Why Recycling Lithium Is As Crucial As Mining It

Rising Lithium Demand and the EV Boom

With the rise of EVs, the demand for lithium-ion batteries exploded, as did the need for lithium resources. This demand is expected to keep growing exponentially, with only the steepness of this curve in question, depending on the speed of EV adoption.

Source: Statista

In addition, a new source of demand for battery and lithium is emerging, utility-scale batteries to stabilize the grid, as solar and wind energy sources are inherently more intermittent and do not contribute directly to stabilizing the electric grid’s frequency.

This creates a massive demand for lithium, which might be difficult to satisfy in the long run, even if the industry often goes through cycles of overproduction followed by shortages.

For this reason, recycling batteries, especially batteries from EVs, will likely become an important lithium source in the future. Researchers at the University of California have looked into the effect that recycling will have on lithium deposits and which will be mined and when.

They published their findings in Nature Sustainability¹, under the title “Effects of demand and recycling on the when and where of lithium extraction”.

Where Lithium Comes From: Brine, Rock, and Clay Deposits

There are three main sources of usable lithium. The easiest to extract is briny water from deep underground, which makes for most of the so-called lithium triangle (Bolivia, Chile, Argentina).

Another option is rock, usually spodumene minerals. This is most of the resource of lithium in Australia and made the country a key lithium producer globally.

The last is sedimentary clays, which have only now started to be considered as potential resources, like the McDermitt Caldera in Nevada the 3^rd biggest mineral deposit discovery in the past few years. They might however become important for countries like the USA looking to diversify their lithium supply from foreign imports.

So far, recycling has not been considered an economical source of lithium and is mostly being considered to avoid pollution.

However, contrary to mining, recycling could be a lot more flexible supply source. This is because opening a new lithium mine is a very long process, that can take 10 to 15 years to begin production.

Reliable and somewhat stable lithium prices are important to properly manage the energy transition smoothly.

“Governments need to know where lithium will come from and if we’re going to run out. It’s not just about having enough lithium, it’s how fast you can extract it.

Any supply disruption will slow down electric vehicle adoption, reducing mobility access and extending the operation of combustion engine vehicles and their associated carbon emissions.”

Ray B. Krone – Professor of Environmental Engineering at UC Davis.

Recycling batteries is making very quick progress on the technological front, with notably the largest battery producer, CATL, looking to source a lot of its future lithium from its battery recycling division.

Forecasting Lithium Demand Through 2050

How Researchers Modeled Lithium Demand and Recycling Scenarios

The researchers looked at multiple scenarios considering EV adoption and the type of battery used.

High demand scenarios included constant demand for lithium-ion batteries (LIBs) as well as solid-state battery adoption (which would speed up greatly the switch to electric vehicles).

In most of these scenarios, the bulk of demand comes from electric cars, but heavy-duty vehicles and the replacement of lithium-ion batteries of existing EVs played an important role as well.

Source: ResearchGate

They then took into account the existing known resource of lithium, as well as the cost of extraction for each deposit and the business conditions in the corresponding country.

Source: ResearchGate

How Recycling Could Reduce Lithium Mine Openings

The researchers forecast that under the high-demand scenario, as many as 85 new and additional lithium deposits would need to be opened up by 2050.

But this could be dramatically reduced, to as few as 15 new mines, through policies that push the market toward smaller batteries and extensive global recycling.

So determining how battery recycling will play out might be the most important thing investors in lithium producers could do. Much more than forecasting the amount of future production from yet-to-be-built mines.

Timing is everything. Some new mines need to open to create a flow of lithium that can be recycled. Depending on the demand scenario, recycling would make the biggest difference around 2035.

The researchers ultimately showed the result of their model with a 2050 world map of the mines that could be avoided if recycling is done efficiently, and which should be needed due to large demand for lithium-ion batteries.

Source: ResearchGate

 How Policy and Infrastructure Shape Lithium Demand

Public policy and investment in EV infrastructure will also have a large impact. Currently, the trend is toward very strong battery packs in EVs, in order to alleviate “range anxiety” in prospective buyers, especially the drivers who are not necessarily that enthusiastic about EVs.

