US burgeoning black mass exporter; domestic battery recycling demand to soar: sources

US refining capacity for black mass – the remains of lithium-ion battery packs after shredding, sorting and some processing – is also expected to double over the next two to four years, according to the US Department of Energy (DOE).

Last year, 6% of globally generated lithium-ion battery scrap was generated by the US, but that percentage is expected to rise to 11% by 2034, according to the latest estimates from Fastmarkets’ research team. In the US, 87,000 tonnes of battery scrap are expected to be available for recycling in 2024, and this tonnage is expected to increase by approximately 488% by 2034.

The US is also estimated to produce approximately 40,000 tonnes of black mass in 2024, which is expected to rise to about 270,000 tonnes, or 13% of total market share, in 2034, per Fastmarkets’ research team.

According to the DOE, as of 2023, the US had enough domestic battery recycling capacity to reclaim only 35,500 short tons of battery materials per year, with more facilities planned in the next two to four years to reclaim an additional 76,000 short tons of material per year.

Nearly 175,000 short tons of material were reclaimed in intermediate processing facilities in 2023, with plans to handle nearly 198,000 additional short tons in the next few years, according to the DOE.

As a result of the widening oversupply in black mass, most market participants expect that a significant volume of US material will continue to be exported over the short and medium term, while a portion of that material may be stored in warehouses until it can be processed domestically.

Currently, many US black mass producers sell their materials on an ex-works basis to either limited domestic consumers, traders or foreign consumers, according to market sources, particularly to Southeast Asian and South Korean markets.

“Most of the material today, be it black mass or be it batteries, [is] being exported to Asia,” and, in addition to the lack of refining capacity, “[it’s] also because they’re offering more profit for these metals,” Alberto Pascual, commercial manager at Nth Cycle, said during the Battery and Critical Metals Recycling Conference in June.

A manufacturing renaissance stemming from governmental focus on recycling and other efforts to secure supply chains for critical battery materials has come in the form of $7 billion worth of funding from the Bipartisan Infrastructure Law (BIL), as well as tax credits from the Inflation Reduction Act (IRA).

But, according to market sources, with the market still developing, the US market cannot yet support a robust domestic trade of this material.

Talk of export restrictions or bans on US black mass are occasionally heard, but most market participants told Fastmarkets they do not believe any will come to fruition anytime soon, if ever.

“The problem that we’re trying to solve here is very simple… and we see this as the elephant in the room, and it’s really that there’s not enough refining capacity in the United States,” Pascual said.

While this refining capability continues to be incentivized and capacity grows, so does market interest in US black mass.

Sources currently describe the market as “opaque,” with refiners needing different compositions of black mass depending on refining capabilities.

However, more homogeny is expected with the expansion of refining capacity and the emergence of different technologies as more popular or successful, sources have said.

Financial issues have also delayed progress of some major Western entrants into the sector while weaker battery metal prices and stronger black mass payables amid stiff competition in Asia have hampered conversion margins for black mass consumers.

US incentivizing growth

The current US administration’s drive to support decarbonization efforts has manifested in hefty industry investment.

US black mass refining has been incentivized by both BIL funding and the IRA, which motivates automakers to use domestically manufactured components for electric vehicle (EV) batteries through the 30D tax credit, which incentivizes the sale of “clean” vehicles.

“There’s a lot of focus being put on this subject right now by the government, and the government is actually showing a lot of good will as wanting to work with the industry to create a sustainable environment, both economically and environmentally for the movement of batteries,” Emil Nusbaum, vice president of strategy, government and regulatory affairs at the Automotive Recyclers Association also said at the Battery and Critical Metals Recycling Conference.

Additionally, since the start of the Biden administration, $173 billion in private-sector investment has been announced across the US clean vehicle and battery supply chain, it was stated in a Treasury Department announcement on May 3.

Joint ventures and memorandums of understanding in recent years have emphasized efforts to “close the loop” between production, recycling and refining to ensure as much material as possible stays within US battery supply chains.

“When you’re trying to compete on a global stage, you’ve got to be competitive… especially when you’re playing catch-up. So, in this case, [the] United States is playing catch-up with China,” Mike O’Kronley, chief executive officer of Ascend Elements said at the same conference.

And in order to do that, “you need some help, especially when you’re going up against very established players that are already at that capacity and capability. And so, if we want that to be in the United States, you need a certain amount of help, and that’s certainly what the [DOE] has done. Not only with us, but a lot of other technologies, a lot of other US innovations,” O’Kronley continued.

Fastmarkets’ commitment to transparency in developing markets

Based on growing demand for transparency across the battery recycling supply chain, and to complement its existing suite of European and Asian Black Mass Payable Indicators, Fastmarkets has launched a raft of US payable indicators effective Wednesday August 7.

Black mass, NCM/NCA, payable indicator, nickel, domestic, exw USA, % payable LME Nickel cash official price
Quality: Nickel and cobalt-rich black mass composed with metal content of 15-25% nickel, 3-13% cobalt, max 2% aluminium, max 2% copper, max 5% fluorine, max 1% iron
Quantity: min 1 tonne
Location: Ex-works United States
Timing: 45 days
Unit: % payable of LME nickel cash price
Payment terms: Letter of credit, current price month
Publication: Weekly, Wednesdays 4-5pm EST
Notes: Total cobalt and nickel content to be 18-38% min/max. Material with impurities above 2% but not exceeding 5% for aluminium and copper may be accepted dependent on liquidity levels and reporter’s discretion

Black mass, NCM/NCA, payable indicator, cobalt, domestic, exw USA, % payable Fastmarkets’ standard-grade cobalt price (low-end)
Quality: Nickel and cobalt-rich black mass composed with metal content of 15-25% nickel, 3-13% cobalt, max 2% aluminium, max 2% copper, max 5% fluorine, max 1% iron
Quantity: min 1 tonne
Location: Ex-works United States
Timing: 45 days
Unit: % payable of Fastmarkets’ standard-grade cobalt price, in whs Rotterdam (low-end)
Payment terms: Letter of credit, current price month
Publication: Weekly, Wednesdays 4-5pm EST
Notes: Total cobalt and nickel content to be 18-38% min/max. Material with impurities above 2% but not exceeding 5% for aluminium and copper may be accepted dependent on liquidity levels and reporter’s discretion

These assessments will form part of Fastmarkets’ Minor Metals Physical, Industry Minerals Physical and Base Metals Physical price packages.

Amy Hinton contributed to the writing of this report.

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