[Complete Battery Mastery](31) Battery Recycling Turned into a 'Warzone of Stars,' Who Will Be the Winner?

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Last March, Envirostream, a subsidiary of Australia's Lithium Australia, signed consecutive battery recycling contracts with LG Energy Solution and Hyundai Glovis. Under these agreements, Envirostream will exclusively handle the collection and recycling of waste batteries from the two companies for three years.

Earlier, Seongil Hightech, a domestic used battery recycling company, announced that it had signed a memorandum of understanding (MOU) related to an off-take (long-term purchase) contract and joint development agreement (JDA) with Lithium Australia for black powder (battery powder). This contract involves Seongil Hightech receiving black powder, which Envirostream collects and processes as a primary step, to extract key minerals.

This series of contracts exemplifies a circular ecosystem for electric vehicle waste battery recycling that connects Korean battery cell manufacturers, automakers, overseas battery collection companies, and Korean battery recycling firms.

With the expansion of electric vehicles, a global battle to secure the used battery market?expected to become a multi-trillion won market in the coming decades?is intensifying. Initially dominated by specialized companies, the used battery market now sees raw material suppliers, material and battery cell companies, and even automakers directly entering the battery recycling market, resembling a period of intense competition akin to the Warring States period. Alliances and collaborations among companies are also actively occurring.

The recycling and reuse business of used batteries holds significant meaning not only in terms of profitability but also in supply chain management (SCM) and securing stable raw materials. The core competitiveness lies not only in technological capabilities but also in which company can establish a broad global network.

Three Methods of Recycling Waste Batteries

Used batteries from electric vehicles were formerly called waste batteries, but the term "used batteries" is now preferred. The term "waste battery" implies waste material. However, batteries removed from electric vehicles are not simply discarded but are reused or recycled in various ways, forming an industry. This is the background for the term "used battery." In English-speaking countries, the term EOL (End Of Life) battery is commonly used.

Used batteries generated during electric vehicle scrapping or repair are mainly utilized through three methods: remanufacturing, reuse, and recycling. Remanufacturing refers to disassembling used batteries, performing cell balancing, reassembling, and inspection to restore them to their original performance for reuse.

Reuse means recycling used batteries as components to manufacture and sell products other than electric vehicles, such as energy storage systems (ESS) and uninterruptible power supplies (UPS). Even fully used batteries retain 60-80% of their charging capacity, maintaining high utilization value.

The most notable and promising industry in the battery sector is recycling. Recycling involves disassembling used batteries and extracting valuable metals such as lithium, cobalt, and nickel to reuse as battery raw materials. Battery recycling is often likened to "urban mining" because minerals are extracted from urban waste.

Battery recycling methods include dry process (pyro-metallurgy), wet process (hydro-metallurgy), and direct recycling.

Among these, direct recycling physically removes active materials coated on the battery's cathode for reuse. Direct recycling is cost-effective and environmentally friendly but remains at the laboratory stage. Companies such as Onto Technology and Princeton Nuenergy in the U.S., and Farasis in China, are adopting direct recycling methods.

Image source=SNE Research

Dry and wet processes are broadly divided into pretreatment and post-treatment stages. Pretreatment involves discharging and disassembling used batteries to produce recycling raw materials like black mass and black powder. Post-treatment extracts valuable metals directly from these raw materials. Some companies specialize in either pretreatment or post-treatment, while others operate both.

The dry process extracts metals by discharging and disassembling used batteries, then crushing them into flakes, which are melted in a furnace at 1200?1400℃. The molten materials separate into an upper slag layer and a lower metal alloy layer due to density differences.

The lower alloy layer, composed of nickel, cobalt, and copper, can be extracted by exploiting differences in melting points. However, the upper slag, made of lithium and manganese oxides, forms a stable molecular structure, resulting in a low lithium recovery rate.

The dry process is relatively simple and can handle large volumes of used batteries easily. However, it requires operating high-temperature furnaces, leading to high energy consumption and significant carbon emissions, posing environmental burdens.

Belgium's Umicore is a representative company employing the dry process, while domestically, Youngpoong and Korea Zinc apply this method. Youngpoong has reported a 90% lithium recovery rate using the dry melting method.

