European battery regulations to restrict black mass exports to secure raw materials

Recycling requirements under new European Union battery regulations could see exports of black mass from Europe fall close to zero as soon as 2025, Fastmarkets heard at the E-waste World battery recycling conference in Frankfurt last week

On June 14, the EU parliament voted in favor of adopting updates to its battery directive with the intention of supporting circular production and securing valuable battery raw materials for Europe.

The updated directive features guidelines for the collection of portable batteries (45% by 2023, 63% by 2027 and 73% by 2030) and also sets minimum levels of materials recovered from waste batteries, with the target for lithium set at 50% by 2027, rising to 80% in 2031. Targets for cobalt, copper, lead and nickel have all been set at 90% by 2027, rising to 95% by 2031.

But lack of processing capacity means that most black mass – shredded material from end-of-life batteries, including lithium, cobalt, nickel and copper – generated in Europe is currently exported to Asia. And while a raft of processing projects are expected to organically raise demand for black mass in Europe, the regulations will increase the pressure to keep most of its black mass within the trade bloc.

“Exports [of black mass from Europe] will finish by around 2025 [and] with the regulations coming in, I don’t see how Europe can afford to lose any of it,” said one black mass processor.

Another regulatory factor affecting black mass exports is the material’s classification as a product or as hazardous waste, with the latter requiring detailed permits for cross-border travel.

The classification of black mass is not currently consistent across EU countries or even across regions within certain counties. Once it is labelled as waste, however, permits are required to move the material and finding transport is more difficult in terms of crossing borders and seaborne exports. Hazardous waste permits must also specify that the final consumer is a recycler.

But market participants told Fastmarkets on the sidelines of the E-waste conference that it was widely expected that the EU will classify black mass as a hazardous waste product within the next two years. That would limit exports to members of the Organisation for Economic Co-operation and Development (OECD) – although that would still include South Korea, which is a key importer and processor of black mass.

“Currently it’s mess. It’s very complicated,” a black mass producer and trader told Fastmarkets. “[But] everyone expects the EU to bring in a blanket classification as waste [for black mass and] that would mean no more loopholes and you could only export to OECD countries. [And while that would include South] Korea and Japan, at least the situation would be clearer,” said another black mass producer and trader.

The EU’s battery manufacturing industry is expanding rapidly but relies on imports of virgin raw materials, according to the European Battery Alliance, with European battery capacity growing from less than 1 GWh in 2017 to 80 GWh by 2022 – with more than 1,000 GWh of announced capacity additions expected to be operational by 2030.

“We see a big gap on the supply side of materials, but also [in] recycling where we currently see a lot of the… black mass leaving the EU and being processed elsewhere – mainly in [South] Korea,” Ilka Von Dalwigk, policy manager at the European Battery Alliance, said at the Frankfurt conference.

Fastmarkets’ assessment of the black mass, NCM/NCA, payable indicator, cobalt, cif South Korea, % payable Fastmarkets’ standard-grade cobalt price (low-end) and the black mass, NCM/NCA, payable indicator, nickel, cif South Korea, % payable LME nickel cash official price were both 70-75% on Wednesday June 28, unchanged week on week.

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