible. The “why” is where fortunes could (and likely will) be made.

AquaRefining™: From Concept to Reality

After spending nearly two decades working in the battery industry, Aqua Metals CEO Dr. Stephen R. Clarke and his team (the team that currently comprises management, R&D, and the operations team at Aqua Metals) began to work on a “better way” of recycling lead acid batteries. This was three years ago, at the beginning of the process that would ultimately result in the discovery of AquaRefining™ (SEE BELOW). Three years later, AquaRefining™ is on the verge of defining a new process, a “new normal”, that should become the status quo for a $22 billion mission critical industrial process; mission critical for global economies that is. A new technology defining a “new normal”, by the way, also happens to define exactly what it means to be a “disruptive technology” — a phrase used all too often and more importantly all too often incorrectly.

As indicated in the AquaRefining™ tiles at the introduction of this Medium, lead is essential to 98% of the world’s batteries. And while alternatives are currently being studied, concept-tested, and taken into commercial trials — we’re likely a decade away (or longer) from there being any economically viable alternative created. This becomes especially true for emerging economies, which are likely multiple decades away (or longer) from having an economically viable alternative . The fact is: lead is the way of the past, lead is the way of the present, and lead is the way of the future (at least for right now, at least with anything of visibility). Which makes the lead “life cycle” and “ecosystem”, if you will, an important one to know. I believe it’s this same “life cycle and ecosystem” which led to 1) Aqua Metals achieving the fundraising milestones it has in its early maturation [including securing three strategic investors — with Wirtz Manufacturing, Battery Systems, Inc., and Interstate Batteries being among them] and 2) Aqua Metals achieving the developmental milestones it has in its early maturation [including major battery supply agreements].

Lead as a commodity is essentially limited to what is already in existence/circulation. This is why there’s such a demand for lead alternatives and such a demand in the overall search for lead alternatives (a simple Google search for many of the popular, “hot dot” lead alternatives will show a laundry list of startup creations, funding events, etc.). That said, this is is also why lead recycling is so prominent as a way of producing lead acid batteries.

Lead acid batteries are 99% recycled.

Currently, smelting (extraction via a heating and melting process) is the only way of recycling a lead acid battery. But smelting, again the only way of recycling a lead acid battery, is one of the world’s five worst polluting industries. Nearly every process throughout the process of smelting releases airborne emissions which need to be managed. In addition to the issue of pollution and pollution maintenance, because of logistical and infrastructural constraints, smelting also comes with a laundry list of other issues: smelter locations must meet high regulatory hurdles for allowances by local municipalities — often these are in obscure, hard to reach, low-infrastructure build areas; smelting facilities require huge tracts of land to be allocated to a build because they’re only efficient/economical at extremely large sizes — eliminating facility building in areas of other development; smelting facilities are nearly entirely fixed in costs and can be hugely inefficient depending on battery traffic and/or consistency of battery traffic — making economics of a facility hard to predict, etc. Put simply, smelting is currently the only commercially proven way to recycle a lead acid battery — but it couldn’t be more inconvenient and less efficient.

Enter Aqua Metals and AquaRefining™.

Dr. Stephen R. Clarke and his team at Aqua Metals have perfected AquaRefining™ as a concept, concept-tested the process (at lab-scale), and presumably will begin the ramp to commercial production in October. With its AquaRefinery™ finally built to completion — Aqua Metals calls its low-CAPEX, infrastructure-simple, skeletal-build facility an “ AquaRefinery™” — Aqua Metals should begin AquaRefining™ any day now. Remember, Aqua Metals already has battery-supply agreements in place for up to 1 million batteries (by way of its strategic investor, Interstate Batteries); which should allow it to run into nameplate capacity without supply-side delays. Assuming Aqua Metals doesn’t run into any modular-equipment installation delays and/or complications in scaling its process to nameplate capacity, Aqua Metals could be at 20 tons run rate by November and at 40 tons run rate by December in the early going (both figures are quoted in metric tons “per day”).

Ultimately, nameplate capacity being reached at the initial AquaRefinery™ should lead to licensing opportunities for Aqua Metals; at least this is the goal for the startup. Just to give some context, with full equipment installation the AquaRefinery™ can be at 160 tons run rate. That said, reaching nameplate capacity should be thought of, at least in the early going, as a secondary investment thesis milestone. Aqua Metals proving-concept at commercial volumes (i.e. proving-out the production of lead) should be the primary, October-expected milestone investors should focus on.

Obviously a long way from the finish line and a long way from its goal, Aqua Metals still has much to prove; but it’s well on its way to proving-out a technology that could potentially disrupt a $22 billion industrial process. Aqua Metals’ technology, AquaRefining™, provides a more efficient, ultimately more cost effective (at scale, according to the early economics modeled by Aqua Metals) , infinitely more scaleable alternative to an incredibly toxic process-status quo. Smelting isn’t preferred by incumbent industry participants, it isn’t even looked upon with anything of connection. It’s simply an existing process which has too long benefited from an absence of innovation. Aqua Metals recognizing this, with execution and further prove-out, could lead to it becoming the next disruptive tech unicorn.

As far as I’m aware, all other competing innovations are commodity-based and not technology-based; with these commodity-based competitive threats being long, long development timelines away from realization. The fact is, in the immediate-term Aqua Metals offers the only realistic alternative to smelting. If AquaRefining™ is real, and all indications at lab-scale are that it is, Aqua Metals could be a publicly-traded startup offering returns that start at 10X. For now, all eyes are on the October production start.

Stay tuned.