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Despite the challenges, the growing volume of LFP scrap availability coming, together with EU regulations stipulating recycled content targets of 6% for lithium in lithium-ion batteries from 2031, means this is an area of rapidly growing interest among market participants.
Led by China, the LFP chemistry is rapidly growing as a proportion of global electric vehicle (EV) battery production, which means that the volume of LFP battery scrap and black mass being produced in Europe is also rising sharply – albeit from a low base.
Fastmarkets’ research team estimates that around 26% of all black mass-produced globally will be of LFP chemistry in 2024, but this portion is forecast to rise to 32% by 2034.
Much of the LFP scrap arisings and black mass production currently made from this battery chemistry takes place in China. But European companies are increasingly searching for solutions and outlets for their LFP black mass.
European LFP recycling was a key issue raised by numerous delegates at the recent International Congress for Battery Recycling (ICBR) 2024 in Basel, Switzerland, held on September 10-12.
At the heart of the issue around LFP black mass recycling is the fact that the process is less economically lucrative than that of nickel cobalt manganese (NCM) and lithium cobalt oxide (LCO) due to the lower value of their output materials, Korean black mass consumers have told Fastmarkets.
The main elements being recovered from LFP black mass are lithium and graphite, along with copper and aluminium. Lithium prices have fallen very sharply over the last year, while graphite is still not yet recycled on a commercial scale.
Fastmarkets’ price assessment for lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was $9,800-11,300 per tonne on Monday September 23 ($1,390-1,602), with the price midpoint down by 59.4% year on year from $25,000-27,000 per tonne on September 20, 2023.
“The lack of nickel and cobalt kills the economics of recycling LFP batteries,” Luke Sweeney, senior battery recycling analyst at Fastmarkets, said.
“Modern battery cathode chemistries have less inferred value, be it in the form of LFP, lithium manganese iron phosphate battery (LMFP) or from the decreasing cobalt content in NCM cathodes. This poses a big long-term economic problem for battery recyclers as their battery feedstock is set to decrease in intrinsic value over the next ten years,” Sweeney added.
According to estimates by Fastmarkets’ research team, the intrinsic value of key metals in an average LCO battery are worth more than five times that of an LFP battery, while the average NCM cell is worth just under four times the value of an LFP battery, as shown in the chart.
Even for the higher-value and more popular NCM and LCO black mass chemistries, lower lithium prices and demand for recycled lithium salts have squeezed margins at black mass post-treatment facilities in Asia, thereby reducing consumer intake volumes and black mass payables.
Demand for LFP black mass is even lower across South Korea and Southeast Asia.
European companies are currently paid to recycle LFP batteries, according to market sources, in a transaction known as a gate fee.
Gate fees depend on the state of batteries received, volumes and locations across the EU, but Fastmarkets has recently heard of fees around €3,000-4,000 ($3,349-4,465) per tonne of scrap LFP batteries being paid to recycle the batteries.
By comparison, recent gate fees for scrap NCM batteries have been heard around €0-400 per tonne depending on location and company. Some firms have been heard even paying for these materials given the rising capacity for black mass production in Europe.
While some major European black mass producers are already procuring LFP battery scrap, and producing LFP black mass, the question then becomes: what next?
One European producer told Fastmarkets on the ICBR sidelines in Basel that although some of their black mass is being sold effectively for free in the EU market, other volumes are being disposed. “We hope to be paid for this material in the future,” they said.
The cost of safe disposal of LFP is several hundred euros per tonne, a European trader said on the ICBR sidelines. The main objective in recycling LFP batteries currently is to ensure black mass producers can cover their costs, they added.
Challenges faced in recycling LFP black mass are not unique within the European industry treating hazardous waste materials.
“Available data indicates that more than half of the hazardous waste we generate in the EU is disposed of, and reuse and recycling account for 34%,” the European Court of Auditors said in a 2023 report.
“Some hazardous wastes streams are technically difficult to recycle on a large scale or in an economically viable way. When this is possible, recycling facilities encounter difficulties to decontaminate waste or to find market opportunities for the recycled outcome,” the report added.
Once a producer or trader has LFP black mass in hand, the next issue then becomes who will buy the material.
European domestic capacity to consume black mass is nascent even for NCM and LCO materials. Interest in treating LFP black mass locally is slim to none. That means export is being explored by market participants.
China is by far the largest market for LFP black mass, but most of the LFP black mass produced in Europe today is categorized as hazardous waste, meaning that it cannot be legally exported to nations of outside of the Organization for Economic Co-operation and Development (OECD).
Furthermore, a Chinese trader source told Fastmarkets last week that although they are having more success in importing high-grade black mass and black powder of NCM chemistries into China amid a gradual relaxation of Chinese import rules, importing LFP black mass was still illegal.
In the Chinese domestic market, Fastmarkets has recently heard LFP black mass with lithium content over 3.8% priced at 2,600-2,700 yuan ($369-383) per 1% lithium, and LFP black mass with lithium content lower than 2.5% was heard at 2,300-2,500 yuan per 1% lithium.
By comparison, the value of the material is very low outside of China, according to sources.
South Korea is the largest OECD-member importer of black mass, but even companies in that country have a lack of interest in purchasing LFP black mass due to the recent drop in lithium prices making the process economically challenging.
A Chinese LFP consumer source told Fastmarkets last week that they were actively trying to purchase European LFP black mass for free, and could take the material on a CIF South Korea basis. It is not known if the material would be then consumed in South Korea or shipped into China from South Korea.
But some European producer companies have voiced concerns to Fastmarkets in recent months that although they will happily do business with South Korean companies for consumption in South Korea, they do not want to risk the possibility of their materials being trans-shipped outside of the OECD into China or Southeast Asia.
While most producers of black mass in Europe are classified as makers of hazardous waste, a smaller number of companies producing chemically similar materials have accreditation from their local authorities to say that the black mass they make is classified as a “product”, the latter of which can be shipped outside of the OECD and does not require certain waste-related documentation.
The European Commission is expected to iron out this imbalance and define all black mass as a hazardous waste material by the end of 2024, industry sources have told Fastmarkets.