Most battery recycling companies currently use the wet process, which chemically treats raw materials to extract valuable metals. In Korea, Seongil Hightech, Sebitchem, ISTMC, and Ecopro CNG use this method. Chinese companies such as Brunp, GEM, Huayou Cobalt, CNGR, Canadian Li-Cycle, Li-Cion, and U.S. companies Redwood and Ascend Elements also apply the wet process. The market share of the wet process is estimated to be about 90%.

Image source=SNE Research

In the wet process, used batteries are first crushed and ground into fine black powder. When this black powder is placed in a sulfuric acid solution, metal substances leach out in ionic form. After removing impurities, solvents that induce selective chemical reactions are added to sequentially extract manganese sulfate, cobalt sulfate, nickel sulfate, and lithium carbonate. The lithium recovery rate is known to be about 90%. Manganese is sometimes not extracted due to economic reasons.

The wet process has a higher metal recovery rate than the dry process but incurs relatively higher operating costs. Additionally, it produces wastewater containing sodium sulfate (Na2SO4), raising environmental concerns.

Waste Battery Recycling as 'Urban Mining'... Expected to Reach 63 Trillion Won by 2040

The used battery market is gaining attention because the number of batteries used in electric vehicles is expected to surge in 8 to 10 years due to the expansion of electric vehicle adoption. Although the global electric vehicle market's growth rate is currently slowing, few dispute the forecast that it will continue to expand. Accordingly, the volume of waste batteries removed from discarded electric vehicles is also expected to increase significantly.

According to a recent report by market research firm SNE Research, the global battery recycling (reuse/recycling) market, based on recovered metals such as lithium, nickel, and cobalt, is projected to grow from 535 kilotons (kton) in 2025 to 935 kton in 2030 and 2,843 kton in 2040, with an average annual growth rate of 12%.

In monetary terms, the battery recycling market size, which was $3.417 billion in 2023, is expected to grow to $7.342 billion in 2025, $13.646 billion in 2030, and $46.776 billion (approximately 63 trillion won) in 2040, with an average annual growth rate of 13%. The market size fluctuates significantly depending on mineral prices.

The excessive dependence on China for key battery minerals such as lithium, nickel, cobalt, and graphite, which could threaten energy security, is also influencing the expansion of the recycling market. Major countries like Europe and the U.S. are strengthening regulations or expanding incentives for battery recycling to stabilize supply chains.

According to the USGS, as of 2020, Australia, Chile, and China accounted for 90% of global lithium production. China dominates smelting with a 65% share due to lower environmental standards and production costs. Notably, 75% of lithium hydroxide used in ternary batteries, the main type for domestic battery companies, is smelted in China.

For cobalt, 70% of production in 2021 came from the Democratic Republic of Congo (DRC), with 60% of smelting conducted in China. The cobalt supply chain also faces issues related to child labor exploitation. Nickel reserves economically viable for mining are primarily in Indonesia and Australia, each holding 22%, followed by Brazil (16.8%) and Russia (7.9%).

Concerns about the environmental impact of mining and smelting key battery minerals also drive the expansion of the recycling market.

According to McKinsey & Company, producing ternary batteries from mined minerals emits about 74 kg of CO2 per kilowatt-hour (kWh), with 29 kg attributed solely to mineral mining.

In contrast, extracting minerals through recycling reduces CO2 emissions from 29 kg to 8 kg, a 72.4% decrease. Total CO2 emissions drop from 74 kg to 53 kg. Energy consumption also decreases by 68% in dry processes and 75% in wet processes when recycling is applied.

Reduced Carbon Dioxide Emissions from Battery Recycling. Source: McKinsey & Company, Requoted by Kyobo Securities Research Center

Consequently, countries worldwide are regulating battery recycling. The European Union (EU) is a prime example. The EU Battery Regulation, effective from February 18, 2024, mandates carbon footprint reporting, sets targets for waste battery collection and raw material recovery, applies minimum recycled material usage rates, enforces supply chain due diligence, and introduces battery passports.

