Recycling of lithium-ion batteries won’t set off before 2030: Report

The recycling of lithium-ion batteries, used in electric vehicles (EV), is not expected to take off before 2030, which could put more pressure on the mining industry to meet the sudden rise in demand, according to a new report by Wood Mackenzie.

Last year, EVs accounted for 7% of all global passenger car sales and the resources consultancy expects this to rise to 23% by 2030. By 2040, EVs will be responsible for nearly 90% of the demand for lithium-ion batteries, the report stated.

“The story for the mining sector is how quickly it can keep up capacity in pace with demand,” Max Reid, a research analyst and author of the report, told The Northern Miner in an interview.

“This year we are seeing lithium prices … going to monumental amounts … and that’s partially due to the surge in EV sales, which is higher than probably (what) anyone expected, and the lag of the mining sector to keep up,” he said.

With the world aiming to cut its carbon pollution to net-zero by 2050, several countries have introduced green policies and are investing in clean energy. The transition to EVs from vehicles powered by fossil fuels is a trend that has gained significant popularity in the last two years — especially in Europe, North America and China — analysts say.

But studies show that the global mining industry may need to nearly double its annual capital expenditure to meet the demand and prevent bottlenecks to net zero. According to a study published last month by BofA Global Research, a unit of the Bank of America, the global mining sector needs to spend an additional US$72 billion till 2030 to boost its capacity and support decarbonization.

Underneath the surface of this electric future lies a relatively young supply chain struggling to keep up and this could be seen as a ripe environment for recycling, said Reid. But obstacles to recycling EV batteries have kept investors wary.

Currently, EV-packs are complex to disassemble into individual cells and new batteries cost less to produce, which doesn’t encourage battery recycling. In addition, battery manufacturers are leaning towards cheaper materials, compelling recyclers to increase their efficiency to maintain profit, the study stated. In addition, new materials used in batteries require recyclers to regularly update their processes.

The study further stated that the lack of recyclable feedstock will be a major barrier. EVs have an increasingly long lifespan, with some reaching up to 15 years and the recycling sector is already scaling up quite aggressively, which could lead to recycling facilities overshooting feedstock in 2030.

The supply imbalance could hurt independent recyclers in North America and in Europe as recyclers will have to scramble for used EV batteries. China, which has a large re-use and refurbishment sector for portable electronics, would benefit from proximity to the midstream, the study stated.

“Bullish expectations for li-ion recycling may well lead to a rush of new entrants to the space. However, limitations on feedstocks mean that only the large and integrated will likely survive and reap the rewards in later years,” Reid said.