In an official ceremony yesterday, (31,79 EUR, -1,40%) inaugurated its new recycling facility for rechargeable batteries in Hoboken, Belgium. We remind that already commented at the time of the first half’s results release in August that the recycling unit was commissioned in May while the plant was at that time in pre-start up testing phase and full operations were planned as of September.
The new facility serves as a demonstration plant for Umicore’sproprietary plasma-based, Ultra High Temperature recycling process which is intended to be used for recycling of rechargeable batteries and potentially other recycling streams (which are not disclosed yet). The facility represents an investment of € 25m and has a capacity of 7,000 tons, which is equivalent to 150k hybrid electric vehicle batteries or 250m mobile phone batteries. Depending on the performance of the demonstration plant, previously hinted it would decide on a large scale industrial recycling unit based on the UHT process in about 1.5 years with construction then probably taking another 2-2.5 years.
In an interview in the Belgian newspaper De Tijd, Umicore’s chairman Mr Leysen was quoted as saying that for the moment they do not see aslowdown of growth. Unsurprisingly, also the FY11 recurring EBIT guidance of € 400-425m was reiterated (we incorporate € 400m in our earnings model for 2011).
Our View:
If the Ultra High Temperature recycling process demonstrates good performance in the demonstration plant it has the potential to become an important (earnings) growth driver for in the next decade. As we have no visibility on the recycling streams that may be treated along with batteries, it is too early to make up our mind on the real potential. We welcome the inauguration and stick to our Accumulate rating for now.