As the transition to an electric future accelerates, the demand for critical battery minerals, such as lithium, graphite, nickel, and cobalt, is surging. According to a recent analysis by Cleantech Group, battery recycling presents a significant opportunity for nations to secure reserves of these essential materials while reducing reliance on geopolitically sensitive sources.
The International Energy Agency (IEA) forecasts that global lithium demand could rise by 870% by 2040, with substantial increases in demand for other key minerals as well. This rapid growth has sparked an international race to secure these resources, with battery recycling emerging as a strategic solution to meet this challenge.
Leading economies, including the United States, European Union, and China, are advancing circular economy practices to address the growing need for battery materials. These nations are increasingly adopting technologies that require 22% less energy and reduce emissions from mineral production by nearly half when compared to traditional mining methods. Parker Bovée, Associate for Waste & Recycling at Cleantech Group, stated, “Battery manufacturers, automobile OEMs, and refineries are creating localized recycling supply chains to feed the surging demand for battery minerals.”
The battery recycling landscape is evolving rapidly, with three main technologies at the forefront. Direct recycling, currently at Technology Readiness Level (TRL) 4/5, focuses on restoring battery materials for immediate reuse in new batteries or energy storage systems. While this method requires extensive sorting, it holds promise for maintaining the highest value of recycled materials.
Hydrometallurgy, at a more advanced TRL 8, offers liquid recovery of all minerals but comes with challenges such as liquid waste production and a higher greenhouse gas footprint due to chemical reagent requirements. Pyrometallurgy, the current industry standard at TRL 9, provides thermal recovery of nickel and cobalt but falls short in lithium recovery and faces difficulties in reducing its environmental impact.
As these technologies mature, industry players are strategically positioning themselves. Chemical giants like BASF and Johnson Matthey are entering the hydrometallurgy space to meet the growing demand for battery-grade chemicals. Meanwhile, Cleantech Group's analysis suggests that European and Chinese automakers are expected to leverage direct recycling, driven by the potential for higher returns on extended producer responsibility (EPR) mandates and improved economics for LFP battery recycling.
The global battery recycling landscape is shaped by a complex interplay of geopolitical interests and market forces. With China leveraging its mineral refining prowess to dominate EV production, other nations are scrambling to establish alternative supply chains. The United States has earmarked $7 billion to boost domestic mineral refining, cell manufacturing, and battery recycling capabilities. Similarly, the European Union and other countries are pouring billions into developing their own battery ecosystems.
Venture capital is taking notice of this shift, with Cleantech Group reporting that funding for battery recycling startups doubled to $4.5 billion in 2023. This surge in investment is fueled partly by supportive legislation like the U.S. Inflation Reduction Act. Major players across the value chain, including battery makers, refiners, mining companies, and automakers, are all vying for a piece of the recycling pie.
While most automakers currently view battery recycling as unprofitable and opt for partnerships with specialized recyclers, a select few, such as BYD, Tesla, and Northvolt, are integrating recycling capabilities into their own facilities. As the industry matures and the volume of end-of-life EV batteries increases, we may see more manufacturers bringing recycling in-house to capture additional value and meet stringent regulatory requirements.
