Companies in 2022 sought out strategic partnerships after a squeeze in feedstock supply. The mid-2020s are expected to be a period of recycling supply deficit meaning that companies rush to set up shop next to big factories with offtake and supply agreements working in full circularity.

With companies like Redwood Materials setting up in the US ‘battery belt’, the West is forming circular supply chains in a way that is seen in China’s industrial zones. Li-Cycle have opened 4 spoke facilities in 2022 with a combined capacity of 30ktpa, all strategically placed to offtake from local factories. Glencore forecasts a competitive scrap market so partnerships moving forward will be key.

Governmental announcements have stimulated large investments into recycling capacity. The US Inflation Reduction Act (IRA) set out requirements to source 40% of critical battery minerals domestically or within free trade agreements by 2024, increasing to 80% in 2026. This also carried vast investment into projects within the US and sparked a frenzy of investment into the region. Bidens bipartisan Infrastructure Law provided USD$74M investment into 10 projects to advance EV recycling.

The European parliament and council announced provisional battery standards agreements after a period of waiting for an outcome. Outcomes include cobalt containing batteries must use at least 16% recovered cobalt, which is an increase of 2%, and an increase of two percent (4 to 6%) for the amount of lithium and nickel to be recovered. This agreement needs to be agreed and formalised and is expected to be implemented over the coming years, this will stimulate growth in the European region and continue to drive the market for capacity to become operational.

Chinese firms led the pack and held the “lions-share” of capacity in 2022, but this early growth isn’t forecast to carry the same trajectory and a period of lag is expected. Chinese firms GEM, Brunp and Xiongtao (vision) lead the global market by capacity with Sungeel in Hungary leading the way in Europe. Redwood and Li-Cycle represent a new age of recyclers with attractive investment opportunities, backed by large institutional investment, and rapid expansion in North America. Li-Cycle benefitted from Glencore investment showing the commodity trading house’s desire to secure offtake agreements.

Global supply of feedstock is likely to stay at a fairly consistent mix percentage-wise for end of life (EOL) vs production waste, however quantity is expected to rise considerably, due to increased production as well as the waste stream maturing and producing increasing EOL batteries.

Given the price of lithium rallying in 2022 along with the LME nickel crisis and graphite prices rising in 2022, recycling is positioned to be a key industry sector for mediating global prices through offtake agreements and joint ventures. 2023 is forecast to be strong, with expanding capacity growth especially in Europe and North America - investment in these regions has been significant and additional capacity is expected to come on stream in 2023. Hydrometallurgical processing is likely to form a majority of new developments and maintain its large market share. Supply chains are expected to get shorter with recycling facilities becoming more closely linked to factories to capitalize on production wastes.