Battery scrap projection for recycling plummets – Circular Energy Storage exec

➤ Circular Energy Storage, a battery life cycle consulting firm, cut its projection of available battery scrap material by 46% for 2030.

➤ Battery production reject rates are falling as quality control improves.

➤ Automation and higher material costs are among drivers of the trend to improve quality control.

Circular Energy Storage Managing Director Hans Melin. Source: Hans Melin

The price of battery metals has been rising so quickly that electric vehicle costs are rising, pressuring demand. New metal production takes years to come online, and experts had expected battery recycling to fill part of the outstanding demand. But those same high costs have forced producers to become more efficient, and the amount of scrap available will be far less than was thought. Battery scrap material contains key energy transition metals such as lithium, nickel and graphite.

London-based Circular Energy Storage, a research and consulting firm focused on lithium-ion battery life cycle management, slashed its projections of how much metal-intensive scrap material from battery production will be available to the recycling sector through the 2020s into 2030. Circular Energy now forecasts 911,655 tonnes of battery production scrap in 2030, down from a previous estimate of about 1.7 million tonnes.

S&P Global Commodity Insights spoke with Hans Melin, Circular Energy's managing director, about what drove the revision. The following conversation has been edited for clarity and length.

S&P Global Commodity Insights: Why did Circular Energy cut its forecast of how much battery production scrap manufacturers will make over the next eight years?

Hans Melin: Not having better data, we previously applied rule-of-thumb scrap rates, typically using between 5%-10%. Then we started to dig deeper into the assumptions and also have discussions with battery manufacturers. From some of them, we did not get really good information. A lot of companies actually don't even have it, and for others, it's classified. But we did get some figures in South Korea and in China, and what we found is the focus on increasing yield and bringing down reject rates is super important. Now reject rates are usually less than 5%, and in some cases they are down to 2%-3%, especially in China.

What is battery production scrap, and how much battery-related recycling material comes from scrap compared to used batteries that, for example, have reached the end of their life?

Scrap waste is generated through actual production, which is obviously unwanted. It's either what we call natural waste, like clippings, or rejects from different parts of the manufacturing process. This can be anything, like cathode or anode material [or other critical mineral-rich battery parts] that don't make it to the next step. For recyclers, right now the mix is almost half and half. We also have a few other categories, such as batteries from research and development, but they produce a very, very small amount of material for recycling compared to the other categories.

What factors are driving lower reject rates?

To us, it makes sense to see this. With greater use of artificial intelligence and automation, battery manufacturers are getting rid of people in the process who are, in some ways, to blame for higher reject rates. You have these big players investing so much in automation and quality control. This really enables them to produce en masse and at a high pace with consistent quality.

Are there broader implications for the growing battery production industry from this trend?

It's a barrier to entry for anyone else. We have five players dominating about 80% of the battery market — and they are big, and they are financially healthy. It will favor them in being more competitive. This is also aligned with something I think is missing in the discussion around all these new battery companies: We should ask new startups to provide evidence about how they are going to get low costs like Chinese companies.

Have surging raw material prices accelerated the drive to lower reject rates?

Yes. You still have customers that are not keen to pay much more for batteries than they did last year. And then battery producers have to pay more for the materials. For every single gram of rejected material, you're losing more money right now because of the high material prices. So yes, it is definitely a driver.

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