Lithium-ion Battery Industry Ramps Up Recycling Focus As Geopolitical Events Challenge Supply Chain

The Russia-Ukraine war and booming EV demand are contributing to surging battery commodity prices. Federal funding and private-sector investments could boost recycling.

Recent geopolitical events — including Russia's war in Ukraine, the domestic infrastructure law and President Joe Biden’s invocation of the Defense Production Act — are impacting the supply of critical minerals used in lithium-ion battery manufacturing and contributing to soaring commodity prices. Businesses dependent on lithium-ion batteries are exploring investments and advancements in battery recycling as ways to ease these metal supply-chain concerns.

"Recycling lithium-ion batteries is an important part of ensuring a healthy supply chain," said Jeff Spangenberger, director of the ReCell Center, a consortium based at Argonne National Laboratory that advances battery recycling research and development . "This is a new industry, for the most part, compared to a lot of other recycling industries. There's a lot of room for improvement."

About 99% of raw and component materials for the batteries are produced outside the U.S., and the domestic supply chain is in its infancy. In December, the U.S. Department of Energy released a list of 13 new domestic electric vehicle battery manufacturing plants that are scheduled to come online in the next five years, eight of which are joint ventures between battery manufacturers and automakers. Most of the current focus on lithium-ion battery recycling is on recovering passenger vehicle batteries because the commercial EV market is still in its infancy.

The DPA's stated intent is to boost critical mineral supply to meet clean energy needs through mining, recycling and identifying unconventional sources. President Biden invoked it in March in response to soaring gas prices following Russia's invasion of Ukraine. Former President Donald Trump previously signed executive orders to boost the critical minerals supply as well. Recycling batteries recovers critical minerals for reuse in new, domestically-produced batteries and reduces U.S. dependence on foreign virgin materials in tight supply.

"In order for the industry to be sustainable, and to de-risk it, it's very important to localize in North America," said Michael Insulan, vice president of commercial at Toronto-based battery recycler Electra Battery Materials Corp. The company's battery materials industrial park in Ontario, Canada, is expected to begin pilot production later this year. Following a four-phase expansion, the campus eventually will house a Li-ion battery recycling facility, plants for refining and processing cobalt and nickel and a facility to manufacture the cobalt and nickel into next-step battery materials.

Despite its relative newness, Li-ion battery recycling is expanding quickly. That's a good thing, sources say, because battery demand is ballooning. Demand is so high for these commodities that recycling alone will not boost supply enough.

"This is an extraordinarily rapid growth market, so the supply challenge is tremendous — maybe a bigger supply challenge than the world has seen in several decades," Insulan said.

Metals including lithium, nickel and cobalt are essential for the transition to clean energy technologies powered by electricity instead of fossil fuels. Electric vehicles and their batteries are at the forefront of that movement. In April, the CEO of EV startup Rivian warned of a looming battery shortage as demand for EVs rises, signaling the critical mineral shortfall and the largely unbuilt battery supply chain.

For example, Russia's war in Ukraine is disrupting that country's dominant mining and processing industries for metals, including nickel. And the goal of some funding for EV charging stations in the 2021 infrastructure law is to spur additional EV adoption; that's driving up EV and battery material demand. The crunch is pushing already volatile metal markets to new highs. The London Metal Exchange suspended nickel trading on March 8, when prices doubled in a matter of hours, exacerbating prior increases from supply concerns.

The Biden administration has funneled billions of dollars into addressing the problem. Earlier this month, DOE announced $3.1 billion in funding from the infrastructure law for new and upgraded battery manufacturing and recycling facilities, plus a separate $60 million that partially goes toward developing new recycling processes to get materials back into the supply chain.

Battery recycling "historically has been an environmental conversation," said Shane Thompson, president at battery recycler Retriev Technologies. "But within the last two years, it's really interesting to see ... there is this supply chain part of the conversation."

Lithium prices shot up 280% last year and rose another 130% in the first four months of this year, Bloomberg reports. Lithium use has nearly quadrupled since 2010, and projections show no signs of it slowing. Experts say lithium itself is everywhere, and supply isn't low, but the extraction and refinement processes are slow and costly.

"There's more than enough lithium to power an EV for every man, woman and child, but it's just in such dilute concentrations, and the quantities are so scattered ... that it gets harder and harder to extract economically," said Roger Lin, vice president of global marketing and government relations at Ascend Elements. The company (formerly known as Battery Resourcers) develops advanced battery materials from reclaimed critical minerals through its hydro-to-cathode process, which it says reduces costs by more than 50% and reduces greenhouse gas emissions more than 90% compared with mining and processing virgin materials.

Material supply challenges are prompting research projects to develop new battery chemistries and recycling processes. Some use more sustainable or readily available elements and less environmentally taxing processing techniques. The reconfigurations could reduce costs and reliance on critical metals.

Direct cathode recycling is an emerging technique heralded as "the holy grail of lithium-ion battery recycling because they take the cathode material in the batteries as-is, then rejuvenate and revive it," instead of breaking it down into individual feedstocks, Lin said.

Conventional Li-ion battery recycling involves chemically, mechanically or thermally breaking down the valuable battery components, then processing and reusing them to build a new battery. This method creates more emissions and cuts the value of the recovered critical minerals by about half, Spangenberger explained, whereas direct cathode recycling retains the materials' full monetary value.

