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Recycling EV Batteries: How waiting for scrap becomes a struggle for survival for battery recyclers

2022-10-13T06:23:33.086Z


Numerous battery recycling factories will soon be connected to the grid. But in the next ten years they will hardly be needed - there is simply not enough battery scrap. Not everyone on the market will survive.


Enlarge image

Circular economy: In the Volkswagen pilot plant, employees remove the battery for recycling

Photo: Stefan Warter / Volkswagen

The promises made by Li-Cycle boss

Ajay Kochhar

in June 2021, shortly before the Canadian start-up went public via Spac, were full-bodied.

"It's going to be a big, central part of the electric vehicle ecosystem," he said of his planned battery recycling business.

Electric vehicles would cause a "tsunami of used batteries" in the coming years.

By 2024, Kochhar plans to set up 20 shredding plants and four global centers for recycling electric car batteries.

With the IPO and a crazy turbo expansion, Li-Cycle not only attracted the attention of interested investors.

Critics began betting against the young recycling company with short sales.

The uncertainty about the success of the technology and the high development costs made some investors skeptical.

Li-Cycle is an example of how risky it is to enter the battery recycling market.

Returning valuable raw materials from battery cells to the process chain has become a real hype.

Car manufacturers are betting that recycled material from old batteries will provide raw materials for the construction of their electric cars.

But chemical giants, start-ups and many others are also hoping for billions in business from the recycling of electric car batteries.

They all pump huge sums of money into the market and compete with their factories for pole position.

The problem: nobody will need the factories in the next ten years – at least not with such capacities.

There isn't nearly enough battery scrap to feed them yet.

Old batteries will remain in short supply for a long time.

And the waste from battery cell production, which the factories also recycle, cannot begin to fully utilize the many factories.

Waiting for battery scrap thus becomes a struggle for survival for the recyclers.

Battery scrap remains in short supply

"People who want to start their own battery recycling business are under pressure now," said recently

Kunal Sinha

, global head of recycling at mining giant Glencore, which is also investing in recycling.

"Some of the pure recycling business models will not be successful or at least will struggle because they have to wait for the scrap to arrive."

Enlarge image

Dismantles the battery: The shredding plant

Photo: Volkswagen

The reasons are obvious.

On the one hand there is the battery, which usually spends its entire life cycle in an electric car.

It can only be recycled after around ten to 15 years.

Cells that are being installed today will for the most part only come back in the 2030s.

However, the batteries are often resold for reuse, so they don't end up with the recyclers in the first place.

On the other hand, there is the waste from battery cell production.

As the quality of the gigafactories increases, its share will dwindle.

Recycling capacities are growing by leaps and bounds

At the same time, the number of production facilities for battery recycling is growing rapidly.

According to the market research and consulting company Circular Energy Storage, by 2025 the capacity in Europe will already have increased tenfold compared to 2021.

While last year there was more battery scrap than processing capacity, the trend is already turning.

The capacity will exceed the amount of available recycling material for the first time this year.

Overcapacity will increase in the coming years (see chart).

As early as 2024 there will be twice as much recycling capacity as battery scrap worldwide, and even three times as much in Europe.

In short: more than every second European recycling factory will have no material to process by 2030.

A condition that will last for the entire next decade.

“Several reprocessors have been receiving more old and test batteries than they can handle for some time now, so we definitely need more capacity – at least 100 percent more than we have today. But the market is not going to grow 500 to 600 percent like some suspect recyclers," says

Hans Eric Melin

, founder of Circular Energy Storage.

"It is inevitable that we will have pre-processing overcapacity in the next five to seven years."

China dominates the market

In Germany, the car manufacturer Volkswagen operates a pilot plant in Salzgitter with partner URT.

VW's first battery cell factory is also being built there.

Additional capacities could be added through a new joint venture with Umicore, a Belgian recycling group.

Recycling used batteries is an option for the partners, said Umicore boss

Mathias Miedreich recently

.

The chemical company BASF is also building a test facility in Germany.

In North America, start-ups such as Redwood Materials Inc. by

Jeffrey Brian Straubel,

long-time Tesla chief technologist, Ascend or Li-Cycle have announced that they will spend billions of dollars to provide battery manufacturers with the raw materials they need.

Enlarge image

High-quality scrap: The valuable cellulose – gunpowder (lithium, nickel, manganese, cobalt) – is separated from the other raw materials

Photo: Volkswagen AG / Volkswagen

But most of the money still goes to China.

In 2021, more than 80 percent of the global battery recycling capacity was located there.

The first big wave of battery scrap is also likely to occur in China, since most electric cars have been on the road there for some time.

Plant operators in Europe and North America will therefore have to wait even longer before their demand picks up.

Nevertheless, companies are speeding up the expansion of factories in Europe.

Above all, foreseeable bottlenecks in raw materials such as lithium or cobalt are prompting automobile manufacturers to secure those raw materials in good time.

Without them, the ramp-up of electromobility would come to a standstill.

For numerous battery metals, the price has already shot up to astronomical heights this year.

Lithium carbonate cost $71,400 per tonne in China in mid-September, higher than ever.

As a result of the drought in Chinese regions, electricity had become scarce, and production suffered as a result.

In addition, high sales of electric vehicles drove up demand.

The pressure is also increasing due to an EU regulation.

Minimum quotas will apply from 2030, which will oblige car manufacturers to use more recycled materials in their batteries.

The result: More factories.

It is unclear when the capacities will approach the amount of battery scrap.

Benchmark Mineral Intelligence expects that by the mid-2030s, end-of-life batteries, rather than manufacturing waste, will be the primary source for recycling plants (see chart).

But who can last that long?

Hardly many independent recyclers.

You urgently need old batteries.

According to industry observers, only those who have more to offer than the competition are likely to survive.

Automakers are in a better position thanks to their customer connections.

They get batteries through their used car business.

Those who rent their batteries, such as the Chinese electric car manufacturer Nio or Renault and Nissan, do not even have to ask themselves this question.

Ultimately, the price of the batteries will decide how many will end up being returned to the recyclers or will continue to be used for a second life (second life) - for example as part of fast charging stations.

For Li-Cycle, the bumpy start with short selling didn't mean the end.

CEO Kochhar secured a $200 million investment from Glencore in May.

The companies have also agreed on a strategic partnership.

Should there be supply bottlenecks at Li-Cycle in the future, the mining company can help out with waste from its mines that is rich in raw materials - "until the volume of battery scrap finally increases seriously," says Glencore boss Sinha.

Source: spiegel

All news articles on 2022-10-13

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