[Bojo,Battery] How Will Raw Material Prices Change If Waste Batteries Are Recycled?

Recycling Used Batteries, Recovering Expensive Raw Materials
Production → Use → Collection → Recycling → Battery Reproduction
Mineral Prices Expected to Stabilize Downward but No Crash

Collection and Processing Costs Are Significant
Battery Demand to Rise Sharply with Electric Vehicles and ESS Adding Up
Outpacing Supply Growth

Editor's Note'Bojo, Battery' is a series that takes a closer look at the battery industry, which has emerged as the center of next-generation advanced industries. It examines the agile movements, strategies, and conflicts among governments and companies worldwide aiming to dominate the battery manufacturing ecosystem. We will also cover the technological competition to create safer and longer-lasting batteries. We aim to serve as an 'assistant' to readers and investors by enhancing and supporting their understanding of the battery industry. We will share battery stories that are easy to approach.

Will extracting lithium and nickel from used batteries for recycling make battery raw material prices cheaper? Battery recycling contributes to raw material supply to some extent, but predictions suggest it will not keep pace with the rapid increase in demand.

Used batteries are largely reused or recycled depending on their condition. Reuse involves repurposing batteries for different applications?for example, using batteries formerly used in electric vehicles (EVs) for energy storage systems (ESS). The industry’s focus, however, is on recycling. This method recovers expensive raw materials such as lithium, nickel, and cobalt to manufacture new batteries. Recycling batteries enables the establishment of a 'closed loop system'?a 'production → use → recovery → production' cycle?that reduces environmental damage and lowers production costs. The UK research firm Benchmark Mineral Intelligence forecasts that by 2040, 20% of industrial lithium will come from recycled batteries or process scrap (waste generated during manufacturing). Especially from the mid-2030s, an increasing number of batteries will reach the end of their life and become available for supply.

Battery Raw Materials: No Price Collapse

Nevertheless, battery recycling is unlikely to drastically reduce raw material prices. First, the collection and processing costs of used batteries are not low. Many used batteries will come from EVs in the future, but separating heavy batteries from EVs and transporting them to factories incurs costs. Additionally, the wide variety of battery types due to differences in form factors and material composition ratios makes extracting raw materials challenging. Choi Young-min, Head of LG Chem’s Battery Materials Research Institute (Executive Vice President), said at the 'Next Generation Battery Seminar' last April, "Large EV batteries weigh about 2 tons, with the battery itself weighing around 1 ton, resulting in high transportation costs. Since batteries vary greatly by vehicle model and manufacturer, implementing automated processes to disassemble and extract raw materials will require significant time and cost."

Prices for used batteries are also rising. In this year’s electric vehicle used battery sales auction conducted by the Korea Environment Corporation, the bid-to-expected price ratio reached 250?500%. In the March auction, a used battery from the 2018 Niro EV with a 64 kWh capacity was sold for 7.85 million KRW, four times the expected price of 1.96 million KRW. A used battery of the same capacity from the Kona EV was sold for over three times the expected price of 3.24 million KRW, fetching 11.5 million KRW.

The second reason raw material prices do not collapse despite battery recycling is the surge in battery demand. Although the volume of used batteries will increase as the EV market matures, battery demand is rising even faster. Focusing on lithium, a core material: in 2020, lithium supply was 500,000 tons, and demand was 400,000 tons. By 2025, lithium supply is expected to rise to 1.8 million tons, with demand at 1.4 million tons, indicating a supply surplus. However, by 2035, demand is projected to reach 4.6 million tons, while supply will be only 3.5 million tons (according to S&P Global Market Intelligence data).

Lithium phosphate produced from the Hombre Muerto salt lake in Argentina, developed by POSCO Holdings. Photo by Jeong Donghoon

Demand Growth from ESS and Other Variables

Especially after 2030, battery demand for EVs will be joined by demand from ESS. Benchmark Minerals forecasts that due to the growth of renewable energy industries such as wind and solar power, ESS will account for more than 60% of battery demand by 2050.

However, there are limited means to increase supply. Although lithium reserves are about 521 million tons, only 138.32 million tons are economically mineable. The actual amount of lithium being mined is even less. Park Jae-beom, Senior Researcher at POSCO Research Institute, said, "There are not many economically viable lithium mines from exploration to actual mining, and it takes a long time?4 to 7 years?to reach actual mining." The lithium mined from discovered reserves is only about 0.5%. Currently, about 700,000 tons are produced.

Nearly 60% of the world’s lithium reserves are concentrated in the 'Lithium Triangle'?Chile, Bolivia, and Argentina. These countries are nationalizing lithium mines and salt lakes to control supply. Technologies and facilities to refine raw materials exist only in a few countries, such as China. Although reports have emerged of lithium mines discovered in India, Iran, and Africa, commercially viable mines at the exploration stage are few.

Lee Ho-geun, Professor of Future Automotive Department at Daeduk College, said, "With the popularity of ternary batteries (nickel, cobalt, manganese), lithium prices have increased eightfold over the past four years. Recycling technology can establish a battery raw material circulation system and stabilize raw material prices." He added, "While demand may increase due to ESS, improvements in charging technology and infrastructure could reduce the amount of battery per vehicle, lowering lithium demand. The development of alternative batteries could also be a variable."