Closing the Lithium-ion Battery Loop

MKB Perspectives

Key Takeaways

• Today, only 5 percent of lithium-ion batteries are recycled. Governments have begun introducing legislation on the handling of EV batteries to increase recycling rates – Europe and China are ahead of North America on this front.

• Hydrometallurgical and pyrometallurgical battery recycling methods each have their pros and cons –more recent research has been centred around hydrometallurgy likely because of its high metal recovery potential and lower emissions.

• It’s still early innings for lithium-ion battery recycling due to cost and a lack of necessary infrastructure. Two publicly traded companies to pay attention to are Li-Cycle and Umicore. Li-Cycle is utilizing a hydrometallurgical process to recycle, whereas Umicore’s process combines pyrometallurgy and hydrometallurgy. 

As a part of building a green economy, the Government of Canada requires 100 percent of passenger car and truck sales to be zero-emission by 2035.¹ In the US, President Biden has similar aspirations for America. Two years ago, with the support of major US automakers, he signed an executive order outlining a target of 50 percent electric vehicle (EV) sales by 2030.²The transition away from internal combustion engine cars toward battery EVs has spurred demand for key metals, namely cobalt, lithium, and nickel. Demand for these metals is growing so quickly that S&P Global projects they will enter global supply deficits at some point over the next decade.³ An emerging solution to alleviate the limited supply of battery metals, while minimizing the negative impacts of resource extraction, is recycling spent EV batteries. This process is nothing new. The first efforts to recycle consumer batteries began in the 1990s, spurred by the US Resource Conservation and Recovery Act (RCRA).⁴ Today’s lead-acid battery recycle rates reflect the success of the RCRA: with recycle rates over 99 percent, lead-acid batteries are the most recycled product in North America.⁵ Recycling rates for lithium-ion batteries commonly found in consumer electronics and EVs are another story – only 5 percent of lithium-ion batteries are recycled.⁶

To prevent valuable minerals from ending up in landfills, governments globally are introducing legislation regulating the handling of end-of-life EV batteries. China cast the first stone, drafting a comprehensive EV battery recycling framework in 2016 which was been fully implemented by 2019. Europe followed shortly thereafter, with a European Commission proposal to modernize EU battery legislation in 2020. At the end of last year, The Commission built upon the proposal, enabling provisional agreement to be reached in parliament.  This led to the passage of legislation mandating replacement of dated Batteries Directive from 2006. The law, which is to be gradually introduced from 2024 onwards, establishes collection targets, recycled content targets, and responsible sourcing of raw materials.⁷

China and Europe’s urgency in establishing comprehensive EV battery recycling policy has not been matched in North America. This perhaps can be explained in part by the continent’s relative abundance of oil and the implications of being energy independent; Europe and China are both major importers of oil, making them far more susceptible to commodity price shocks. To date, while the US and Canada have provided subsidies and tax credits for near-shoring battery recycling they are yet to pass federal regulation on how end-of-life EV batteries should be handled.

A Primer on Lithium-ion Battery Recycling

The battery recycling process begins with a pre-treatment phase, where spent batteries are discharged and dismantled before undergoing further processing to separate lower value materials from higher value battery metals. The resulting dark, powder-like mixture of the various battery metals is known as black mass. Following pre-treatment, black mass undergoes either pyrometallurgy, hydrometallurgy, or a combination of the two approaches.

Pyrometallurgy, the more widely used metallurgical recycling technique, is akin to ore smelting. The process consumes significant amounts of energy to generate sufficient heat for melting battery metals into alloys of cobalt, nickel, iron, and copper, which can then be separated through techniques such as leaching. Lithium, due to its high affinity for oxygen, cannot be recovered as part of the alloy, and instead binds as an oxide in the slag. While the slag can be treated to recover lithium, it typically is not due to cost. There are several pyrometallurgical facilities currently recycling lithium-ion batteries on a commercial scale. The economics of the pyrometallurgical process depend heavily on the amount of cobalt in the spent batteries, as well as cobalt’s market price. The trend of battery manufacturers moving toward cobalt-free chemistries will undoubtedly present future challenges to pyrometallurgy.

As the name suggests, hydrometallurgy employs aqueous solutions to retrieve battery metals. The process can be broken down into four stages: leaching, impurity removal, metal extraction, and lithium recovery. During the leaching process, metal ions from the cathode material dissolve into a leach solution inside of a tank. The impurity removal process then eliminates unwanted metal ions and unleached solids. This processed solution undergoes a metals recovery step which recovers metal ions via sedimentation, chemical precipitation, or solvent extraction. The remaining lithium-enriched solution is transferred to a lithium recovery station where lithium can be recovered through chemical precipitation or crystallization by distillation.⁸

The relative benefits of hydrometallurgy include the ability to recover metals more efficiently with a higher degree of purity, recovery of lithium, lower energy usage, and 30 percent lower emissions.⁹

The Current State of Battery Recycling

In recent years, the majority of lithium-ion battery recycling research concentrated on hydrometallurgy, likely due to its high metal recovery potential and lower emissions.¹⁰ Leveraging this research, Toronto-based Li-Cycle leads the hydrometallurgical recycling pack. The company is North America’s largest lithium-ion battery recycler and boasts recycle rates of greater than 90 percent for battery-grade metals. ¹¹

As a public company, Li-Cycle’s mandatory disclosures provide unique insights into a hydrometallurgical battery recycler’s commercial strategy. This is particularly important because operational efficiency, rather than hydrometallurgical technology or process, serves as the key factor of differentiation for hydrometallurgical recyclers. The various hydrometallurgy techniques produce very similar final products.¹² Li-Cycle partitions its recycling process in a spoke and hub configuration. At spokes, batteries are processed into black mass and mixed foil. The mixed foil is sold for its copper and precious metals content, while the black mass is transported to hubs, where it undergoes hydrometallurgical processes and is converted into battery grade materials, such as graphite, lithium carbonate, nickel sulphate, and cobalt sulphate.