It means that better charging infrastructures could drastically reduce the need for large battery packs, reducing a lot the corresponding demand for lithium.

Why Lithium Recycling Must Be Prioritized

In commodity investing, the most important factor to determine is often the balance between supply and demand. Usually, it means calculating exactly how much supply could be made available depending on market prices, and an educated guess of future demand.

In the case of lithium, as the industry is still very young and changing quickly, recycling could be another important factor to take into account.

As demonstrated by the University of California researchers, different scenarios lead to a 5x variation in the number of new lithium mines needed. So properly estimating the consequence of recycling on the lithium market should likely be a top priority for most of the industry actors.

Investing in the Lithium Sector

Rio Tinto

Rio Tinto is a giant of the mining industry (the world's second-largest), with a strong presence in iron mining, as well as copper, aluminum, gold, uranium, etc.

Rio Tinto is expanding quickly, notably with the mega iron mine project of Simandou in Guinea and the Oyu Tolgoi copper mine, the largest project in the history of Mongolia.

Rio Tinto is expected to provide 25% of the growth volumes in global copper supply in the next 5 years.

Recently it has made a massive entry into the lithium mining sector, with the acquisition of lithium giant Arcadium Lithium, itself the result of the merger in 2023 of large lithium producers Allkem & Livent, making it the 3rd largest lithium producer in the world.

Source: Arcadium

The merger created a company present at all lithium production and processing steps. Arcadium had expansion plans in place to more than double capacity by the end of 2028 that are now going to be carried by Rio Tinto.

Direct Lithium Extraction (DLE)

Regarding this acquisition, what has been described as “Rio Tinto's real prize” is Arcadium's direct lithium extraction (DLE) technology. Arcadium has actually been working on DLE since 1996, in combination with evaporation pounds, and recently made significant progress in making it commercially viable as a stand-alone extraction method.

Notably, Livent acquired ILiAD Technologies in 2023.

“ILiAD Technology Platform combines a superior lithium selective adsorbent with continuous countercurrent bed processing”

“Livent is the world's foremost practitioner and largest user of DLE-based production processes, and we are thrilled that they have recognized the advantages that ILiAD brings to the future of DLE.

It seems that the long-term expertise of Arcadium with DLE, and the “vast range of lithium laden brines under a wide variety of conditions” of ILiAD were a prime reason for Rio Tinto's decision to acquire Arcadium, on top of its low valuation due to the cyclical nature of lithium markets.

While in the long run, electrochemical lithium extraction might replace adsorbent-based methods, it is also likely that experience in scaled-up DLE will anyway payoff if this becomes the main lithium extraction method in the future.

Lithium Foil

Arcadium also developed LIOVIX, a form of printable lithium foil that could be used to boost battery performances, reduce manufacturing costs, and reduce lithium use.

Source: Arcadium

Rio Tinto’s Role in Green Metals and Battery Innovation

Arcadium's acquisition firmly put Rio Tinto in the camp of mining industry innovators when combined with its tech branch improving copper extraction methods through its venture Nuton.

Nuton's new technology allows for a much higher rate of copper recovery from mined ore.

Rio Tinto's aluminum production is low-carbon, thanks to hydropower being used to refine bauxite into alumina and then aluminum.

Rio Tinto also invested in other lithium projects, recently acquiring the Ricon project in Argentina and the controversial Jadar lithium project in Serbia (potentially the largest lithium project in Europe).

Due to its recent acquisitions and new projects, Rio Tinto should increasingly be seen as still an iron miner at the core, with an increasingly green profile and strong growth in all the metals required by the energy transition, especially copper, low-carbon aluminum, and lithium.

As a result, Rio Tinto is a company that should be able to benefit from the energy transition not only from potentially volatile lithium prices but also from more stable sales of aluminum and copper.

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Study Reference:

^{1. Busch, Y. Chen, P. Ogbonna & A. Kendall. Effects of demand and recycling on the when and where of lithium extraction. Nature Sustainability. (2025). https://doi.org/10.1038/s41893-025-01561-5}