Lithium-ion batteries (LIBs) are increasingly becoming a fixture of everyday life. By 2030, 60% of new passenger vehicles sold in the US will be plug-ins or full hybrids, while the country will have installed 200 gigawatt-hours of batteries as energy storage.

In a few years, these batteries will reach their end of life. This upcoming mountain of waste should be viewed as an urban mine, offering the industry a major circular economy opportunity.

Manufacturing batteries from virgin materials comes with a range of issues. Critical minerals, such as lithium and cobalt, are geographically concentrated and, with demand rapidly growing amid the emergence of new technologies, supply could fall short. The markets can be volatile and are already the object of trade wars between China and the US. In addition, environmental impact and human rights abuse are also issues related to new mining. 

Recycling is a stone that will kill multiple birds: it can be done anywhere, reducing the need for imports; it has a lower environmental impact than mining; it can stabilise the price of commodities; it helps large corporations meet their ESG targets; and it creates new jobs and economic opportunities. Moreover, it is an effective process as 95% of a battery can be recycled and the minerals do not degrade.

Some governments are supporting recycling to enhance supply security. Most lithium-ion battery supply chains are in Asia with small volumes in North America, which the US government has identified as a strategic risk.

The White House has poured $7 billion into the domestic battery supply chain, including $192 million for recycling batteries from consumer products, $74m for EV battery recycling and reuse, and $62m to boost participation in consumer electronics battery recycling.

Under the Inflation Reduction Act, by 2027, 80% of the value of critical minerals in the EV battery must be mined, processed, or recycled in North America, or mined or processed in countries with a free trade agreement with the US. It also grants significant tax credits for recycled minerals, even if they were not originally mined domestically or in countries with which it has no free trade agreements. 

The new black gold

McKinsey forecasts global annual revenues to hit $95 billion by 2040 across the battery recycling value chain, from collection to metal recovery.

Production scrap will remain the primary source for recycling globally until 2030, then be overtaken by end-of-life EV batteries. China has already made this shift, having a more mature EV market than other regions.

There is no scarcity of scrap material, which can be as high as 30% when a new battery factory launches. Another source can be EV recalls.

The most common recycling processes are pyrometallurgy – which uses high-temperature furnaces to melt and separate battery components – and hydrometallurgy – where aqueous solutions dissolve them. 

In both methods, batteries are first tested, discharged, and disassembled, then the material undergoes a process called shredding, which yields black mass – a powder containing the target materials. 

Some companies are working to innovate recycling processes to lower costs, improve yields, and limit health and environmental impacts, as the black mass is a highly toxic material. New methods under development include electricity-based recycling, which involves the use of electric currents and voltage to separate the metals, while cathode materials can be recovered without the use of acids or smelting through direct recycling.

“There’s a lot of fear about what’s going to happen with the end of life of all these batteries… [We need] to get past the fear and recognise that the future, where we’re going with things, with EVs, is very bright, very clean. It’s the new black gold versus the old black gold,” Tony Mitchell, director of marketing at RecycLiCo Battery Materials, tells Kallanish. 

The company claims its process can recover up to 99% of cathode metals from battery waste, in a closed loop with no water discharge.

Scaling sustainably

In North America, the lithium-based battery recycling industry is still in its infancy, but the landscape is evolving quickly.

The International Council on Clean Transportation estimates the US could reach a recycling capacity of at least 652,293 tons per year by 2030, based on projects announced as of September 2023. This is enough to process 1.3m end-of-life electric car batteries annually.

There is a mix of major corporations and start-ups looking to grab market share early. Many automotive OEMs and cell manufacturers are showing interest in vertical integration. For example, Toyota Motor North America partnered with the US Department of Energy’s Argonne National Laboratory to develop a direct recycling process, while Honda’s CAD 15 billion ($11 billion) EV ecosystem in Canada is expected to include recycling technologies.

One start-up success story could be Redwood Materials, which is building a plant in Nevada. Established by Tesla co-founder JB Straubel, the company has raised $1.8 billion in investment plus a conditional commitment for a $2 billion loan from the DOE and has already expanded to Europe by acquiring Germany’s Redux Recycling.

Others have been hit by challenges. Toronto-based start-up Li-Cycle paused construction of its hub in Rochester, in the US state of New York, due to spiralling costs. To improve its liquidity, it is cutting 17% of its workforce, has secured a $75m lifeline from Glencore and is in talks with the DOE for a $375m loan.

In a white paper published earlier this year, public-private US alliance Li-Bridge warns processing costs are too high relative to the value of the materials, and the domestic industry will not be economically viable without government support. Costs are driven up by high labour intensity during the collection, sorting, and disassembly processes, as well as by the transportation and handling of black mass.

According to Li-Bridge, there is much to do as current volumes in the US are insufficient for a fully domestic circular economy and the industry has yet to identify best practices to avoid health effects from chemical hazards.

Some say this race to scale up the industry risks being a double-edged sword.

“Things are happening daily, especially in the PR portion of the market, but… some things are getting delayed, we’re having challenges on electrical infrastructure to support the manufacturing… there’s constant flux right now,” states David Regan, vice president of commercial at Nevada-based recycler Aqua Metals.

“The mistake that I think some of the other recyclers in our space have made is that they are going from bench-scale work – very small-scale testing that looks great – to enormous commercial-scale facilities. So a reaction that you can get to work in like a 500-millilitre beaker, versus getting that same reaction to work in a 5,000-gallon tank are very, very different things,” he adds. “They’re jumping. And the problem with that is that you don’t know you don’t know. And when you have to redo things at that scale, it takes a lot of time, a lot of money. And so, we have very consciously scaled step by step… I think it seems slow to our shareholders, but it’s going to be a lot faster than jumping to the big scale at the end of the day.”

To make the energy transition more economically and environmentally sustainable, there are many more challenges this fledgling industry needs to overcome – though enthusiasm and financial backing from governments and industry do not seem to be lacking.