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The adoption of electric vehicles (EVs) and energy storage systems was expected to soar over the next decade, pushing the demand for lithium-ion batteries to increase more than sixfold to 5,419GWh in 2032, from 847 GWh in 2022, according to Julia Harty, Fastmarkets’ energy transition research analyst.
A combination of regulations banning the sale of new internal combustion engines (ICEs) will come into effect, and the prices of EVs are expected to fall, with more charging points being installed to reduce consumers’ “range anxiety” – all of which is expected to drive EV sales growth.
Demand for battery raw materials is expected to follow this increase, with lithium demand, for example, increasing to 2.82 million tonnes of lithium carbonate equivalent (LCE) in 2032, from 456,000 tonnes in 2022, according to Harty.
In response, a recycling sector has started to develop both in the US and in Europe, primarily focused on the lithium, cobalt and nickel markets.
Well-established hydrometallurgy, pyrometallurgy and bioleaching technologies – which recover metals from recycled materials via aqueous solutions, high temperatures and micro-organisms respectively – have been successfully employed in industrial production to recover valuable metals from cathode materials in spent lithium-ion batteries.
The high prices of cathode materials – lithium, cobalt and nickel – in comparison with graphite means that there is currently much greater incentive for the cathode to be recycled.
“Cathode active material [CAM] represents more than 40% of the value of a cell, while active anode materials [AAM] represent around 10% of the total cell price. This means the CAM value is four times higher than AAM,” a spokesperson for Resolution, Orano’s battery recycling project, told Fastmarkets.
France-based Orano is developing a process to extract graphite in the first mechanical pre-treatment phase of recycling process at a project in its home country.
Graphite is the largest single ingredient in lithium-ion batteries and its supply is expected to fall into deficit later this year, which should push up prices, according to Fastmarkets research.
Adoption of EVs is expected to drive up graphite anode consumption in batteries to 2,715,000 tonnes in 2032 from 508,000 tonnes in 2022, according to Fastmarkets research.
This means that increasingly large volumes of graphite will be tied up in used batteries at a time when consumers want to eradicate waste.
“Closed-loop anode recycling is important to reduce waste, potentially lower input costs, provide a domestic source of material, and reduce transportation times to battery manufacturers, among other benefits,” Alexander Allen, director of mining at Nth Cycle told Fastmarkets.
Nth Cycle will produce a low-grade graphite product by the end of the year from its recycling project in the US, which uses an electro-extraction system.
The company has won a grant from the US government to develop domestic nickel and cobalt recycling, and to produce nickel mixed hydroxide precipitate.
More than 99% of the graphite from waste anode battery material can be recovered, according to market participants.
“Black mass [dismantled and processed batteries] typically contains between 30% and 40% graphite, so a 5,000-tonne black mass line produces as much as 2,000 tonnes per year of graphite,” Michael Insulan, commercial vice president of Electra Battery Materials in Canada, told Fastmarkets. “The main challenge to graphite extraction is to minimize the loss of other valuable materials in the extraction process.”
Electra’s hydrometallurgical lithium-ion recycling plant, which started operation in December 2022, will have the capacity to treat 5,000 tonnes per year of black mass. Further modules may be added when demand for recycling capacity increases over the next few years.
With such large volumes of material expected to be available, recyclers are looking to find the best use for graphite.
“The real challenge for us is trying to understand and find the right end-market for the product, which we are still working on,” Allen said. “We generally see good form and structure of the graphite but, because of the residual metal content in the graphite after processing, we do not expect it to be used for batteries.”
One use for this recycled material, which is being investigated, could be in the steelmaking process.
“There is lots of interest in recycled graphite, as a green alternative to [metallurgical] coke,” Insulan said.
Met coke is made from metallurgical coal or coking coal and is used in blast furnaces in steelmaking.
“Other end-uses we are looking at are the anode industry, steelmakers, lubricant or brake-pad makers, and as a reductant,” Insulan said. “The anode market would probably be the highest-value sector.”
