The Economics Around Lithium-Ion Battery Recycling Are Strong and Growing

The market around the recycling of lithium-ion batteries is huge and growing, mostly thanks to electric vehicles. Surely, a lot of other lithium-ion batteries get recycled, including from phones and power tools, but the majority comes from EVs.

In 2019, it was estimated that the recycling market was worth $1.5 billion. The projected amount of available lithium-ion batteries to be recycled in 2020 was 460,000 metric tons — a large amount compared with previous years. By 2025, the market for recycling is expected to grow to $12.2 billion. After that, it should remain at an estimated 8% growth rate. To put that in perspective, the world is at equilibrium with lead acid batteries — the number of batteries that get produced is the number of batteries that come back for recycling. The market grows only along with new vehicle sales, and EVs are expected to take over in the coming decade.

Most EV batteries won’t have a second life, although Tesla is pushing it. Some of Tesla’s batteries get tested, confirmed they’re functional, and then reused in an EV. They may come back and test as functional, but they’re not good enough to go into a car. These may be repurposed for power storage in a house.

The lifetimes of EV batteries are long, much longer than lead acid (two to four years for LAB vs. an estimated 10 years for LIB). The batteries coming back for recycling vs. the amount being produced will not be at equilibrium for a long time. It won’t be until the EV market plateaus, and eight to 10 years have gone by to allow the old batteries to come back.

Recyclable Materials in Electric Vehicle Batteries

There are three main components that can come back for recycling. The first is unspent cathode material, which has nickel, manganese, and cobalt. With any factory, there is a certain reject rate for this material, and it’s very valuable. The facility would want to capture the value of that and/or get that nickel, manganese, and cobalt off the cathode and recycle it back upstream within the factory.

Second is unspent lithium-ion batteries. These are rejected in the factory for whatever reason, and the company making the batteries wants to recycle those or capture the value. It’ll send them out for recycling, sell them, and either let the recycler do whatever it wants with the material or perhaps send them off for processing and ask to have the nickel, manganese, and cobalt returned.

The third is spent LIB batteries, which are starting to come back for recycling but the volume percentage vs. current production is very low. In these cases, car companies hire third parties to replace the batteries, likely under warranty, and they are then contracted to be recycled.

The Types of Recyclers

There are two main types of recyclers. The first is companies that already recycle other things, including Umicore Corp. in Belgium and Glencore in Switzerland. The other is companies that recycle only lithium-ion batteries. Of those, there are two different varieties: ones that take any type of lithium-ion battery and others that focus only on EVs. Some of these EV-focused companies concentrate only on unspent coated cathode that has not been put into a battery yet, while others concentrate on unspent cells or unspent modules to then get recycled for the auto company. A third group focuses on spent cells. New companies are coming into the market every day.

From a high level of how these recycling companies operate, first they have a source of material. That could be a contract with General Motors to get unspent coated cathode, unspent batteries, or some combination. Comparatively, the lead acid battery space is mostly brokers going around and collecting batteries, then feeding them to recycling operations. Once a company has a source, the economics can change depending on the contract, whether it involves getting material for free or paying for it, or a tolling contract where an automaker pays the recycler by the metric ton of batteries or material that it processes and returns.

The Costs of Recycling

The cost to break the battery down is similar to lead acid, mostly because the process uses similar equipment, and the operating expenses are comparable — about $100 to $200 per metric ton of the black mass paste. Black mass (the mixture of nickel, manganese, and cobalt oxides with carbon) makes up about 60% of the incoming battery weight. When you adjust for that, it’s about $90 per metric ton of converting the incoming batteries. Of this 60%, half is carbon and the other half is either spent or unspent metal oxides, cobalt, nickel, and manganese, plus miscellaneous pieces of plastic and metal. The cobalt consists of about 5% to 10%, depending on the manufacturer. About $300 per metric ton of the incoming battery unit is the black mass that sells on the open market, or $500/MT of the actual black mass.

The aluminum and copper are quite valuable. If you consider the amount of copper and aluminum that are in the battery, multiply that by 30% of London Metal Exchange prices, and you get approximately $450 per metric ton for the copper and $53 for the aluminum. That adds almost as much value to what’s coming out of this process as the black mass does. It’s important for recyclers to take both of those into account because they almost equal the value of the black mass.

One metric ton of incoming batteries will cost approximately $90 for processing, with black mass selling for about $300 or more and the metallics for about $500. That’s a profitable recycling operation.

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About Patrick Curran

Patrick Curran is Chief Executive Officer at Lithium Recycling Systems, specializing in the disposal and recycling of lithium-based and lead-acid batteries. Patrick has 13 years of experience in the battery recycling sector. Previously, he was a Plant Manager at Exide Technologies, one of the largest lead-acid battery equipment manufacturers in the world.

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