Right now, depleted EV batteries rarely get reused. Instead, an infrastructure for recycling lithium-ion batteries is scaling up with the help of IFC financing. That industry is in its infancy, trying to master the delicate and potentially dangerous task of harvesting scarce and expensive minerals from used batteries so that they don’t end up in landfills. It’s a tricky business. Puncture a battery and it can release toxic fumes, short circuit or even explode.
Complicating matters, EV makers use different battery designs with different mineral and chemical configurations. There is no single-stream recycling solution. Tesla, for example, uses lithium-nickel-cobalt-aluminum batteries fused together with polyurethane cement to power a vehicle for hundreds of thousands of emission-free miles over a lifetime, but Nissan uses lithium-nickel-manganese-cobalt batteries. They don’t mix easily.
Besides the recycling dilemma, the raw material deposits for lithium batteries are disproportionately concentrated in emerging economies where minerals are extracted and processed in conditions that are often hazardous to both workers and the environment. About 70 percent of cobalt, for example, is mined in the Democratic Republic of Congo.
Anticipating the explosive growth of the global EV market and the imperative of sustainably managing waste, IFC is investing in the expansion of recycling capacity and exploring circular solutions. Global Battery Alliance estimates that 54 percent of end-of-life batteries could be recycled by 2030, returning seven percent of the raw materials for new battery production. To achieve those levels, though, 25 times more recycling capacity would need to come on line in the next nine years.
“We are driving a systemic solution that includes recovering used EV batteries that can be given a second life and optimizing the recovery of EV batteries for high quality recycling, therefore reducing demand for raw materials,” said the Alliance’s Mathy Stanislaus, who will be a moderator at IFC’s 2021 Manufacturing Conference. “ A key strategy is to establish a data mechanism – referred to as a battery passport – to enable circularity and promoting design-for-disassembly, which would cut back-end costs of recovering and recycling.”
This year, IFC proposed a $76 million investment in the Chinese recycler Jingmen GEM. It would recycle 100,000 EV lithium-ion batteries each year and use the recycle materials into assembly of up to 100,000 new batteries.
“Anything in the process that lends itself to the circular economy is part of our strategy,” said Ramesh Ramanathan, who heads IFC’s Asia and Pacific manufacturing operations, emphasizing that “mining is among the weakest links in the battery production process, and therefore we are working with the leading producers of raw materials to make sure that there is proper governance, labor practices, and environmental oversights in place to process mined and recycled minerals that go into batteries sustainably.”
The transformation of the battery value chain, predicts the Global Battery Alliance, will have a lasting impact on many country’s economy, creating as many as 10 million new jobs by 2030, half of which will be in emerging markets.
“The volumes in the EV market are going to be huge,” said Arvind Srinivasan, principal investment officer at IFC. “It is imperative to develop the ability to efficiently reprocess batteries, capture the key materials, mitigate the toxic waste that is left behind, and make it cost advantageous for manufacturers to use recycled materials to produce new batteries.”