Repurposing recycled graphite for the anode market would require additional levels of processing, however.
“Maybe in the future, recycled graphite could be used as part of the anode blend, but it would have to go to anode refiners,” Insulan said. “I suspect recycled graphite would have to go through a natural graphite maker’s processing to respheronise it, to make it back into active material.”
Orano plans to return recycled anode material into the battery raw material supply chain as part of its project.
“We are working on optimizing the recovery of graphite to reintegrate it in the production of new anodes,” a spokesperson for the company said. “Different aspects should be taken into consideration to match the original performance of graphite, such as purity and some physico-chemical characteristics.”
There is growing demand in Europe and the US to increase efficiency and drive down wastage through the use of recycled materials.
“[Original equipment manufacturers] and cell-makers – the industry as a whole really, Electra included – want everything to be recycled so there is no requirement to [put material into] landfill,” Insulan said. “Recycling might also be an avenue for carbon-credit management.”
Some European market participants expect that graphite will ultimately fall into the EU’s Carbon Border Adjustment Mechanism (CBAM).
Battery-grade natural graphite for anode is one of the European Commission’s strategic raw materials, laid out in its Critical Raw Materials Act.
Under voluntary targets within the Act, the EU should have recycling capacity for at least 15% of the annual consumption of strategic raw materials by 2030.
And in the US, the US Inflation Reduction Act (IRA) was designed to develop a battery production chain in North America via a tax credit system, which was implemented in 2022.
But the low relative cost of graphite means that it has not so far drawn the attention of traders in the same way as other battery raw materials.
“Traders are very interested in nickel, cobalt, lithium and copper, but graphite is seldom a conversation topic,” Insulan said. “We have had to reach far and wide to develop a network of potential partners on the graphite side.”
In China – as elsewhere – anode recycling remains in its infancy due to the cost involved, compared with the price of graphite and difficulties in recycling.
“Recycling of graphite anode is feasible technically, but somehow that has not been applied commercially,” a battery manufacturer source in China said. “This could be attributed to the low value and probable chemical change in the recycled products.”
Nevertheless, despite these concerns, some industry participants have discovered ways to recycle spent graphite anode material.
Recovered graphite been used as feedstock for lower-grade anodes in lithium-ion batteries using acid leaching, according to sources. Acid leaching is a process in which impurities such as lithium, aluminium and copper are removed.
Regenerated graphite can have around 99.95% purity, and can then be used as commercial graphite for anode production.
Byt total volumes of recycled graphite remain low in China, with a few small companies in the sector, according to a producer source in the country.
“The major concern lies in the cost structure and yield rate of this recycling business. Slim profit margins, as well as the complex recycling procedure, could stifle growth,” the source said.
Recycled graphite has also re-entered the market as “fake flake” – man-made graphite flake that has been reprocessed from spherical graphite waste.
This material has been mixed with genuine flake graphite and sold as larger flake graphite, such as graphite flake, 94%, +80% mesh (894).
High profits can be achieved with such material because 894 flake sells for a much higher price than smaller flake sizes.
Fastmarkets’ price assessment for graphite flake 94% C, +80 mesh, fob China, was $1,096-1,160 per tonne on March 30, down by 6% from January 5, 2023.
Meanwhile, the price of graphite flake 94% C, -100 mesh, fob China, was $720-760 per tonne on March 30, down by 10.84% from the start of year.
Weaker-than-expected demand and steady supply have weighed on the market.
Increasing supply of large flake graphite from producers outside China, such as Madagascar, may result in reduced demand for dishonestly sold “fake flake”, according to a producer source outside China.
Alternatively, “fake flake” could be sold as a form of synthetic graphite made from waste material with genuine usages.
“If we are aware of what we are buying, and the specifications of the underlying materials are appropriate for our production,” a source from a refractories company said, “it’s reasonable for us to consider it as an option. One needs to minimize cost while maintaining quality.”
More information can be found in Fastmarkets’ quarterly battery recycling and black mass outlook and Fastmarkets long-term graphite forecast.