Opportunities in Lithium-ion Battery Recycling Industry
The lithium-ion battery recycling market is expected to grow significantly from 2019 to 2030. Market growth is expected to be driven by increased demand for EDVs, smart devices, and other consumer electronic gadgets, stringent government regulations, depletion of earth metals, and rising demand for recycling products and materials. Factors such as subsidies to encourage battery recycling and declining prices of lithium-ion batteries are expected to lead to increased adoption in new applications, which is expected to offer significant opportunities for recycling after end-of-life, leading to market growth. Download PDF Brochure at https://www.marketsandmarkets.com/pdfdownloadNew.asp?id=153488928 Battery recycling is mandatory in North America and Europe. Grants and subsidies are available for battery recycling businesses through development grant programs in some countries in Europe and North America. For instance, in the US, Florida has special project grant funding for which recycling initiatives are eligible; and Texas offers regional solid waste grants for recycling efforts through public-private partnerships. However, such grants and subsidies that make business ventures in this field economically viable are not provided to market players in all regions. In the coming years, provisions to provide grants and subsidies in other areas are expected to offer opportunities to battery recyclers. 1.1 DECLINE IN PRICE OF LITHIUM-ION BATTERY PACK The prices of lithium-ion batteries have been a significant hurdle in acceptance since their introduction in the 1990s. A state-of-the-art lithium-ion battery comprises many components provided at subsidized costs. The primary part of any lithium-ion battery is the cell, which accounts for almost 50% of its price, while the rest is electronics, assembly, and packaging. However, recent developments and claims made by lithium-ion battery manufacturing companies and automobile companies suggest that the prices of these batteries are expected to decline significantly. Several battery manufacturers, including Tesla Motors Inc. (US), have undertaken developments such as the inception of the Gigafactory-1, which includes the increased production of lithium-ion batteries in 2018 compared to 2013. This is expected to help reduce the prices of lithium-ion batteries. Source: BloombergNEF Developments such as large-scale manufacturing, lower component prices, and the adoption of technologies to boost battery capacity are factors leading to decreasing prices. The decreasing costs of lithium-ion batteries are expected to lead to the growth of the renewable energy storage market and other grid storage markets. These markets are expected to prefer lithium-ion batteries over any other rechargeable batteries, hence increasing their market share, which is expected to increase the demand for recycling spent lithium-based batteries. 1.2 Geographically concentrated sources of lithium and cobalt Although there are sufficient lithium resources, almost 70% of these are concentrated in Argentina, Chile, and Bolivia, and the same is true for cobalt, of which 60% resources are in Congo. Thus, there is a lack of accessibility to raw materials for other countries. In addition, geopolitical tensions between countries and government instabilities are expected to affect the supply of these raw materials and battery prices in the market. This provides an opportunity for recyclers to address the deficit supply gap and fulfill the demand through recycled materials, including expensive metals like nickel and cobalt. So far, NiMH and NiCd batteries have constituted the majority of recycled batteries because of their use in hybrid vehicles. However, given the growing EV sales, the stock composition is changing, and LIBs will soon overtake their predecessors. Yet this observation raises some questions. Their different chemical composition will be a crucial element in their recyclability. Currently, and considering the recent tendencies of metal prices, recycling a battery without cobalt or nickel, like an LMO (lithium-magnesium-oxide), will be far less profitable. Furthermore, the different chemical compositions are sources of incidents and involve additional processes, especially hydrometallurgy, increasing costs. Finally, the composition of a battery leads to other uses directly linked to their recycling. Indeed, electronic applications, which still represent most LIBs in circulation, are less easily collected and recycled. In China, it has been estimated that less than 40-45% of the materials contained in a battery can be recycled given the current organization of the battery life cycle, meaning that 70% of the nickel, 67% of the cobalt, 77% of the lithium and 95% of graphite were lost in 2016. Source: IEA, Avicenne Energy, and MarketsandMarkets Globally, the ratio of recycled batteries to end-of-life batteries varied from 44% in 2017 to 51% in 2020. Therefore, there is a massive gap between end-of-life batteries w.r.t the recycled batteries. This gap could only be bridged with better recycling infrastructure and collection processes. 1.3 LONG TERM CHALLENGES TO THE RECYCLING BUSINESS The profitability of battery recycling has been closely linked to the prices of cobalt, and a certain extent, to the situation of the nickel and copper markets. For example, elements contained in LMO batteries (without cobalt) were USD 860 per ton, whereas materials contained in LCO batteries were valued at $8,900 per ton in 2014. But prices of cobalt tend to be volatile. In April 2018, a ton of cobalt sold for about USD 95,000, but only for USD 24,000 the following year. By mid-2018, prices had increased enormously due to uncertainties regarding the political situation of the Democratic Republic of Congo (DRC) but also on account of the growing consumption of battery materials which generated a disruption of the market structure and some production bottlenecks linked to both mining and refining production capacities. Source: IEA, Avicenne Energy, and MarketsandMarkets The volatility of cobalt prices has prompted battery manufacturers to use less of it in cathodes. The best example is the NMC 5-3-2 or 6-2-2, which will switch to 8-1-1 and less, if possible, in the next few years. But if cobalt constitutes the incentive for the industry to recycle LIBs, putting less cobalt into cathodes could endanger the profitability of the whole recycling chain. While 70% of global nickel production is used for stainless steel, only 3% is used for the manufacturing of batteries. However, this segment is estimated to grow strongly in the coming years. Due to the increasing use of nickel, market tensions may increase due to the lack of production capacities for nickel sulfates (Nickel Class I), a key component of batteries. From this perspective, closed-loop recycling of nickel should gain in value, eventually compensating for the lower recovery of cobalt. Lithium is the least recycled of the three metals (less than 1% as cobalt and nickel have recycling rates of 16% and 32%, respectively. Current prices are too low to make it profitable, and lithium reserves are large and located in relatively stable countries, which eventually limits the price formation scenario due to political factors. The more significant concern for recyclers is that if manufacturers continue to optimize LFP batteries, the share for NMC batteries will decline rapidly. In that case, it will pose a threat to the profitability of recyclers in the long term.