‘Consumers remain hesitant to pay ‘green’ premium for recycled lithium: ICBR’

EU Battery Regulation requires at least 6% of recycled lithium in batteries from 2031

Recycled lithium carbonate currently at discount to primary

Market participants remain hesitant to pay a premium for lithium salts of recycled origin, Claas Hoffend, AMG Lithium project manager for lithium salts, said during a panel discussion at the International Congress for Battery Recycling (ICBR) in Basel, Switzerland, on Sept. 12.

“The key question is whether the customers – the carmakers – are willing to pay a premium on recycled material and if the recycling capacity is not here by 2031, then what do we do?” Hoffend said. “It’s possible that the regulation will be postponed by some years and regarding my understanding [as to] whether carmakers are willing to pay a premium – I don’t think so.”

The 2023 EU Battery Regulation will require at least 6% of recycled lithium and nickel, 16% cobalt and 85% for lead of recycled lithium in the new battery production from August 2031.

“Lithium recycling competes with the primary lithium production costs and if the [recycled origin] price is similar [to primary origin] then everyone is in a good shape, but I don’t think someone is willing to pay dollars and dollars more,” Hoffend said.

“[Battery] recycling is just kicking in and European recycling capacity is evolving – we don’t have a 100,000 mt LCE [lithium carbonate equivalent] recycling facility now, but we will see some good capacity by the end of this decade,” Hoffend said.

The impurity level of recycled lithium salts is fundamentally different compared with lithium carbonate produced from brine and hard rock, and there needs to be purifications steps, at an added cost, to reach battery grade quality, adding to the challenges for any recycled-origin premium.

Some market participants in the growing European lithium-ion battery recycling market have only just begun to produce recycled lithium carbonate from black mass at commercial quantities, with the majority still at the laboratory and testing scale. Those surveyed by Platts have noted that the quality has varied significantly, from below 90% to 95% Li2CO3, meaning the lithium carbonate is likely to be suitable for industrial rather than battery applications.

“Maybe some political direction will be relaxed or postponed depending on the [current] recycled content in Europe […] but I don’t see that a premium will be paid,” a participant from a large EU carmaker said. “We need to ask ourselves if we would pay the extra money.”

“No one in cell manufacturing will accept inferior quality materials and therefore it’s important that at a certain point in the production, from the refining or pCAM [pre-cathode active material] production or somewhere, you have to mix [recycled lithium with primary] to have a homogenous quality so that there is no difference in primary or secondary material,” another conference participant said.

“I think the answer depends on the incentive scheme because if it’s an obligation to have the [recycled] content it’s a much more motivating factor,” Eric Frederickson, Vice President of Call2Recycle, said. “What you will probably lose eventually is the tax incentive that the consumer gets and there doesn’t seem to be as much receptiveness to pay a premium on a product as there is to reducing the price of the vehicle.”

Platts launched the world’s first daily, spot market recycled lithium carbonate price assessments earlier this year. The recycled lithium carbonate DDP China and CIF North Asia assessments reflect standard battery grade quality at 99.5% Li2CO3.

Platts assessed recycled lithium carbonate CIF North Asia at $10,200/mt Sept. 13, unchanged on the day and on the week. In comparison, Platts battery-grade lithium carbonate CIF North Asia was assessed at $10,500/mt on Sept. 13, showing a premium over recycled origin material.

Recyclers in the more established Asian battery recycling supply chain have been able to produce recycled-origin lithium salts to battery grade level.

Source: S&P Global Inc. United Kingdom, September 2024