What happened

Shares of lead recycling specialist Aqua Metals (AQMS 5.93%) rose a dramatic 30% in the first hour or so of trading on Jan. 26. That follows on material gains the day before, when it was up around 20% or so. The big news behind both moves was a deal with global chemical giant BASF.

So what

There has been a lot of change in Aqua Metals' business of late. For example, it paid off all of its debt in 2020 and, more important, shifted to an asset-light model. A fire at a facility using the company's technology in late 2019 disrupted its business and helped push forward the change process, which started in 2018. The change in focus got a big boost yesterday when Aqua Metals agreed to partner with BASF on the production of chemicals used in Aqua Metals' patented lead recycling technology.   

A woman raising her arms in triumph in front of a computer.

Image source: Getty Images.

BASF, which has a long history of innovation behind it, has agreed to help make improvements to Aqua's product. BASF will be the preferred supplier for all Aqua Metals customers. But, perhaps more important, BASF has also agreed to offer Aqua's product to its current and prospective lead recycling customers. Effectively, Aqua Metals just got a big backer to stand behind its business, increasing the company's credibility and reach.   

Now what

One day of gains seemingly wasn't enough to sate Wall Street as relatively tiny Aqua Metals (with a market cap of around $400 million) partnered with an industrial giant like BASF (sporting a market cap of $73 billion). That actually makes some sense. This is probably a rounding error at best for BASF, but it could be a growth engine for Aqua Metals as it looks to push its environmentally friendly lead recycling technology.