Next big auto industry material squeeze is old batteries
A global rush into battery recycling is good news for automakers worried about future raw material supplies. But the wave of new factories poses a big risk for the recycling industry itself: There’s nowhere near enough scrap yet to feed them all.
Big-name auto giants, specialist recycling firms and even miner Glencore Plc are all pouring money into transforming waste into the commodities needed to fuel the electric-vehicle revolution.
As a result, global battery-recycling capacity will surge nearly 10 times from 2021 to 2025, and is expected to surpass available scrap supply this year, according to consultancy Circular Energy Storage.
Shortages are likely to persist well into the next decade while the industry waits for early models of EVs to hit junk yards in big numbers, and by 2025 there may be three times more recycling factory space than scrap to run the plants.
Of course, the old batteries will eventually start rolling in, but recycling companies will have to survive until then.
Some are already talking about supplementing their plants with freshly mined material — a counterintuitive solution given that recycling is intended to be a crucial and environmentally friendly answer to limited mined production of metals like lithium and cobalt.
Automakers have been racing to lock in future supplies amid concerns about raw-material shortages that have sent prices spiking in recent months.
For automakers in Europe, there’s an urgent need to build the plants ahead of regulations that will force them to use more recycled materials
in their batteries from 2030 onward.
Needing to move fast
Independent recyclers also need to move quickly, and recovering the raw materials contained in the batteries could still prove lucrative for those who can lock in sufficient supplies.
But the result is that the burgeoning industry is building plants far too quickly.
“Nobody is really looking
at each other, and they seem to think there will be a lot of scrap and end-of-life batteries,” said Hans Eric Melin, founder of Circular Energy Storage. “But if you look at the level of capacity that’s coming online, it’s huge in relation to what we need.”
There are two main types of recycling feed — old, used-up batteries, and waste material from battery factories. But most EVs being driven now will remain on the road for years and, even when the cars are scrapped, batteries are often sold on for re-use.
Available scrap
In 2025, 78 percent of the available scrap supply will be coming from manufacturing waste, while end-of-life batteries will account for 22 percent, according to new research by Benchmark Mineral Intelligence.
It won’t be until the mid-to-late 2030s that the industry reaches an inflection point where volumes of used batteries available to recyclers start to surge, the consultancy predicts.
Previously, most of the investment has been focused in China, which accounts for more than 80 percent of the world’s battery recycling capacity.
It’s also where the first big wave of scrap is likely to emerge, because more EVs have been on the road for longer.
“In terms of where the scrap is coming from, China is going to be dominating supply,” Benchmark analyst Sarah Colbourn said by phone. “It’s quite an opaque market to understand, but the overwhelming majority of capacity is in China and the volume of scrap available will be higher in China.”
To recycle spent batteries, they are first dismantled and shredded into something called “black mass,” which is then processed to produce specialist chemicals for use in new batteries.
The biggest bottleneck is likely to be for the companies focused mainly on making black mass, according to Ajay Kochhar, the chief executive officer and co-founder of US recycling startup Li-Cycle Holdings Corp.
The company plans to produce high-value chemicals at a new $485 million facility in Rochester, N.Y.