Picture: SUPPLIED
Picture: SUPPLIED

Munich/London/Melbourne — Battery packs clamber up a conveyor belt before dropping into a flame-proof chamber, where they are crushed into gray metallic mush, a cocktail containing the car fuel of the future.

The facility separates components such as cobalt, nickel, graphite and lithium from waste plastic particles. Factory owner Duesenfeld is bracing for a tidal wave of spent batteries as car makers move beyond combustion engines in huge numbers. Over the next decade, the pile of retired power plants will grow from almost nothing to 1.6-million tonnes annually, according to Bloomberg New Energy Finance (NEF).

The recycling push betrays a dilemma at the centre of the car industry’s green reincarnation: battery-powered cars might not have the carbon footprint of their combustion siblings, but they are still toxic at heart. The power cells contain raw materials mined in politically and environmentally delicate places, such as Bolivia and the Democratic Republic of Congo (DRC), and if estimated growth rates are any guide, demand will eventually outstrip supply.

Battle lines are forming, and China is emerging as a leader in the field. Unlike in the US and Europe — where high transport and energy costs are a burden — recycling vehicle batteries is profitable in China, based on the value of the raw materials alone

“At some point it won’t make sense anymore to dig for raw materials, because enough batteries are available,” said Duesenfeld MD Christian Hanisch in his office in Wendeburg, in the heartland of northern German car production, where Volkswagen (VW) has its headquarters and some of its biggest facilities. “As a car maker, I’d seriously consider safeguarding the raw materials. A deposit system might work.”

There’s another hard economic truth facing recycling companies and vehicle manufacturers alike. The process comes at a cost that’s unlikely to be covered by the value of the extracted materials, which are less precious than the substances retrieved from catalytic converters, for example. That’s set to expose electric cars to an additional cost burden, further widening the profitability gap to conventional vehicles.

The transition to battery power will dramatically increase the thirst for raw materials. Deployment of about 140-million electric vehicles by 2030 will require 3-million tonnes more copper a year, 1.3-millions tonnes more nickel and about 263,000 tonnes more cobalt, according to Glencore, a top producer of all three metals. In the case of cobalt, that surge will dramatically outstrip total current mined production, which stood at 150,000 tonnes in 2018, according to Bloomberg NEF.

It’s such calculations that will make recycling inevitable. Already, battle lines are forming, and China is emerging as a leader in the field. Unlike in the US and Europe — where high transport and energy costs are a burden — recycling vehicle batteries is profitable in China, based on the value of the raw materials alone. That’s nurturing an industry ready for expansion and in a pole position to compete with western efforts.

“In both the US and Europe, we tend to look at recycling as a question of how we should take care of batteries that reach the end of their life,” said Hans Eric Melin, founder of Circular Energy Storage, a London-based consultant. “In China and South Korea they look at it from the other direction; they tend to ask themselves how to supply production of battery materials, and recycling is one way to do that.”

Recycling as an industry

One Chinese player is Ganzhou Highpower Technology, which plans to raise recycling of used-car batteries six-fold next year, part of an ambitious plan by the government to boost recycling power to 1-million tonnes annually by 2030 from about 60,000 tonnes now.

“Recycling has been a very popular topic, and there’s been a lot of companies joining the market,” said Ou Hancheng, GM of Ganzhou Highpower. “The electric vehicle producers already realise the importance of recycling.”

What still needs to percolate through to the industry and consumers is that the end of life, whatever it is, will come at a cost, and that has to be incorporated into the selling price. There’s a fee to be paid
Marc Grynberg, CEO of Umicore

One complicating factor for recycling companies is that prices for cobalt, lithium and nickel have vacillated wildly in recent years, making calculations harder. Cobalt sulphate prices quadrupled in the two years to March 2018 on concern over potential shortage, and have since plunged by about two thirds after supplies flooded the market. Lithium prices have also tumbled after a dramatic surge that saw the battery metal triple in the three years to the end of May 2018.

But a bigger issue is that extracting these materials from spent batteries will come at a cost that car makers and consumers may not have fully realised, said Marc Grynberg, the CEO of Belgian chemicals company Umicore. “What still needs to percolate through to the industry and consumers is that the end of life, whatever it is, will come at a cost, and that has to be incorporated into the selling price. There’s a fee to be paid.”

Umicore already recycles batteries for Tesla  at a plant south of Antwerp. Its approach differs from Duesenfeld’s mechanical removal in that the batteries arrive discharged and stripped of casings and wiring, before being smelted into liquids to be analysed and extracted in a process known as wet chemistry.

Grynberg predicts major investments in recycling, saying that beyond his own company, there’s only been “modest” attention paid so far outside of China to salvaging spent batteries.

German chemicals company BASF, which claims more than a century of expertise recycling materials, also wants to play a bigger role, though the company cautioned that integrating the entire process — from collecting the used batteries to dismantling the cases to onward shipping of the extracted materials — will require a robust local value chain.

“Given the capital-intensive nature of battery recycling, partnering along the value chain is a critical aspect for success,” said Peter Schuhmacher, head of BASF’s catalysts division. “The economies of scale very much depend on the number of batteries coming back into the recycling market.”

For a mass producer such as VW, the pressure is palpable. The world’s biggest car maker is rolling out the industry’s most aggressive electric-model line-up, expecting sales of 22-million battery-powered vehicles over the next 10 years.

“It’s our goal to get to a point where recycling is economical, provided there’s the scale and availability of materials,” the company said. “Electric mobility has significant challenges that can only be resolved with the right partners in the longer term.”

Bloomberg