Sustainability
Lithium Recycling vs. Policy: What’s Blocking Scale-Up?
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Sourcing Lithium: Mining vs. Recycling (What Scales Faster?)
With the trend of electrification, lithium has quickly become an important global commodity, almost entirely driven by EV adoption.
Source: Statista
While other battery chemistries like sodium-ion are being considered for mass production, lithium is still the king of battery chemicals, thanks to its exceptional electrical properties.
So over the last few years, the demand for lithium has been constantly exploding, almost quadrupling between 2020 and 2025.
For now, most of the lithium has been produced from concentrated deposits, either from brines (mineral-rich waters) or mineral deposits called spodumene.
A new source of lithium is likely to be the recycling of old batteries. But this will require developing the appropriate technological base, building the appropriate infrastructure, and a solid legal & regulatory framework.
How lithium recycling will impact lithium production in the future has recently been discussed in detail by researchers at the Australian Edith Cowan University and University of Western Australia, in a paper1 published in the Journal of Environmental Management under the title “A comprehensive review on the recovery of lithium from lithium-ion batteries and spodumene”.
Lithium Sources
From Brines & Spodumene to Battery-Grade Lithium
In the immediate future, the largest increase in lithium production is expected to come from Australia and its rich resources of spodumene. In parallel, extraction from brines, mostly in Chile and Argentina, and partially in China, is also growing, but at a slower pace.
As batteries age, they are increasingly becoming a large source of easily available above-ground lithium, especially as most EV batteries are going to be retired as soon as they decline to 70-80% of their initial maximum charge.
In 2023, global battery manufacturing reached ~2.5 TWh; the capacity added in 2023 was over 25% higher than in 2022. In parallel, lithium demand rose by ~30%.
In comparison, global recycling capacity surpassed 300 GWh per year in 2023, with over 80 % of this capacity located in China. In comparison, Europe and the United States each account for less than 2 % of global recycling capacity. So the current recycling capacity covers only 12% of the current battery production, which is also still more than doubling every 2-3 years.
EV Battery Waste: Scale, Risks & Fire Hazards
From 2021 to 2030, an estimated 12.85 million tons of EV lithium-ion batteries will retire globally, according to Greenpeace. For China, multiple industry forecasts point to ~3–3.5 million tons by 2030, underscoring the urgency of large-scale collection and recycling.
This could cause significant pollution and environmental risks, as lithium batteries contain a complex mix of chemicals, including heavy metals. So recycling is not only a question of reducing the impact of lithium production, but also avoiding other types of pollution as well.
Unrecycled batteries can also cause landfill fires, which, combined with landfills’ methane production, can have catastrophic consequences.
Surface and underground fires can cause the production of toxic gases like dioxins, furans, volatile organic compounds (VOCs), polychlorinated biphenyls, organochlorine pesticides (Nair et al., 2019/01), polycyclic aromatic hydrocarbons (PAHs), carbon monoxide, sulfur dioxide, and hydrogen sulphide (IEAa).
Battery Recycling: Hydromet vs. Pyromet vs. Direct Recovery
There are currently three main methods for recycling spent lithium batteries: pyrometallurgy, hydrometallurgy, and direct recovery.
Source: ResearchGate
Overall, these methods are only a little less energy-intensive than the production of lithium from raw natural resources, but greatly reduce the rest of the environmental impact.
For example, recycling lithium batteries reduces CO2 emissions, greatly reduces SO2 (sulphur) emissions, and can reduce water consumption by more than half in the case of pyrometallurgical methods.
Both pyrometallurgy and hydrometallurgy use so-called “black mass”, or crushed battery containing a complex mix of metals and chemicals.
Of these methods, pyrometallurgy is the most polluting in terms of unwanted toxic gases. In contrast, hydrometallurgy is less toxic, but requires more water resources (but still a lot less than raw lithium ores).
Both types of recycling take several steps, each producing its own type of pollution that needs to be dealt with.
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| Method | What it does | Pros | Cons | Best for |
|---|---|---|---|---|
| Hydrometallurgy | Leaches metals from black mass using aqueous chemistry | High recovery; lower air pollutants vs pyro; scalable to many chemistries | Higher water use; reagent management needed | NMC/NCA, mixed-chemistry streams |
| Pyrometallurgy | Smelts black mass to alloy; slags other materials | Robust to feed variability; fast throughput | Higher energy and air emissions; graphite/lithium losses without extra steps | High-cobalt streams (legacy phones/LCO), pre-processing |
| Direct (cathode to cathode) | Restores cathode microstructure for reuse | Potentially lowest energy/chemical use; preserves value | Chemistry-specific; supply chain integration needed | Standardized EV chemistries with OEM partnerships |
Regulatory Gaps Holding Back Lithium Recycling
Currently, most batteries are not recycled, in part due to a lack of capacity, in part due to insufficient regulations.
A stricter framework mandating the collection and proper recycling of the existing batteries is required. This will not only boost the collection of potentially harmful waste but also provide the industry with a predictable volume of materials, helping size the recycling infrastructure correctly.
