Rare Metals 'Nodaji' Found in Used Batteries... 264 Trillion Won Market by 2040

[Electric Vehicle Golden Egg Waste Battery]①
Surging Metal Recovery Value... High Market Growth Potential

The value of metals recovered by recycling electric vehicle batteries is soaring. Energy market research firm SNE Research forecasts that the price of ternary batteries NCM811 (nickel 80%, cobalt 10%, manganese 10%) will rise from $23 per 1kWh in 2021 to $68 this year, and the price of ternary batteries NCA (nickel, cobalt, aluminum) will increase from $25 to $71, approximately tripling. LFP (lithium, phosphate, iron) batteries are expected to jump about fourfold from $12 to $45.

Interest in recycling and reusing electric vehicle batteries is also growing due to rising raw material prices. Why are companies entering the battery recycling business, which requires investment costs ranging from hundreds of billions to thousands of billions of Korean won?

First, the high growth potential of the market is cited. SNE Research expects the number of end-of-life electric vehicles worldwide to increase tenfold from 4.11 million units in 2030 to 42.22 million units in 2040. The battery recovery rate is 95%. As the number of end-of-life electric vehicles increases, the waste battery market naturally expands. Accordingly, the waste battery recycling market is projected to grow steeply from $10.8 billion (about 14 trillion KRW) this year to $42.4 billion (about 52 trillion KRW) in 2030, and $208.9 billion (about 264 trillion KRW) in 2040.

Another reason is the increasing instability in the supply of battery raw materials. The market expects the prices of key battery raw materials to skyrocket due to the surge in electric vehicle demand.

SNE Research analyzed that nickel supply will be insufficient starting in 2024, and Norwegian energy market research firm Rystad Energy estimates that lithium carbonate demand will exceed supply by 2026. The necessity to secure raw materials by recycling used batteries is growing. Kim Hyung-deok, director at Sungil Hightech, recently stated at an SNE Research annual seminar, "Recycled raw materials are no different in quality from original raw materials mined from mines."

Battery factory expansions are also a major factor driving the waste battery market. Most defective products (scrap) generated during battery manufacturing can be recycled. As battery cell manufacturers expand production capacity, scrap naturally increases.

Kim Dae-gi, vice president of SNE Research, said, "At least 5-10% of the total volume becomes scrap during battery manufacturing." He added, "More scrap is generated during the ramp-up process of building new factories and increasing production capacity. For example, LG Chem took about two years to establish and ramp up its plant line in Poland."

Module inspection preparation area inside Jeju Electric Vehicle Battery Industrialization Center
Photo by Choi Seoyoon

Automakers are also in urgent need of battery recycling and reuse. Vice President Kim said, "When the full-fledged electric vehicle era arrives, batteries will need to be replaced for any reason, but replacements are unlikely to be made with new products." He added, "As the number of electric vehicles increases, the rate of battery reuse will also grow."

Governments around the world continuously introduce favorable systems and policies for the battery recycling industry, which also attracts companies to this market. These include the EU Battery Regulation, Critical Raw Materials Act (CRMA), Extended Producer Responsibility (EPR), and the Inflation Reduction Act (IRA).

The EU was the first in the world to push for legislation on sustainable batteries, strengthening legal binding power by changing the form from a 'directive' to a 'regulation.' This law mandates the use of raw materials extracted from waste batteries when manufacturing batteries. The proportion of recycled raw materials will increase from 12% cobalt, 4% lithium, and 4% nickel in 2030 to 20% cobalt, 10% lithium, and 12% nickel in 2035.

Electric Vehicle Battery Pack of Ultium Cells, a Joint Venture between LG Energy Solution and GM [Photo by LG Energy Solution]

The United States offers tax benefits for using recycled raw materials produced domestically. Our government announced the CE9 (Circular Economy 9) project last month, aiming to realize a circular economy in nine major industries including batteries and petrochemicals. Starting in 2024, the Circular Economy Society Transition Promotion Act will be enforced to encourage the use of 'circular raw materials' that are recycled and reused.

Battery recycling and reuse may seem similar but follow different processes. When an electric vehicle is scrapped, batteries are first tested to separate those that can be used from those that cannot. Batteries that have deteriorated and cannot be reused are sent to recycling companies. At this stage, the responsibility for recycling lies with the manufacturer, either the complete vehicle manufacturer or the cell manufacturer. Batteries that can be reused are transferred to battery reuse companies. In Europe, if the reused batteries reach the end of their second life, the reuse company that refurbished them once again assumes responsibility under EPR.

This content was produced with the assistance of AI translation services.