From 2027, member states must implement Extended Producer Responsibility (EPR) systems, holding producers accountable for waste battery collection and establishing related approval procedures. Minimum recycled material usage rates and extraction targets are set for industrial batteries over 2 kWh, electric vehicle batteries, and starting-lighting-ignition (SLI) batteries.

According to the regulation, by 2027, 90% of cobalt, copper, lead, and nickel, and 50% of lithium must be recovered from battery waste. By 2031, these rates increase to 95% and 60%, respectively. The minimum recycled material usage rates in new batteries by 2031 are 16% for cobalt, 85% for lead, 6% for lithium, and 6% for nickel.

The U.S. government projects that battery recycling will supply 55%, 25%, and 35% of the copper, lithium, cobalt, and nickel demand for electric vehicle battery production by 2040, respectively. However, unlike the EU's regulatory approach, the U.S. encourages battery recycling mainly through various incentive policies.

Since the Biden administration took office, the U.S. Department of Energy (DOE) decided in November 2022 to invest about $74 million in 10 projects for electric vehicle battery recycling under the Bipartisan Infrastructure Law.

Notably, under the Inflation Reduction Act (IRA), to qualify for electric vehicle subsidies, a certain percentage of battery minerals must be extracted or processed in the U.S. or countries with which the U.S. has free trade agreements (FTA), or recycled in North America.

To verify compliance with the IRA's critical mineral requirements, the "50% value-added test" includes a condition that the proportion of recycled minerals in North America meets a specified threshold. Consequently, interest in battery recycling has surged in North America, with various collaborations among electric vehicle manufacturers and venture companies.

Recycling: The Battlefield of Stars

As the used battery market is expected to expand rapidly, not only specialized recycling companies but also material, battery cell, and automaker companies are entering this field.

Seongil Hightech, established in 2000, boasts the largest scale among battery recycling specialists. It operates nine pretreatment plants (recycling parks) and two post-treatment plants (hydro centers) domestically and abroad. The company collects battery scrap and used batteries locally, produces black powder, and sends it to post-processing facilities in Korea.

Raw materials such as scrap are procured from the three domestic battery cell manufacturers, Samsung C&T, Hyundai Glovis, and others, extracting metals to supply domestic cathode and precursor manufacturers. The largest supply share goes to Ecopro BM.

Seongil High-Tech Recycling Process. Image provided by Seongil High-Tech

Sebitchem originated from Dongyang Chemistries, a wastewater treatment chemical company founded in 1993. It changed its name in 2005 and entered semiconductor and display acid recycling businesses. Since 2017, it has been engaged in battery recycling. From 2020, it began selling extracted metals in complex liquid form. Raw materials are procured from cathode material companies such as POSCO Chemical and L&F, with major customers including China's EMT.

ISTMC specializes in both pre- and post-treatment and supplies final metal materials to precursor and cathode material companies. Its main products include NCM solutions and lithium carbonate. ISTMC forms a battery recycling ecosystem centered on its parent company, IS Dongseo. It has vertical integration for raw material procurement through affiliated companies such as Insun Motors, a vehicle dismantling specialist, and ISBM Solution, a pretreatment company.

Leading material companies like Ecopro and POSCO have also entered the recycling business. They emphasize their competitiveness by completing an ecosystem from recycling to precursor and cathode/anode material production.

Ecopro operates its recycling business through Ecopro CNG. It plans to nearly double its current annual production capacity of 30,000 tons to about 61,000 tons by 2027 through domestic and overseas plant expansions.

POSCO Holdings completed the POSCO HY Clean Metal plant, a secondary battery recycling specialist, in July 2023 in partnership with China's Huayou Cobalt and GS Energy. The plant has an annual processing capacity of 12,000 tons of black powder.

Battery cell companies are also actively involved in recycling. LG Energy Solution signed a contract in August 2023 to establish a joint venture (JV) for battery recycling with China's Huayou Cobalt. The new JV plans to build a plant in Nanjing, China. In December 2021, LG Chem and LG Energy Solution invested 60 billion won to acquire a 2.6% stake in Li-Cycle, North America's largest battery recycling company.