Li-Cycle is in the early stages of commercializing its hub and spoke model. The company had planned to start commissioning its first hub, in Rochester, NY, at the end of the year, but escalating construction costs halted construction pending a strategic review.¹³ Once up and running, the Rochester hub will process up to 35,000 tonnes of black mass per year.¹⁴

Pyrometallurgy, despite lower metals recovery rates, has relative advantages in cost, speed, and technical ease. Additionally, meta-analysis indicates pyrometallurgical recycling sustainability can be improved through various techniques, such as processing metals at lower temperatures.¹⁵ There are several companies pursuing pyrometallurgical processes to recycle lithium-ion batteries. Umicore, for example, applies its expertise as one of the world’s largest precious metals recyclers, to a new battery recycling business unit. Umicore’s pilot battery recycling plant in Belgium can process 7,000 tons of lithium-ion batteries per year The company recently announced its intention build the world’s largest battery recycling facility, which would bring additional processing capacity of 150,000 tons per year online by 2026.¹⁶

Umicore’s recycling process combines pyrometallurgy and hydrometallurgy in a manner yielding lower lifecycle emissions than alternative processes, such as mechanical pre-treatment coupled with hydrometallurgy.¹⁷ A two-step approach streamlines the typically cumbersome recycling process, while being faster and requiring fewer chemical reagents. The purported result is a process that is 30 percent more cost-efficient than other battery recycling methods, allows for recovery rates of over 95 percent for nickel, copper, and cobalt, and over 70 percent for lithium.

Looking into the Future

Despite progress in lithium-ion battery recycling techniques, it remains expensive, and recycling infrastructure is yet to be widely adopted.¹⁸ By the end of the decade, however, the situation will improve significantly. Forecasts of significant volumes of retired EV batteries and manufacturing scrap by 2030 point to a manifold increase of battery material feedstock recycling. Projected supply shortages of key battery metals may push prices higher.  This would provide incentive to recyclers who in parallel will continue improving recycling techniques and cost efficiencies.

At the heart of battery recycling is onshoring. Right now, China overwhelmingly controls the recycling and processing of battery metals. By 2040, analysts project China will recycle over 50 percent of the world’s spent lithium-ion batteries.¹⁹ In the wake of COVID-19 and the invasion of Ukraine, the importance of supply chain resilience should be abundantly clear to Western governments. On this front, under President Biden, the Department of Energy announced $3.2 billion in funding to support battery manufacturing, processing, and recycling.²⁰ More recently, the President signed the Inflation Reduction Act of 2022 into law. This legislation includes more than $60 billion in funding to support clean energy manufacturing in the United States.²¹ The sector likely will need additional industrial policy measures to support commercialization to scale.

Factors such as commodity prices, competing battery technology advances, and recycling efficiencies add complexity to predicting the future of lithium-ion battery recycling from an investor’s perspective. However, it is clear that closing the lithium-ion battery loop, and keeping spent EV batteries out of landfills, increases EV sustainability while alleviating battery metal supply challenges.

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Source: Tesla Impact Report (2020)

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1 https://www.canada.ca/en/transport-canada/news/2021/06/building-a-green-economy-government-of-canada-to-require-100-of-car-and-passenger-truck-sales-be-zero-emission-by-2035-in-canada.html

2 https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/fact-sheet-president-biden-announces-steps-to-drive-american-leadership-forward-on-clean-cars-and-trucks/

3 https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/battery-next-metal-supply-concerns-push-ev-makers-to-new-battery-chemistries-75884340?

4 https://www.epa.gov/sites/default/files/2015-09/documents/eval-three-rcra-regulations.pdf

5 https://www.energy-storage.news/lead-acid-batteries-are-us-most-recycled-products-trade-group-says/

6 https://www.cas.org/resources/cas-insights/sustainability/lithium-ion-battery-recycling

7 https://ec.europa.eu/commission/presscorner/detail/en/IP_22_7588

8 Pyrometallurgical and hydrometallurgical steps presented may differ in practice as there are many different forms of these processes and techniques.

9 BloombergNEF Energy Storage Content Battery Recycling Presentation

10 https://www.sciencedirect.com/science/article/abs/pii/S0378775318308498?via%3Dihub

11 https://www.waste360.com/recycling/how-li-cycle-technology-retrieves-95-lithium-battery-content

12 Hydrometallurgical Recycling of Lithium-Ion Battery Materials by Joey Jung, Page 71

13 https://www.proactiveinvestors.com/companies/news/1030637/li-cycle-pauses-construction-on-rochester-battery-plant-sending-shares-tumbling-1030637.html?

14 https://li-cycle.com/rochester-hub/

15 https://www.sciencedirect.com/science/article/abs/pii/S0921344920301300

16 https://cen.acs.org/environment/recycling/Umicore-wants-build-worlds-largest/100/i23

17 https://www.umicore.com/en/newsroom/umicore-battery-recycling/

18 https://uwaterloo.ca/research/waterloo-commercialization-office-watco/business-opportunities-industry/complete-recycle-system-lithium-ion-battery-materials

19 https://www.idtechex.com/en/research-report/li-ion-battery-recycling-2020-2040/751

20 https://www.energy.gov/articles/biden-administration-announces-316-billion-bipartisan-infrastructure-law-boost-domestic

21 https://www.proactiveinvestors.ca/companies/news/990464/american-manganese-says-us-inflation-reduction-act-of-2022-recognizes-critical-role-battery-materials-play-990464.html

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