The scientists looked at the cost breakdown of recycling, and discovered that collection, transport, battery disassembly, and pretreatment (crushing or melting) represent a large portion of total costs.
As a result, an optimization of these processes through adequate policy, centralized waste collection, and optimization of recycling sites could greatly increase the profitability of lithium battery recycling. And while better technology can reduce cost for the other steps, these early costs are more of a policy issue.
Due to its lower energy consumption and pollution, hydrometallurgy should be encouraged by policymakers, and sites chosen should be ideally both energy and water-rich to not strain local resources.
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| Policy element | 2031 (min. recycled content) | 2036 (min. recycled content) | Material recovery targets (by 2027 / 2031) | Notes |
|---|---|---|---|---|
| Cobalt | 16% | 26% | 90% / 95% | Industrial/EV/SLI batteries in scope |
| Lithium | 6% | 12% | 50% / 80% | Recovery targets apply to recycling plants |
| Nickel | 6% | 15% | 90% / 95% | EU Regulation (EU) 2023/1542 |
| Lead | 85% | 85% | — | Lead thresholds remain constant |
The research also discovered that the type of battery recycled greatly affected the profitability of recycling.
“The revenue generated from recycling LCO (Lithium Cobalt Oxide) batteries was 7 times greater than that of LFP (Lithium Ferrum Phosphate) batteries and 10 times greater than that of LMO (Lithium Manganese Oxide) batteries.”
As LFP batteries are becoming more common, in a bid to reduce costs and dependency on cobalt supply from Congo, this should be factored into policies regarding battery recycling.
Bottom Line: Policy Will Decide Recycling’s Pace
Lithium recycling technology is now becoming more mature, with hydrometallurgy coming out as a clear winner against pyrometallurgy when taking into account air pollution (toxic gases) and energy consumption.
However, recyclers are facing a few issues that they are not going to be able to solve by themselves, and instead require a quick move by legislators.
The first step is to organize a much more efficient collection of used batteries, which might require a strong obligation of battery and EV manufacturers to keep track and prove the recovery of the products they previously sold to the public.
In that respect, the plans by the EU stipulating that by 2031 all batteries must contain 6% recycled lithium material and up to 12% by 2036 are probably not enough.
The second step will be to properly encourage the adoption of hydrometallurgy in recycling facilities and offer the proper incentives in terms of environmental controls.
Lastly, building recycling facilities is a very capital-intensive activity, and the public sector could provide grants, subsidies, and low-interest loans to speed up construction. As global recycling capacity is already lagging much behind current battery production volumes, which are also exploding, quick actions are required.
Western legislators in particular should pay attention to the fact that their countries are already severely lagging behind China in recycling, which could, in the long term, lock inside China a major new source of battery metals, as well as many new green energy jobs.
Illustrative of this trend, the battery giant CATL (Contemporary Amperex Technology Co., Limited – 3750.HK) is already envisioning that 50% of its new batteries will use no mined minerals within 20 years, and only because it expects demand to grow quicker than the supply of older batteries.
CATL is also building its own battery collection network, Brunp Recycling, with already 240+ collection depots, a 99.6% recovery rate of nickel, cobalt, and manganese, and 10,000+ employees.
(You can read more about CATL in our dedicated report about the company)
Investing in Lithium Production & Recycling
Albemarle
(ALB )
Albemarle is one of the largest lithium producers in the world, only rivaled by only outmatched by one of the world’s mining companies, Rio Tinto (RIO ), fellow lithium triangle producer SQM (SQM ), and Chinese Ganfeng Lithium (GNENY).
Albemarle has mining operations in South America, Australia, and the USA, as well as refineries in the USA, China, and Germany.
Source: Albemarle
The raw material is then shipped to either China (hard rock sources) or to La Negra, Chile (brines).
Source: Albemarle
Historically focused on lithium mining, Albemarle is also making inroads into recycling. Many of the steps used in recycling are identical or similar to the ones used in refining the raw ore, giving a valuable expertise to Albemarle.
“For us in the long term, (black mass) will probably be another resource.
Typically, the black mass that comes out of recycling is very similar to the concentrate produced at our conversion assets. So I think it’s an opportunity for us.”
Meredith Bandy – Vice president of investor relations and sustainability at Albemarle
Albemarle aims to build a lithium processing facility in the US Southeast later this decade to process and recycle lithium.
This will also be an important move for Albemarle to not be left out of a new source of lithium that could compete with its current production from brine and spodumene.
With strong liquidity and a debt held at a low fixed rate, Albemarle is also well positioned to endure the context of low lithium prices of the last few years, increasing its market share against smaller, less capitalized competitors.
(You can read more about Albemarle’s history and business in our report dedicated to the company. A complete analysis of the lithium market prospect can also be found in “Investing In Lithium: The Core Metal For A Green Future”)
Study Referenced
1. Asad Ali, Sadia Afrin, Abdul Hannan Asif, Yasir Arafat, Muhammad Rizwan Azhar. A comprehensive review on the recovery of lithium from lithium-ion batteries and spodumene. Journal of Environmental Management. Volume 391, September 2025, 126512.