Samsung SDI established a circular system in its Cheonan and Ulsan plants in 2019 to recover key battery raw materials and recycle them into battery production, with plans to expand this system globally by 2025. It also established a recycling research lab within its research center to develop eco-friendly material recovery technologies. Samsung SDI maintains a close cooperative relationship with Seongil Hightech. Samsung SDI (8.8%) and Samsung Group affiliates hold a combined 13.8% stake in Seongil Hightech, making them the second-largest shareholders.

SK Innovation, the parent company of SK On, signed a memorandum of understanding (MOU) with Seongil Hightech in December 2022 to establish a joint venture for waste battery recycling.

Global electric vehicle companies are also conducting waste battery recycling businesses. Hyundai Motor Group promotes battery recycling through Hyundai Glovis. Hyundai Glovis collects used batteries from scrap yards worldwide, which Hyundai then reuses or recycles. In January, Hyundai Glovis signed a share investment agreement (SSA) with EAR, a battery recycling specialist with pretreatment technology.

SK ecoplant held a completion ceremony for its battery recycling plant on December 12, 2023, in the Economic and Technological Development Zone of Yancheng City, Jiangsu Province, China. Photo by SK ecoplant

Non-battery companies are also entering the competition. SK Ecoplant acquired Singapore-based electronic waste processing company TES for 1.2 trillion won in February 2022. TES opened a waste battery recycling plant in Jiangsu Province, China, in December last year. Doosan Enerbility established Doosan Recycle Solution, a battery recycling specialist subsidiary, and is preparing to open a plant in Daegu.

Challenges: Raw Material Procurement, Wastewater Treatment, and LFP Recycling

The biggest key to success in the battery recycling business is securing stable raw materials. Currently, since the number of waste batteries from electric vehicles is not large, battery recycling companies mainly use scrap generated during battery manufacturing as their primary raw material. It is estimated that scrap accounts for 80-90% of recycled raw materials.

The entry of material and battery cell companies and automakers directly into the recycling business could pose a threat to existing specialized recycling companies. As competition intensifies, securing raw materials may become difficult. Demand companies appear to be interested in recycling businesses more from the perspective of raw material procurement than profitability.

Shattered battery debris. Photo by Princeton University, reprinted from Kyobo Securities Research Center

Global competition is also intensifying. Local companies in major markets such as the U.S., Europe, and China are actively developing battery recycling businesses. Redwood Materials and Ascend Elements in North America are representative examples. Large corporations with global networks are also entering the battery recycling business, making it necessary to monitor their movements.

Battery recycling companies are requesting governments to introduce battery collection system regulations and ease restrictions on importing waste batteries from overseas.

Recycling of lithium iron phosphate (LFP) batteries, whose adoption rate is increasing, is also emerging as an issue. Currently, companies focus on recycling ternary batteries because they can extract valuable rare metals such as lithium, nickel, cobalt, and manganese.

In contrast, LFP batteries are known to be discarded without recycling due to economic infeasibility, which could cause serious environmental problems in the future. According to SNE Research, as of 2023, LFP accounts for 45.6% of cathode material loading, nearly half of the total.

Seongil Hightech plans to build a pilot line for LFP battery recycling this year and establish mass production by 2026. Youngpoong and POSCO HY Clean Metal are also developing LFP battery recycling technologies. However, the high cost of metal extraction remains a challenge to profitability. Recycling companies are expecting government incentives for LFP battery recycling.

The wet process generates sodium sulfate, known as salt cake, causing environmental pollution issues. Therefore, battery companies equipped with zero-discharge wastewater systems are expected to have a competitive advantage.

Korea Investment & Securities, Waste Battery Made in Urban Mine, 2023.6.1
Kyobo Securities, What's Up with Secondary Batteries These Days? - Waste Batteries, 2023.7.18
KOTRA, U.S. Lithium Battery Recycling Government Policy Trends, 2024.1.12
Korea International Trade Association, Key Contents of Major EU Trade Regulations in 2024, 2024.1.24
Seongil Hightech, Current Status and New Technologies of Lithium-ion Battery Recycling, 2024.3.26