China opens the door to “black gold” – Is a massive shift in global battery resources imminent?

Recently, China's Ministry of Ecology and Environment, General Administration of Customs, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Commerce, and State Administration for Market Regulation jointly issued the Announcement on Regulating Import Management of Recycled Black Mass Raw Materials for Lithium-ion Batteries and Recycled Steel Feedstock.

Effective 1 August 2025, this marks the complete lifting of import restrictions on lithium-ion battery black mass in China.

In 2014, China issued the Catalog of Prohibited Imports of Solid Wastes, which listed crushed battery materials as prohibited imports due to the presence of toxic chemicals in waste batteries. These materials have remained prohibited ever since.

The change in regulation relating to black mass imports has significant implications for the battery recycling market, both domestically and internationally. How will China’s recycling market reshape?

Short term: Supply-demand easing drives profitability restoration

In the short term, imported black mass from ex-China regions will partially alleviate raw material supply shortages in the domestic recycling market. Currently, China’s domestic recycling capacity operates below 30% utilization. The lifting of import restrictions will activate idle domestic capacity through new overseas black mass supply.

Additionally, China’s recycling industry is in a downturn, with profitability weakened by rising upstream material costs and falling product prices. Compliant black mass imports will enhance domestic recyclers’ bargaining power over raw materials, reducing procurement costs while lowering processing expenses through higher-quality inputs, thereby restoring recyclers’ profits.

Medium-long term: Industrial standardization drives sector integration, amplifying global circular economy influence

In the medium-to-long term, standardized black mass imports will compel technological upgrades in domestic recycling. Enterprises lacking pre-treatment capabilities will be eliminated, consolidating the industry and phasing out low-quality capacity. Concurrently, profits from overseas black mass processing typically exceed domestic margins.

Recyclers’ profit structures will shift from integrated domestic operations to a dual-segment model of “overseas pre-treatment + domestic metallurgy,” while Chinese recyclers progressively establish closed-loop systems spanning both overseas and domestic markets.

The opening of China's black mass import channels will significantly boost trading activity in overseas black mass markets. Given China's current mastery of the most advanced recycling technologies and processing capacity, it will leverage its stringent import standards to export technical benchmarks, thereby weakening the influence of Ex-China processors.

Concurrently, large-scale inflows of black mass into China will enable it to capture pricing power in the global black mass market and consolidate dominance in the circular economy sector.