Slower EV growth has delayed scrap availability, while low metals prices have compressed payables for black mass producers and refiners, with outlooks remaining bearish in the near term, delegates said.
Challenges in building a battery recycling industry
“Building a battery recycling industry, when the Western battery manufacturing industry is still in its infancy, is very difficult,” Fastmarkets’ senior battery recycling analyst Luke Sweeny said at a panel titled “Closing the Mineral Loop” on June 25.
“We often find we’re thinking of a chicken and egg scenario; does the chicken come first or the egg come first? Does the black mass refiner and electrochemical grade producers come first or does the gigafactory come first in the United States?” according to Sweeney.
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“Recycling facilities are the last puzzle of the full supply chain… We need gigafactories and EV manufacturers in the United States first,” SungEel HiTech‘s VP, head of sourcing, sales, and business development Paul Yum said.
“Currently, we have shredding overcapacity in the country, so we [recyclers] are campaigning for the same material, and the payables for the feedstock are pretty high,” Ascend Elements’ market intelligence and product manager Anton Popiy said on the same panel.
“In this case, it would be easier if gigafactories would start first,” Popiy added.
With current pressures, the North American market has seen some black mass producers delay, pause, or cancel construction of new facilities, sources told Fastmarkets.
“It’s such a small industry that if a couple plants go online or offline it changes the fundamental dynamics [of the market],” one black mass producer said
Impact of policy uncertainty on recycling projects
Besides slowing EV growth, uncertainty remains a key concern for black mass producers under changing US policies, and with dependencies on exports markets as US refining capability remains low, according to sources.
“I think the tariffs are trying to obviously attract investment in the United States, that’s the main reason that the administration is pushing for tariffs is to try to make sure we domesticate some of the critical mineral refining that we need in the country.” Cirba Solutions’ president and CEO David Klanecky said.
“I think there’s obviously an ancillary side of that where you have the price of steel, the price of other things to build these assets, is going to obviously go up if that is included as part of the tariffs,” Klanecky said.
“At the end of the day, tariffs are trying to drive investment in the United States; trying to drive jobs, economic activity, and eventually a closed loop….but as we look at it from Cirba’s perspective, that’s part of the puzzle is to have that capability here [domestically] to be able to provide those metals back to the gigafactories to produce new batteries,” Klanecky added.
Advisor to the board of Momentum Technologies Dorothea Soule also touched on the challenges created by policy uncertainty.
“In reality, when you’re building these factories the lead times are 18 months to two years, best case scenario, and we don’t know what the tariffs will look like. When you’re putting together your engineering you just can’t make good decisions without a huge amount of fat built into your budgeting and with that, some projects become unviable,” Soule said.
Uncertainty and revisions to DOE funds granted during the Biden administration was also discussed, with delegates discussing the review of grants and concerns whether all the allocated funds would still be committed to the recycling companies who originally were awarded funds.
“[Both the Trump and Biden administrations] are trying to reach the same goals, but with different methods,” a second delegate said.
Supply chain difficulties
One black mass source told Fastmarkets that the whole supply chain is facing difficulties amid ongoing uncertainty and falling metals prices, adding that recycling “affects the whole industry” and is “really tough” at the moment.
Views among conference attendees were also mixed regarding China’s opening to imports of black mass, with some concerned that such a move will dissuade black mass refining in the US while others said that better black mass margins will help with funding for new facilities.
“We realize that some black mass has already gone to China…so I don’t think this kind of regulation will [have a] huge impact… [However,] there will be some counter action because it is noticed by the Chinese government. There will be some companies that will hesitate to sell black mass to China,” Yum said.
China’s role in the black mass market
Black mass sources also noted the occurrence of material leakages to China but said that the regulation may create stricter restrictions for material entering the country. Some sources also speculated on how much of an impact it will have on US producers, given the strict specifications for material entering the country that the regulations allow.
“Everybody’s seen the specifications, it’s really very, very high quality material that is potentially going to be allowed into China. There are not many people out there that can actually meet those qualifications,” Klanecky said.
“China needs critical minerals. They’ve got 70% of their capacity for refining is not operational today, so they’ve got a lot of assets that are sitting there idle. So, I understand why they want to do that,” Klanecky added.
“I think the longer-term challenge is that there’s probably opportunities from a black mass pricing perspective. But that also then creates pressure on margins for hydrometallurgical processing, which, coming back to tariffs, we have to figure out ways to build hydrometallurgical processing capability out of China if we want to compete. China, they build really good plants at a really low cost and it’s something we just have to figure out a way to compete,” he said.
High feedstock costs in recycling
Panellists and attendees also discussed high feedstock costs and the idea of gate fees in the US as impacting recycling economics.
“The incentives that are given for actual gate fees for recycling. How do you create a feedstock that makes it viable to continue shredding in the US in a way that doesn’t just pass all of that value transfer back to the OEMs?” Soule said.
“There’s a real change in value that’s happened over the past twelve months, in terms of how much you need to pay to get feedstock into shredder, and I think that while someone is benefitting from this up the value chain, it’s going to squeeze the downstream partners until we have either consolidation or reduction in capacity,” Soule added.
(In paragraph 20 of this article, the word ‘not’ has been removed from this phrase: “…so I don’t think this kind of regulation will not [have a] huge impact.”)
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