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Black mass recycling critical to battery metals supply chain’s development

Cesium and dysprosium. Erbium and europium. Praseodymium and ytterbium. The US government’s critical minerals list likely reads to most like a tongue-twisting roll call of obscure elements critical only to those who created it.

However, according to the US Geological Survey, which updates the list every three years, the 50 minerals on the list are essential to the nation’s economic and national security. And tucked among those minerals difficult to pronounce, let alone spell, are cobalt, lithium and nickel — vital electric battery raw materials and crucial building blocks for the energy transition.

As demand surges for electric vehicles and energy storage, many expect raw material deficits to emerge, making it even more critical to secure sufficient supply going forward.

This is why “black mass” — an intermediate material from processing used batteries and production scrap — will play an integral role in future battery metals supply.

Battery production offcuts or end-of-life batteries are collected, dismantled and shredded to produce black mass, from which critical materials including lithium, nickel and cobalt can be extracted. Those materials can then be reused in the production of new batteries.

Growing market interest in black mass recycling is what drove Platts, part of S&P Global Commodity Insights, to launch in August four new daily DDP US black mass spot price assessments — the first of their kind for the US market. The assessments build on nine daily black mass assessments Platts launched in April for China and Europe, and complement its existing suite of daily battery metals assessments.

S&P Global expects recycled battery materials to make up a rapidly increasing share of the battery raw materials supply chain, particularly as the focus on sustainability and energy transition grows globally.

In addition to acting as a supplement to mined material, black mass utilization helps reduce the battery supply chain’s overall carbon footprint.

While the battery industry will remain heavily reliant on mined supply for the majority of its requirements — particularly for lithium and nickel — until at least 2030, recycled materials could account for 30% of nickel, 27% of lithium, and 40% of cobalt demand between 2020 and 2050, according to S&P Global research. Scrap material from cell manufacturing will be worth some $3 billion annually from 2023, according to S&P Global.

Battery recycling also has the potential to be cheaper than virgin-material equivalents and create supply in countries that do not have sufficient natural resources within their own borders.

Governments globally have honed in on the need to shore up supply, with policies aimed at developing domestic battery recycling ecosystems.

In Europe, the Critical Raw Materials Act mandates that at least 15% of the European Union’s annual consumption must come from recycled origins.

In the US, while not a direct mandate, materials from recycled origins qualify for the EV tax credit under the Inflation Reduction Act.

In Asia, China has implemented policies that encourage closed-loop relationships between battery manufacturers and recyclers, and outline a more regulated structure for the industry, such as creating a whitelist of recyclers and companies that repurpose and batteries to ensure compliance with not only environmental requirements but minimum recovery rates as well.

With nickel-manganese-cobalt chemistries being an important part of the global electrification story, Platts has rolled out assessments for nickel-cobalt containing material in all three key markets.

The assessments reflect the percentage value, or payable, of black mass constituents lithium, cobalt and nickel, based on the minimum quality specifications of each key component. For US assessments, those minimums are 10% nickel, 5% cobalt and 3% lithium. In Asia and Europe, the minimums are 20% nickel, 10% cobalt and 4% lithium.

Ni-Co DDP US, DDP China and EXW Europe theoretical prices are then calculated, based on the payables.

The DDP US and EXW Europe calculated prices are a combination of Platts daily spot market assessments of Ni-Co key component payables, with the underlying Platts or LME pricing basis for lithium, cobalt and nickel, respectively. Both are published in $/mt.

The DDP China calculated price also utilizes Platts daily spot market assessments for the Ni-Co component payables, but combines them with Platts lithium carbonate, cobalt sulfate and nickel sulfate price conversions. It is published in Yuan/mt.

Platts also publishes a separate lithium iron phosphate black mass DDP China assessment reflecting the spot market value of a single percentage point of lithium contained within LFP black mass, in Yuan/mt. Typical lithium contained in China-delivered LFP is 3.8%.

All of the assessments consider market information reported to Platts and published throughout each trading day, including firm bids and offers, transactions and indications of value.

Payables in the US so far have been relatively steady since their August launch. Cobalt and nickel have hovered around 60-65%, while lithium has remained at zero.

Initial feedback regarding the new assessments has been positive, with market participants anticipating they will help bring greater clarity and transparency, help quantify value and improve understanding of a market that currently lacks standardization.

Each of those outcomes — just like the list of minerals maintained by the US government — will be critical in the maturation and development of the nascent black mass market.


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