By 2033, 10% of metal supply to come from battery recycling
The lithium-ion battery recycling market has experienced significant growth in the past 18 months, particularly in the US and Europe where the nascent markets are ripe for expansion. China and South Korea are more established, with some estimating that the markets are five to 10 years ahead and therefore act as a potential template for how we might expect the US and Europe to develop.
But the talk of new recycling projects coming online poses questions about whether the scale-up of recycling will affect demand for primary metals from mining and other production methods.
Fastmarkets forecasts that 5% of total battery metal supply (lithium, nickel, cobalt and manganese) will come from recycling in 2023, increasing to 10% by 2033. As a result, while recycling will contribute to raw material supply, we will continue to rely on material from primary production throughout the decade.
Fivefold increase in battery demand between 2023 and 2033
Primary production will remain the key source for battery metal supply in the next decade due to the exponential increase in demand for battery metals. Recycling simply cannot meet this demand in the near-term.
Fastmarkets forecasts that battery demand will increase fivefold to 5,200 GWh in 2033 from 1,100 GWh in 2023. More than half of this demand comes from China at present, but by 2033 demand from other regions will have picked up, reducing China’s share to about one third of total lithium-ion battery demand.
In terms of market share, we expect more than 80% of demand to come from the electrification of the transport sector throughout the analyzed period.
We also expect a steep increase in demand from the energy storage system sector, with its share growing to 15% by 2033 from 7% now.
By comparison, we expect the market share for consumer electronics to fall to 4% in 2033 from 10% in 2023 as a result of flat growth in this segment. Battery recycling will provide security of supply to help reach meet the high demand for battery metals.
Regional battery demand
Units: GWh & million tonnes
Source: Fastmarkets, 2023
Offtake agreements and partnerships key to securing scrap battery feedstock
Roughly 10-15% of the batteries produced at gigafactories fail to meet requirements and are rejected becoming immediately available for recycling. This production scrap tends to be more desirable than end-of-life (EoL) scrap as it is more homogenous and tends to have higher metal content. The EoL scrap takes time to re-enter the value chain because EVs have a 10–15-year lifetime and despite consumer electronics having lifetimes of two to five years, there is an additional delay since people often stockpile old phones and laptops at home for years.
Not all the EoL is collected or recycled and recycling rates vary significantly by end-use segment and region. Fastmarkets forecasts the total amount of scrap batteries to increase to 4.4 million tonnes in 2033 from 1 million tonnes in 2023. Production scrap is currently the biggest source of scrap batteries, contributing 80% of all battery scrap in 2023. But in 2032, we expect EoL to take over as the main source of battery scrap and by 2033 it will contribute 60% of all battery scrap.
Some production scrap is already tied up through vertical integration or offtake agreements between original equipment manufacturers and recyclers, so in some regions there is an undersupply of scrap battery feedstock. This means that new recyclers coming online now need to ensure they have access to battery feedstock to survive until the EoL scrap batteries start to enter the market.
Rise in LFP chemistry will lead to a rise in LFP recycling
Most scrap batteries will be shredded to make black mass, but some can be calcinated (deactivated for safety) and put whole into some pyrometallurgical furnaces.
Pyrometallurgical companies can take calcinated batteries, black mass, or a mixture of the two. To produce black mass, scrap batteries are often sorted by battery chemistry, discharged for safety reasons and dismantled to remove any outer casings. The processed batteries will be shredded and the plastics and aluminium and copper foils will be removed, although some impurities often remain.
Shredding a tonne of scrap batteries will typically give 450-500 kg of black mass, but this can vary depending on the level of dismantling and other factors. NCM/NCA black mass is a more desirable black mass because it contains lithium, nickel and cobalt, while LFP black mass is less desirable because it only contains lithium.
We expect about 45% of the black mass produced to come from NCM and one third of the black mass to be LFP. It is not economically viable for all recyclers to take LFP but there are some who are able to make the commercials work. We expect more LFP recycling in the future due to the rise in LFP batteries being produced in China.
More pricing transparency for black mass but regulatory challenges for international transport
Since the metal content in black mass can range widely depending on the battery chemistry and level of processing, a sample will be taken to try and ascertain the metal content of that batch of black mass.
The price is usually calculated by applying a payable – an agreed percentage of the metal value which can be applied to different black mass to take into account the variance in metal content. For example, the official Fastmarkets NCM/NCA black mass payables cif South Korea on September 20 was 65-70% for nickel and cobalt, and 4-5% for lithium. The underlying prices for these payables are the benchmark prices (the most widely used market price) – the London Metal Exchange nickel price and Fastmarkets’ lithium carbonate and cobalt prices.
If we assume a metal content of 4% lithium, 10% cobalt and 20% nickel and use the metal prices from September 19 (the date used for those prices when calculating the payable on the morning of the September 20) this gives an inferred black mass price of $4,896 per tonne of black mass.
Fastmarkets recently launched a suite of black mass prices including South Korean LCO, European NCM and LCO and Southeast Asia NCM. Prices vary by region due to a few factors. A key issue is the challenge of transporting black mass due to the import ban in China and the uncertainty in Europe of black mass falling into the hazardous waste category making it hard to transport internationally.
We will watch with interest how the regulations change over time, whether they will support international recycling and what regional differences the regulations will create.
By Julia Harty
For information on Fasmarkets’ black mass pricing, visit
https://www.fastmarkets.com/newgen/black-mass-prices
