BU-705a: Battery Recycling as a Business

Batteries are expensive and have a relatively short life span. As discarded batteries grow by the tonnage, entrepreneurs are enticed to start a business in recycling. With an annual world market () of $33 billion, lead acid is the most common battery in use. This is followed by Li-ion at $16.6 billion, NiMH at $2 billion and NiCd at $1 billion. All other chemistries only make up $1 billion. Table 1 lists the material cost per ton to build these batteries.

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Battery Chemistry Metal Value (per ton)* Recycling Lithium cobalt oxide $25,000

Subsidy needed

Cobalt $50,000 Relevant, subsidy Lithium iron phosphate $400

Subsidy needed

Lead acid $1,500 Profitable Nickel$10,000&#;$17,000Subsidy neededCadmium$2,200Subsidy neededTable 1: Metal value per ton of battery
Lead acid remains the most suitable battery to recycle; 70% of its weight contains reusable lead.
* Reference prices only; purity and supply govern value.

Lithium-ion batteries are expensive to manufacture and this is in part due to the high material cost and complex preparation processes. The most expensive metal of most Li-ion is cobalt, a hard lustrous gray material that is also used to manufacture magnets and high-strength alloys.

Knowing that billions of Li-ion batteries are discarded every year and given the high cost of lithium cobalt oxide, salvaging precious metals should make economic sense and one wonders why so few companies recycle these batteries.

The reason becomes clear when examining the complexity and low yield of recycling. The retrieved raw material barely pays for labor, which includes collection, transport, sorting into batteries chemistries, shredding, separation of metallic and non-metallic materials, neutralizing hazardous substances, smelting, and purification of the recovered metals.

Lead Acid

Recycling programs for lead acid are said to have started soon after Cadillac introduced the cranking motor in as a for-profit business rather than protecting the environment. Recycling can be harmful, especially with lead acid batteries. Lead can enter the body by inhaling or ingestion when touching the mouth with lead-contaminated hands. This puts workers and residents of the surrounding areas at risk of lead poisoning. (See BU-703: Health Concerns with Batteries)

The EPA (Environmental Protection Agency) has imposed strict guidelines in recycling of lead acid batteries in the USA. The recycling plants must be sealed and the smokestacks fitted with scrubbers. To check for possible escape of lead particles, the plant perimeter must be surrounded with lead-monitoring devices. Rules are bound to be broken and batteries soon end up in Mexico and other developing countries with relaxed regulations. China, a leader in lead acid battery production, also took action to protect the environment by introducing strict guidelines that only reputable companies can meet.

Nickel

Nickel-based batteries can also be recycled and the retrieved materials are iron and nickel, which are used in stainless steel production. Nickel-metal-hydride (NiMH) yields the highest return in nickel, and with ample supply recycling is said to make money. Low demand for cadmium has reduced the profitability from recycling NiCd batteries. The growth in batteries is with Li-ion but valuable materials are difficult to retrieve. This makes Li-ion less attractive for recycling and a financial breakeven may not be possible without subsidies.

Li-ion

The true cost to manufacture Li-ion is not so much in the raw materials, as is the case with lead acid and NiMH, but in lengthy processing and purification processes of the raw materials to reach battery grade. Retrieving lithium at only 3 percent of the cell mix may never reach break-even levels. If the purity of lithium is below 99.5 percent, then it is not suitable as raw material for batteries. Recycling brings the metal to ground zero, from which costly preparations begin anew. It is often cheaper to mine raw material than to retrieve it from recycling. Lithium from recycled batteries is commonly used for non-battery applications, such as lubricating greases that are found in WD-40 and other products, rather than batteries. (See BU-308: Availability of Lithium)

Direct recycling technologies for lithium-ion batteries my offer a solution in refining used Li-ion into high value cathode and anode materials. Direct recycling may become profitable if the technology can be developed to large-scale processing made possible with high volume EV batteries reaching end-of-life. Direct recycling is said to be cleaner than older methods that melt the material.

Alkaline

Although alkaline and zinc-carbon account for over 90 percent of batteries consumed in the United States, they contain few precious metals and the toxicity is low. Organizations are seeking ways to recycle these batteries as well for the basic metal content and with high volume such a venture should become viable. Table 2 lists the typical metals content of commonly recycled batteries.

