Interactive: Battery recycling assumes strategic role as countries seek to strengthen critical mineral supply

The global adoption of electric vehicles (EVs) continues to support the growing demand for recycled battery raw materials. Although a recent slowdown in EV sales growth and an oversupply of battery metals have impacted battery recycling efforts in some regions, the recognition of black mass as a sustainable source of critical raw materials has solidified its strategic importance among global policymakers.

As the world's largest market for black mass, China continues to spearhead advancements in battery recycling capacity and processing. US and European investments are also expanding, bolstered by various government policy mandates and subsidies.

Asia faces black mass supply crunch

The surge in electric vehicle (EV) adoption across Asia in the past decade has led to the rapid development of battery recycling technology and capacity within the region, creating a growing demand for black mass. However, countries in Asia, particularly China and South Korea, are facing a black mass crunch which has kept at least around half of the countries' recycling capacity idle, according to market participants.

While growing EV adoption is expected to increase the availability of end-of-life (EOL) batteries, not all EV batteries are recycled at the end of their first life; many are repurposed for other applications, such as battery energy storage systems (BESS). Additionally, weaker-than-expected demand for batteries has limited the availability of production scrap, another crucial feedstock for black mass.

According to the China YiWei Institute of Economics, China's actual retired lithium-ion battery recycling volume reached 654,000 metric tons in 2024, reflecting a 5% year-on-year increase. On March 4, Beijing announced a draft import regulation for recycled black mass from lithium batteries to encourage imports. Under this regulation, black mass meeting certain content requirements will not be classified as solid waste, allowing for unrestricted imports starting July 1.

While easing these restrictions could significantly enhance China's recycling sector by increasing black mass availability, the stringent requirements for imported black mass may limit immediate supply boosts. Industry sources indicate that the anticipated relaxation of import bans is not expected to substantially enhance domestic supply in the short term. This potential change has heightened interest in black mass from other Asian countries, such as South Korea, which has underutilized recycling capacity.

The ongoing US-China trade tensions and tariffs have introduced additional uncertainty for market participants. Consequently, the expected benefits of China's easing of import restrictions may be constrained, as importing directly from the US could become prohibitively expensive. Throughout Asia, market participants are closely monitoring developments regarding China's black mass import policies amid these trade tensions.

Challenges in the European market

The black mass market in Europe is still in its nascent stages, facing significant challenges that hinder its growth. Cobalt prices, in particular, have surged by 60-70% since the Democratic Republic of the Congo (DRC) introduced a temporary cobalt export ban in late February. However, broadly low battery metal prices are negatively impacting the recycling sector, making it difficult to attract investment for new projects. Current EU policies are viewed as inadequate in incentivizing both new and established players to invest in the battery recycling supply chain, with payables for European nickel-cobalt black mass remaining stable in the low 70% range on an EXW Europe basis.

While there is an increase in battery shredding capacity, major projects like LiCycle and Glencore's Sardinia initiative are still in the pipeline. The economics of recycling lithium iron phosphate (LFP) batteries are particularly unfavorable in Europe, hindered by low supply, high labor and energy costs, and stringent regulations complicating market entry.

On March 5, the European Commission updated its waste classification, designating black mass as hazardous waste to ensure that batteries and their critical raw materials remain within the European economy. This classification aims to enhance control over black mass shipments, promoting a circular economy and retaining critical metals in Europe. However, the existing shortfall in separation capacity -- driven by high operational costs and regulatory hurdles -- may limit the effectiveness of these regulations, resulting in continued reliance on overseas facilities for recycling.

Some industry sources have told Platts that Europe may eventually relax export restrictions, as the region cannot fully utilize all available material due to a smaller electric vehicle industry and the environmental risks associated with storing black mass.

Platts assessed recycled lithium carbonate CIF North Asia at $8,200/mt April 30, flat day over day. Prime battery-grade lithium carbonate CIF North Asia was assessed at $8,700/mt, also steady day over day.

For Ni-Co black mass, tradable levels were reported stable at 71%-72% for battery powder in the week ended April 30.

Platts assessed lithium, cobalt and nickel payables at 72% basis battery-grade lithium carbonate, cobalt sulfate and nickel sulfate, unchanged day over day.