Europe is experiencing a wave of investment in battery recycling capacity as automakers and battery manufacturers seek to offset the anticipated global shortfall in critical metals such as lithium, nickel, cobalt and copper.

With around 50 new battery production plants set to enter production by 2030, many European battery manufacturers are adopting a holistic approach across the entire battery technology chain to ensure they have the materials required to meet an anticipated surge in demand.

In addition to securing offtake agreements and reducing the material intensity of their battery chemistries, many European battery producers and automakers are seeking to cut resource consumption and establish a closed-loop recycling of battery raw materials.

When batteries are manufactured or reach their end of life, production offcuts or used batteries can be collected, dismantled, shredded and processed to produce black mass, from which critical metals including lithium, nickel, cobalt and manganese can be extracted.

The production of black mass has become increasingly important as a supplement to virgin material supply and is critical to strengthening Europe's battery supply chains.

Commissioned in May 2022, the Hydrovolt battery recycling facility, a joint venture between Norway-based aluminum producer Norsk Hydro and Sweden-based battery manufacturer Northvolt, in Fredrikstad, Norway is currently Europe's largest, capable of processing can process 12,000 mt/year of EV battery packs equivalent to around 25,000 electric vehicle batteries.

Hydrovolt said it is considering expanding its European recycling capacity, with a long-term target to recycle approximately 70,000 tons of battery packs by 2025 and 300,000 tons of battery packs by 2030, equivalent to approximately 150,000 EV batteries in 2025 and 500,000 in 2030.

"The metals used in battery production are finite, but by substituting raw materials mined from the Earth with recycled materials, we can not only cut the carbon footprint of batteries but enable the sustainable long-term use of li-ion battery technology," Northvolt Chief Environmental Officer Emma Nehrenheim said.

Europe's other major recycling facilities include Umicore's battery recycling plant in Hoboken, Belgium, capable of processing 7,000 mt/year of lithium-ion batteries and battery production scrap, equivalent to approximately 35,000 electric vehicle batteries. Building upon this capacity, Umicore recently announced plans to construct a 150,000 mt/year battery recycling plant in Europe by 2026.

"This will be the biggest battery recycling plant in Europe and will incorporate proprietary metal extraction technologies developed by Umicore's research and engineering teams," it said.

In addition, Fortum Battery Recycling, a subsidiary of European energy company Fortum, announced on April 27 that it had started commercial operations at its new 3,000 mt/year battery metal recycling facility in Harjavalta, Finland.

Harjavalta is the location of a Norilsk refinery, from where it supplies BASF's gigafactory and the two companies have signed a letter of intent with Fortum to create a battery recycling cluster.

Europe's battery recycling industry is set to expand further with more than a dozen additional projects earmarked for completion before the end of 2026.

Most notably, on May 9 Glencore and Li-Cycle announced plans to build a battery recycling plant in Sardinia, Italy capable of processing approximately 50,000-70,000 mt/year of black mass with commissioning expected to commence around late 2026 or early 2027.

Li-Cycle is developing three additional recycling facilities in Europe as the company seeks to replicate its successful North American model with a strategically located pre-processing spoke network supplying a centralized post-processing hub.

In support of this strategy, the company plans to commission a 30,000 mt/year lithium-ion battery recycling spoke in Germany's Magdeburg region by mid-2023 with a 10,000 mt/year lithium-ion battery recycling facility in Harnes, France due to start operations in 2024.

"Li-Cycle's expansion in Europe aligns with our modular rollout strategy, as we replicate our successful North American model, which mirrors customer demand and commercial contracting," said Li-Cycle co-founder and Executive Chair, Tim Johnston.

In total, the current pipeline of European battery recycling projects suggests approximately 67,000 mt/year of new capacity set to join the market by the end of 2023, equivalent to the processing and recycling of more than 300,000 EV batteries/year.

The accelerating rate of expansion in European battery recycling capacity comes amid supply concerns and soaring demand projections. The global lithium market alone could see a deficit of up to 220,000mt by 2030 even if all projects in development are executed on time, according to forecasts released by S&P Global Market Intelligence in January 2022.

While the black mass market is also growing exponentially it remains unclear exactly how much is going to be open on the free market for trading, although large raw materials traders have already entered in to the trading space.

Platts, part of S&P Global Commodity Insights, launched nine daily Black Mass price assessments on April 17 aimed at bringing greater transparency to pricing of the battery raw materials market.

The initial assessment on the black mass payables for Ni-Co black mass EXW Europe, cobalt payables were assessed at 60% basis European cobalt metal 99.8% on May 16 unchanged from the previous week.

Nickel payables were assessed at 65% basis LME nickel on May 16 unchanged on the week.

The EXW lithium payables were assessed flat at 0% on May 16 and have been at this level since the price was launched on April 17.

Any value for the lithium has been added on to either the cobalt or nickel price and not yet price on its own value. The reason for this is because pyrometallurgical plants do not have the capabilities to recover lithium and therefore it essentially treated as a waste and has no value.

Hydrometallurgical plants have the capabilities to recover the lithium component and therefore black mass sellers charge for its content.

While much of the scrap and end of life batteries in the European market will be high-nickel cathodes much of the investments are focused on the hydrometallurgy methods, so the value of recovering the lithium could be exponential for recyclers.

Amid a looming global deficit for critical raw materials like lithium, cobalt, nickel and copper, the expansion of the black mass market is set to accelerate as battery manufactures seek to strengthening their critical minerals supply and reducing the carbon footprint of their supply chains.