Fe

Iron

Mn

Manganese

Ni

Nickel

Zn

Zinc

Li

Lithium

Cd
Cadmium

Co
Cobalt

Al
Aluminum

Pb
Lead

Lead acid

65%

NiCd

35%

22%

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15%

NiMH

20%

1%

35%

1%

4%

Li-ion

22%

3%

18%

5%

Alkaline

24%

22%

15%

Table 2: Metals in commonly recycled batteries as a percentage of the overall content
The metal content may vary with battery type. With the exception of lead acid, most recycling requires a subsidy.

Facts about Battery Production and Recycling

Environmental issues and the ability to recycle play an important role when choosing a battery system. If the UPS operates mostly in standby and can provide longevity of 10 years, then lead acid is a strong contender. The preference of lead acid over Li-ion and nickel-based systems is manifested in moderate pricing, superior safety, dependable operation, and the ability to recycle. Table 3 compares the cost to manufacture and recycle batteries.

Estimated Cost of Disposal Production Process Carbon Dioxide Emission Lead acid Profitable; lead has intrinsic value 30 mega joules; 8.3kW* 3kg per kg* Lithium-ion $4,000&#;5,000 per ton 170 mega joules; 47kW* 12kg per kg* NiCd, NiMH Can be cost neutral N/A N/A Table 3: Costs of battery manufacturing and disposal
* Quoted figures from Argonne National Laboratory

Summary

The primary objective of building a good battery is long life, safety and low price. Recycling is an afterthought and manufacturers do little to simplify the retrieving of precious metals. The recycling business is small compared to the vast battery industry, and to this day, only lead acid can be recycled profitably.

Nickel-based batteries might make money with good logistics, but Li-ion and most other chemistries yield too little in precious metals to make recycling a viable business without subsidies. The major expense with modern batteries is not so much the raw materials, as with lead acid, but lengthy preparations, purifications and processing down to micro- and nano-levels. Nevertheless, batteries contain valuable material that can be re-used for new products.

To make recycling feasible in the meantime, subsidies are created by adding a tax to each pack sold. The goal goes beyond retrieving metals for re-use to preventing toxic batteries from entering landfills. Combining the environmental benefit with making a profit is the ultimate goal, and this might become feasible with innovative new recycling processes in development.

Another model is to sort batteries into functional and non-functional groups and give those with capacities of 80 percent or more a second life. Cells and modules of larger battery systems can be tested individually and reassembled in a new pack(See BU-803: Can Batteries be Restored?)

As the fully electric vehicle (EV) continues to make inroads with consumers, heading towards a projected 40% of global car sales by , securing sufficient battery materials&#;especially for the cathode of Lithium-Ion (Li-Ion) batteries&#;is taking on increased urgency. For battery manufacturers and automotive OEMs, potential supply chain disruptions and price volatility that reduce the availability of these materials or make them overly expensive are worrisome roadblocks to a fast expansion in EV battery production. Moreover, the carbon footprint of EV batteries is a concern for environmentally conscious potential buyers, which could also negatively impact EV uptake.

Faced with these uncertainties, automotive and battery companies are increasingly pinning their hopes on the emergence of EV battery recycling as a solution. Under this approach, recyclers recover a large share of the materials in aged-out EV batteries or from manufacturing scrap&#;and this reclaimed &#;secondary&#; content is then used in new batteries. From an economic perspective, this is a compelling idea if undertaken at scale.

Today, only China has a recycling industry large enough to harness these cost advantages, whereas in the EU and the US, the industry is still in the build-up phase. However, by varying degrees policymakers are pressuring the EV sector to ensure that batteries are designed for circularity, that new batteries contain recycled content, and that recyclers recover larger shares of materials. (See &#;Global EV Battery Recycling Regulations.&#;)

Global EV Battery Recycling Regulations

Policymakers around the world are establishing new regulations designed to support recycling of EV batteries. Concerns about excessive carbon emissions in battery manufacturing, materials shortages, and other supply chain disruptions that could inhibit the growth of electric vehicle sales are the impetus behind these new rules. Here are the regulations in the EU, China, and the United States.

European Union

The EU Battery Regulation adopted in July is an ambitious set of rules that covers the entire battery life cycle. Among the key components:

• Transparency on a battery&#;s content, design, and recyclability through a virtual, unique Battery Passport (required for all EV and industrial batteries greater than 2 kWh on the EU market as of February ).
• Recycling targets by the end of of 50% for lithium, 90% for cobalt, and 90% for nickel. Percentages increase at the end of .
• Recycled material targets for new batteries by August of 6% for lithium, 16% for cobalt, and 6% for nickel. Percentages increase in August .

