Europe lagging behind on scrap battery feedstock

The potential of the European battery recycling sector was on display at the Battery Recycling Europe 2023 event in London on March 1-2 against a backdrop of soaring demand for the metal raw materials that power electric vehicles (EVs) and energy storage systems (ESSs)

Many on the sidelines of the Battery Recycling Europe conference also noted that the key battles today are the fight for end-of-life (EOL) scrap batteries to feed the growing capacities of EU recycling units and the need to build an industry in Europe that can directly support and benefit from higher rates of battery recycling.

Sourcing EOL batteries

Around 80% of EVs driving around today on European roads will need to be recycled in 15 years’ time, Helen Waters, Head of Electric Battery Recycling at recycler EMR, said at the event. But attendees at the event said that current EOL EV volumes are taking a while to pile up at specialist European battery recycling yards.

“There are many new companies in Europe and there isn’t enough battery scrap to go around at the moment, so some recyclers are running at reduced capacity, which is eating into their margins,” Julia Harty, battery recycling analyst at Fastmarkets, said.

“Some of the recycling companies will ultimately go bust and the market will consolidate to a size more in proportion to the amount of battery scrap available,” Harty said.

“Battery metal prices have come down, which has hit recyclers’ profit margins and means they can’t be as competitive when bidding for scrap batteries, so some are being outbid by second life companies who repurpose the EV batteries for ESSs or low speed vehicles [LSVs],” Harty added.

Fastmarkets’ assessment of lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $70-74 per kg on Wednesday March 8, the lowest level since March 22, 2022, when the price was $67.00-72.50 per kg.

In the UK, current scrap battery supply is very low, panelists at the event said. Leading EV battery maker Envision AESC is only producing batteries totaling in “the single digits” of gigawatt hours (GWh) per year, panelists said, which would limit production scrap volumes in the country.

The problem is far from a regional one, however. One notable Japanese battery recycler told Fastmarkets late last year that it is only able to run one of its shredders – at just 15% of capacity – due to a lack of available EOL or production scrap batteries to process.

At the same time, ambitious and exciting battery scrap projects are being rolled out across Europe.

Sweden’s Stena Recycling will start operating a major battery recycling plant in Halmstad from April 2023, Louise Drue Andersen, Business Developer – Product Area Batteries for Stena, said at the event.

French mining and minerals company Eramet is also plotting to make a big splash in the battery recycling sector and aims to be producing black mass from recycled lithium-ion batteries by 2024.

Sharp supply increases ahead

Forecasts suggest that it will not be long until scrap battery availability rises exponentially, which will allow European recycling operations to secure EOL batteries much more easily.

The supply of EOL batteries globally will rise to 241 GWh by 2033 according to forecasts from Fastmarkets’ research team, up almost eleven-fold from 22 GWh in 2022. Separately, battery scrap from the production process is also forecast to rise at around a 17% compound annual growth rate over the next decade.

But with supply set to increase sharply, the infrastructure built around battery recycling must also be improved in order to maximize the gains from having a recycling industry, panelists said.

“It is no good producing black mass if there is nobody to [recycle it] to produce cathode active materials [CAM],” Sam Haig, battery recycling business manager at the UK’s RS Bruce Metals & Machinery, said.

Japanese firms have been heard to be exporting large volumes of the black mass they produce to nations such as China and South Korea amid a lack of local refining capacity, according to attendees on the sidelines. The same is also true of Europe, where black mass is also heard exported to Asia, although the region’s domestic spot market is starting to grow, according to an EU recycler at the event.

There is currently no large-scale lithium iron phosphate (LFP)-cathode battery production in Europe, Timm Lux, Boston Consulting Group’s associate director, non-ferrous metals & recycling, noted at the event. Several attendees lamented this fact as a symptom of poor planning in the region.

Projects in the LFP sphere have been slow to get off the ground, but Serbia’s Elevenes has plans to start LFP cell production this year, while mining company Finnish Minerals Group and battery cell manufacturer Freyr Battery earlier this month announced they will explore the possibility of producing LFP cathode material.

Nickel cobalt manganese (NCM)-cathode chemistries account for around 70% of all EV batteries in Europe and the US, while in China LFP battery chemistry accounted for more than 80% of all new EV sales in 2022, Fastmarkets understands.

Keep up to date with global market insights and predictions for 2023 and beyond with our NewGen forecasts.

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