Recycling will be essential in helping Europe and the US meet future demand for electric vehicle (EV) battery components, but the development of this market will depend on finding viable business models that can withstand significant price volatility for the battery metals themselves.
Argus' index for black mass nickel-cobalt-manganese (NCM) 811 production scrap stood at $10,653/t on 2 January, based on a weighted average of the component parts. NCM523 production scrap prices were assessed at $9,442/t on 2 January, while lithium-cobalt-oxide (LCO) production scrap was assessed at $18,868/t. The lowest-value scrap grade was lithium-iron phosphate (LFP) at $1,991/t on 2 January.
These figures indicate an attractive level of value contained in production scrap, even after last year's price slumps, and multiple companies are pushing to take advantage of it. But it is possible that by the time the first wave of scrapped EVs reach their end-of-life by the end of this decade, recyclers might need to contend with lower battery material prices than when they initially invested in recycling facilities.
Last year underscored just how volatile prices for battery metals and chemicals can be. Overall, lithium carbonate prices sank by 79pc in 2023, ending the year at $13-14/kg cif China. Cobalt prices also collapsed, with alloy grade down by 31pc to $13.50-15.00/lb du Rotterdam over the period. Nickel sulphate prices have been falling steadily too, shedding 32pc in 2023 to end the year at $3,100-3,200/t cif China.
The first wave of production scrap
Argus estimates the amount of metal (lithium, cobalt and nickel) available to be recycled from this first wave of gigafactory scrap to grow to 239,827t by 2027, up from 32,225t in 2023. This is expected to grow to 1.05mn t by 2033 as the first wave of mass-produced EV batteries come to the end of their life cycles. Established companies, which already recycle cars to gather more traditional circular materials like steel, aluminium and copper, are trying to cash in on the market.
European Metal Recyling (EMR), one of the world's largest recyclers, is looking to capitalise on its scale to overcome the cost of labour and expertise needed to dismantle batteries.
It plans to collect batteries at a 12,000m² facility in Hamburg, Germany, dismantling 10,000t of battery packs per year. EMR is also collecting copper and aluminium from the EV frames, adding an extra revenue stream. After dismantling, the batteries will be sent to Northvolt to be processed into cathode metals and materials in a joint partnership between the scrap merchant and battery cell maker.
EMR is also partnering with carmakers Bentley, BMW and Jaguar Land Rover in the UK to develop ideas for a battery pack recycling supply chain.
"Our aim is to create a circular supply chain for batteries and, in the process, reduce the cost for end-of-life disposal for the vehicle manufacturer or last owner of the car to zero," EMR managing director for technology and innovation Roger Morton said. He added that by working in a consortium, EV manufacturers "will develop simple design changes that greatly improve the potential to remanufacture, reuse or recycle their batteries at end-of-life". Morton said this will "transform the economics" of the EV industry.
Integrated supply chain problems
Other companies are trying to set themselves up as fully integrated recyclers, collecting the battery packs, dismantling them and processing them into new cathode active materials. But building out an entire supply chain is proving difficult, especially with falling battery metal prices.
Li-Cycle, the most ambitious of a pack of new companies, aimed to launch multiple "spokes" in North America, which collect and shred battery packs, and "hubs", where the shredded black mass is processed into cathode active materials.
But the company has hit a snag, announcing a review of its flagship Rochester hub project because of high construction costs. The project was initially estimated to cost $485mn, budgeted for $560mn, but could now cost around $1bn to complete, Li-Cycle said in a recent results presentation, demonstrating how difficult it is to get a battery recycling facility off the ground. The falling value of battery metals over the past year has not helped.
Plans for another facility in partnership with Glencore also fell through in November, because of permitting issues at its location in Sardinia, Italy. The companies are looking at other locations. The company is now proposing to tighten its belt and cut costs, proposing staff layoffs and spending reductions on non-essential operations. The new conditions have raised questions over a loan from the US Department of Energy (DoE).
"We remain actively engaged and continue to work closely with the DoE to satisfy conditions precedent for financial close for the $375mn loan commitment as we complete a comprehensive review of the go-forward strategy for the Rochester hub," Li-cycle chief executive Ajay Kochhar said.
The new economic reality for battery recyclers could require scaled-back ambitions, until either the initial cost of investment falls, or projected battery metal shortages later in the decade make the process more profitable.
