Will European battery recyclers dethrone Chinese competitors?

Battery recycling in Europe will become ‘widely profitable’ by 2025, new data by Nomura Research Institute (NRI) suggests.

While China leads the sector, Europe is making serious strides forward to catch up. NRI estimates the cost of recycling batteries in Europe in 2020 to be EUR 51 per kilowatt-hour while in China it was around EUR 26/kWh. Revenue generated from the sale of recycled material was EUR 35/kWh in both Europe and China.

Economies of scale

European recyclers face higher costs for several parts of the recycling process, NRI says. Metallurgical processes in the EU are put at EUR 17/kWh whereas lower economies of scale in China put the costs around EUR 11/kWh.

Transportation and dismantling costs in Europe are EUR 5/kWh and EUR 12/kWh, respectively. The higher European costs are attributed to lower economies of scale in transport with smaller volumes of material being recycled and higher labour costs for dismantling batteries. In China, which transports greater volumes of battery scrap and has invested in dismantling technologies, those costs were lower at EUR 2/kWh for both.

Costs will fall

NRI notes that several large projects are being planned for Europe by battery and chemical producers such as Northvolt, BASF and Umicore. Thanks to the advantages of scaling up, it is likely that cost per kWh of recycling batteries in Europe by 2025 should fall to around EUR 33.

Furthermore, lower costs for transportation (down from to EUR 2.50 to EUR 4/kWh) and metallurgical processes (down from EUR 20.70 to EUR 12.50/kWh), are anticipated because of the benefits of scaling up new recycling factories. A reduction in dismantling costs is also assumed, from EUR 12 to EUR 6.50/kWh, because of investment in the relevant technology.

Battery snapshot

NRI points out that the recycling market for lithium-ion batteries exceeded 97 000 tonnes in 2019. Of this, China accounted for 69%, South Korea 19% with the remaining 12% shared between the US, EU and Japan. Most of the recycled content so far has been from lithium cobalt oxide batteries in smartphones, with China is at an advantage because of its strong presence in smartphone production.