Opening the urban mine

Industry Investment Rating - The report does not explicitly provide an investment rating for the industry [1][2][3] Core Viewpoints - The circular economy, particularly in lithium-ion battery recycling, is essential for the green transition but faces profitability challenges [3] - Global demand for lithium-ion batteries is expected to grow significantly, from 1 TWh in 2023 to 5 TWh by 2030 and 7 TWh by 2035 [4] - Recycling end-of-life lithium-ion batteries presents a significant opportunity to combine sustainability and profitability, though current business models in Europe are not economically viable [6] - The EU Commission estimates that global demand for active battery materials such as lithium, graphite, and nickel will double between 2025 and 2030 [4] - Over three-quarters (77%) of experts agree that recycling end-of-life lithium-ion batteries in Europe is currently not economically viable [6] Industry Overview - Lithium-ion batteries are central to decarbonization, powering electric vehicles (EVs) and renewable energy storage [4] - Battery production relies on metals like lithium, manganese, cobalt, and nickel, which generate significant ESG risks and carbon footprints during mining and processing [4] - The EU Commission forecasts that the global demand for active battery materials will double between 2025 and 2030, with a dramatic increase in material demand after 2030 [4] - The availability of spent batteries for recycling will remain limited in the next decade, with Europe expected to have less than 1 million metric tons of material available for recycling before 2035 [4] Recycling Process and Challenges - The lithium-ion battery recycling process involves three stages: reverse logistics, pre-treatment, and materials recovery [12] - Current recycling business models in Europe are not profitable due to high CAPEX investments, low volumes, immature technology, volatile raw material prices, and scaling difficulties [6] - The biggest obstacle to recycling in Europe is the cost of establishing and running hydrometallurgy facilities, as highlighted by 66% of experts [16] - Battery transportation is a significant challenge due to stringent safety regulations, high costs, and lack of transparency around battery conditions [17] - Site selection and permit acquisition for hydrometallurgical facilities are complex and time-consuming, with varying regulations between countries [19] Regulatory Landscape - Regulations around battery recycling and sourcing rare materials vary worldwide but show an overall trend toward stricter standards [9] - The EU's 2023 Battery Regulation aims to establish a closed-loop battery value chain, with targets for increasing recycling rates of specific materials [9] - In the US, there is no overarching requirement for battery recycling, but initiatives like the Department of Energy's Lithium-Ion Recycling Prize promote recycling practices [10] Future Business Models - By 2030–2035, end-of-life volumes from EVs in Europe are expected to overtake production scrap, enabling new business models where vehicle OEMs or battery manufacturers retain ownership of battery materials [13] - In Asia, large-scale hydrometallurgy facilities have been established, enabling more economical operations and higher prices for black mass compared to Europe [14] Recommendations for Profitability - Adopt a hub-and-spoke model for logistics to reduce transportation costs and improve safety [25] - Innovate in technology and processing to reduce costs and increase profitability [29] - Use machine learning and AI to optimize recycling operations and improve decision-making [31] - Leverage economies of scale to achieve higher profitability, as demonstrated by Asian recyclers [34] Insights for the Industry - Building partnerships across ecosystems is vital for stabilizing supply and demand in the battery recycling industry [36] - Early planning and investment are crucial for gaining a leadership position as recycling volumes increase [37] - Monitoring regulatory changes and potential subsidies can help underpin investment in recycling businesses [37] - AI can provide a competitive advantage by enabling better demand and material price predictions [38]