Cirba Solutions considers the growth of the battery recycling industry, emphasising the importance of collaboration and strategic investment in establishing a stable and competitive supply of critical materials.
As the battery industry continues to grow, the importance of developing a closed-loop raw material supply chain has never been more critical. The critical material processing industry that manufactures battery-grade metals for new batteries is critical to securing our supply chains, enhancing global competitiveness, and deploying advanced energy technologies. A key growth sector around the world is battery recycling.
Developing the global battery recycling industry
The transition from historically known battery recycling is moving into sophisticated chemical manufacturing, and that is getting less noticed in the market because capacity in the sector is still small in comparison to virgin material. However, without new avenues of critical materials, we cannot meet future demands, and that transition requires investment. The recycling industry will not prosper without an acceptable return on investment. However, global powers that control the market today are using influence to ensure that control stays strong in the supply chain. Investment in those areas needs to be seen as attractive to develop new avenues of finite sources.
Currently, 85% of rare earth metals are refined in China today, as well as 70% of the global capacity for battery cathodes and 70% of lithium-ion cells.¹ As these numbers demonstrate, China is the world leader in battery recycling and critical mineral refinement, with the US and Europe falling behind. As a result, there is an unprecedented inflation of battery acquisition costs when buying the market. This is hurting the long-term viability of the sector on a global scale and setting undue expectations with customers, including gigafactories, original equipment manufacturers (OEMs), etc., for the long term.
Without the intervention of new markets, China will become more powerful in the critical minerals sector. For new markets to become competitive, they must have favourability that enables profitable returns and attracts investment.
Growth of the battery recycling industry
Certainly, the European Union (EU) has made strides to keep critical materials within their country and to increase battery recycling and material refinement by adopting new battery regulations. By 2030, more than 1,200 GWh of capacity will be built in the US, with cell manufacturers, gigafactories, and original equipment manufacturers requiring more raw materials than are currently available to meet the expected battery demand (Benchmark Minerals Intelligence).
For this sector to continue on a growth trajectory, there must be more collaboration both in the supply chain and between public and private entities to invest in the recovery of the market costs of these materials domestically. Action needs to be taken now to ensure the future security of this industry.
Potential solutions
Every industry faces unique challenges, and the battery recycling sector is no different. The sourcing of critical minerals and diversifying supply chains is a national security issue affecting many countries, and to become competitive in the critical materials sector, a range of options should be evaluated, such as:
- A strategic and collaborative approach between the public and private sectors for investment throughout the battery supply chain to compete with existing and more mature markets.
- How to promote balanced market considerations from battery acquisition costs to processing materials such as sulfates, showing positive returns on invested capital.
- Increase investment throughout the battery supply chain. This can happen by changing the industry standard to align with other hazardous waste disposal, which includes paying for the removal of hazardous materials.
Diversifying the supply chain of critical minerals is crucial to ensuring the most efficient use of these metals, as well as increasing the availability in the market quickly.
Conclusion
North American and Europe-based companies rely heavily on imports for raw materials like lithium, cobalt, nickel, manganese, and more to support their battery needs and respective energy transition priorities.
To diversify sourcing for these materials domestically and create a more stable supply chain, clear expectations must be set for the market today. This will allow the industry to create a thriving and diversified market now and in the future.
Working together with both public and private entities is imperative. Without reasonable market pricing, this sector will not be attractive for investment. And more importantly, batteries will end up in landfills or in the control of foreign entities of concern.
Recycling and recovery of these materials is possible today if we fully collaborate and support the avenues for new critical minerals avenues, including battery recycling.
References
Please note, this article will also appear in the 21st edition of our quarterly publication.