Researchers at Princeton University developed an inexpensive way to perform direct cathode recycling and spun off the startup Princeton NuEnergy to commercialize and scale the operation. They mechanically separate materials, then use low-temperature plasma to remove contaminants produced during battery use. The system uses 70% less water and reduces energy use and emissions by 80% compared with current Li-ion battery recycling technologies, the company says. Earlier this month, the startup announced it had raised $7 million in seed funding.

Direct cathode recycling is still evolving and considered too financially risky for industry to attempt alone, Spangenberger said, so the DOE is helping to tackle these challenges at the ReCell Center. Lin also noted that a leading obstacle with direct cathode recycling is getting the same or better performance from the reused cathode.

Other Li-ion battery recycling advancements include ACE Green Recycling's recent announcement that it will build and operate an emissions-free lead-acid and Li-ion battery recycling park in Texas, which will contain proprietary technologies that are electrified instead of running on fossil fuel. The company notes that the U.S. currently exports much of its battery scrap to Asia and Mexico for processing due to the lack of domestic recycling infrastructure. Li-Cycle announced that it would use Veolia Water Technologies' evaporation and crystallization system to process materials at its lithium-ion battery recycling plant in New York to recover nickel and cobalt materials for use in new batteries.

Ascend's hydro-to-cathode system lets it break down the lithium, nickel and cobalt in EV batteries and then rearrange the atoms to create new materials. The company customizes the amount of each mineral in the end material to meet each customer's specifications.

Electra wants its upcoming recycling campus and cobalt refinery to aid the battery supply chain in Canada and the United States. It will partner with third-party battery collection and shredding businesses for a supply of "black mass," a metal-rich powder. It differentiates itself from competitors by its use of 100% hydroelectric power, which creates nearly zero greenhouse gas emissions during processing, Insulan said.

Retriev recently acquired Battery Solutions, which the company said will create a more holistic battery recycling business. The combination of Retriev's decades of battery recycling experience and Battery Solutions' years of collection and transportation experience results in a full suite of services, and "that's going to play a critical role in fulfilling the material supply gap," Thompson said.

"The more you can collapse down any supply chain between the product and the input materials, the more secure and robust that supply chain is," he said. "I think having a domestic source is very important."

On the battery design side, Samsung SDI announced it would develop a cobalt-free EV battery to make the product price competitive. Analysts predict the cobalt-free battery market will experience significant growth over the next decade. But the design has a notable drawback from a circular economy perspective.

"As we try to get away from cobalt in our batteries because of the cost, that actually makes recycling a little bit more challenging because there's not as much in there to recover as a revenue stream," Spangenberger said. "It's kind of a double-edged sword."

Without a solid profit incentive, convincing more companies to recycle batteries — beyond those already focusing on this area ahead of the growing EV transition — is difficult, he said. The ReCell Center aims to identify more sustainable battery materials and recycling methods that also make economic sense. The dual focus is crucial because "the last thing we want to do is come up with a great process that's worse-off environmentally speaking," Spangenberger said.

Li-ion battery recycling helps, but doesn't completely solve, the critical minerals supply issue, sources say.

"Recycling, for now, is not going to be enough. That's just the truth of it," Insulan said. "There just aren't enough [end-of-life] batteries — certainly not from the electric vehicle industry, but also from consumer electronics."

Battery manufacturers' industrial scrap is another leading material source. Ascend, for instance, is recycling the manufacturing scrap from SK Battery America's Georgia gigafactory in addition to working with major automakers, including Honda, to source end-of-life EV batteries.

"Commodity prices have an impact on what the perceived value of lithium-ion battery scrap is, as well as the prices of the products that we produce out of our factories," Lin said.

The best strategy is to plan for the long haul and anticipate commodity price fluctuations instead of believing the numbers will stay high, Spangenberger said. Like all commodity markets, those related to lithium-ion batteries are cyclical, sources say. They expect prices to remain elevated in the short to medium term, but then to stabilize and likely decrease over time. Insulan says high prices attract investment, and additional investment eventually re-normalizes prices.

Battery recycling has experienced a wave of investment over the last year. Companies including American Battery Technology Co., Redwood Materials, Li-Cycle and Ascend collectively raised more than $255 million during one week in September 2021 alone. This month, metals producer and commodity trader Glencore invested $200 million in Li-Cycle, which announced the opening of a new Arizona facility this week. That investment followed the news that Korean manufacturers LG Chem and LG Energy Solution recognized Li-Cycle as their preferred North American battery recycling partner.

Although the investment influx is intended to improve supply chains, the effects won't be immediate, sources say. It might take years to realize a noticeable effect. They also emphasize that recycled materials alone will not be sufficient to support the entire Li-ion battery industry, at least not for decades. Rather, recovered materials increase the industry's sustainability as a supplementary resource.

"Even if we were to recycle everything that was used today, that is not enough to feed a growing market," Lin said. "We need to 'charge' the system with more metals, and those are going to come from mines," but mines and refineries can take years, even a decade, to become operational.

Spangenberger predicts that in six to 10 years, "the faucet is really going to turn on," and more end-of-life EV batteries will become available for recycling. In the meantime, ReCell and other research and development projects will work to make the Li-ion recycling process and materials more sustainable.

"Even if we can't sell the product, but we find a home for it instead of landfilling it or burning it, we define that as a win because then you don't need to deal with it as a waste," Spangenberger said.

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