In addition, the EU&#;s provisional agreement on the Critical Raw Materials Act (CRMA), which is designed to ensure future availability of feedstocks for critical raw materials, impacts many of the elements contained in EV batteries, such as lithium, cobalt, copper, manganese, and nickel. Under the CRMA, at least 25% of the annual demand for these materials would have to be supplied from recycling.

China

Since , China&#;s Ministry of Industry and Information Technology has placed the responsibility to establish a recycling system for end-of-life batteries on electric vehicle manufacturers through its &#;Provisional Measures for the Management of Recycling & Utilization of Power Batteries for Electric Vehicles.&#; Through subsequent financial and fiscal policies, China, which leads the world in the production and ownership of EVs, has continued to encourage the development of a network of collection outlets and recycling plants to handle an anticipated barrage of depleted batteries in the coming years. Official government guidance for recovery targets is generally higher than in the EU, with 98% recovery rates for cobalt and nickel and 85% for lithium.

United States

The US has no regulations to manage Lithium-Ion battery recycling. However, the Inflation Reduction Act contains domestic sourcing requirements for battery materials, encouraging recycling to limit the need to import materials. In addition, the IRA, the Investment Infrastructure and Jobs Act of , and the Loan Programs Office are providing financial support for qualified battery recycling projects.

The EU Battery Regulation adopted in July is an ambitious set of rules that covers the entire battery life cycle. Among the key components:In addition, the EU&#;s provisional agreement on the Critical Raw Materials Act (CRMA), which is designed to ensure future availability of feedstocks for critical raw materials, impacts many of the elements contained in EV batteries, such as lithium, cobalt, copper, manganese, and nickel. Under the CRMA, at least 25% of the annual demand for these materials would have to be supplied from recycling.Since , China&#;s Ministry of Industry and Information Technology has placed the responsibility to establish a recycling system for end-of-life batteries on electric vehicle manufacturers through its &#;Provisional Measures for the Management of Recycling & Utilization of Power Batteries for Electric Vehicles.&#; Through subsequent financial and fiscal policies, China, which leads the world in the production and ownership of EVs, has continued to encourage the development of a network of collection outlets and recycling plants to handle an anticipated barrage of depleted batteries in the coming years. Official government guidance for recovery targets is generally higher than in the EU, with 98% recovery rates for cobalt and nickel and 85% for lithium.The US has no regulations to manage Lithium-Ion battery recycling. However, the Inflation Reduction Act contains domestic sourcing requirements for battery materials, encouraging recycling to limit the need to import materials. In addition, the IRA, the Investment Infrastructure and Jobs Act of , and the Loan Programs Office are providing financial support for qualified battery recycling projects.

Recycling is just one circularity option. Battery repair and re-use in electric vehicles&#;or giving them a second life in a related application, such as stationary energy storage&#;are other possibilities. But the economics of these alternatives are not favorable, especially for batteries that are dominant today, which are high in nickel and cobalt. We believe that technological improvements and economies of scale will continue to favor recycling as the preferred circularity strategy.

In this article, we provide a window into the landscape, profit pools, value chain, risks, and uncertainties for companies in the EV battery ecosystem&#;including mining businesses, battery (cell) manufacturers, automotive OEMs, and recyclers. Our message is clear: for all of these companies, this is a period of significant opportunity to take advantage of a growing market and attractive profit pools.

EV Battery Recycling Is on the Rise

Globally, EV battery recycling capacity is expanding. Battery cell manufacturers are building recycling facilities on-site or close-to-site. Independent recyclers are starting to invest in their own Li-Ion battery recycling plants. Over the past two years alone, more than 20 companies in the automotive and recycling sectors have announced plans for new partnerships.

The overall capacity of EV battery recycling is difficult to assess because details about the size and scope of new recycling facilities are often incomplete. However, our best estimate is that China now has the capacity to recycle over half a million metric tons per year. The US and Europe trail, with about 200,000 metric tons of annual recycling capacity each. The EU hopes to double that by .

Of course, with few electric vehicles currently on the road and almost all of them relatively new, EV battery recycling is not as necessary now as it will be in the next decade. Demand for cathode materials is expected to more than double between and due to a steep increase in EV sales, while batteries generally are not retired until after 10 years of use or more. Thus, most of the material available for recycling will be production scrap until . The share of available secondary material compared to overall cathode material demand will be low throughout the decade (about 16% by ). (See Exhibit 1.) Beyond , substantial volumes of post-consumer scrap (from retired EV batteries) will overtake production scrap as the most important source of secondary material.

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