The metals market is evolving,especially with the expected surge in lithium battery production.
The Institute of Scrap and Recycling Industries (ISRI) recently shared that more than 70 percent of the steel manufactured in the U.S. is “greensteel,” which is made from recycled material. In 2022, U.S. steel mills consumed approximately 56.6 million metric tons of recycled iron and steel in order to produce 82 million metric tons of steel. In addition, recycled iron and steel exports (excluding stainless and alloy steel) declined 3.9 percent by quantity to 16.0 million metric tons and were down 0.2 percent in dollar terms to $6.86 billion. Recycled base metal exports (including Cu, Al, Ni, Zn, Pb, and Sn) rose 2.6 percent by quantity to 3.2 million metric tons and increased 9.1 percent by value to $9.5 billion. What do these numbers indicate? Quite simply, that the recycled metals market is constantly in flux.
According to Steve Cotton, cheif executive officer at Aqua Metals, the metals market is rapidly evolving, especially with the expected surge in lithium battery production globally. The U.S. aims to expand capacity fivefold by 2030, bringing more than one terawatt hour of new battery manufacturing capacity online.
“However, current prices for critical metals like lithium, cobalt and nickel do not fully reflect the expected increase in demand from this expansion as of yet,” Cotton said. “Recycling, particularly for lithium batteries, is still in its early stages in the West, with existing facilities primarily relying on pyrometallurgy and hydrometallurgy methods. These traditional recycling processes generate considerable waste and pollution, a far cry from the sustainable practices the industry needs for a resilient domestic supply chain.”
Aqua Metals is positioned to change this landscape with the upcoming launch of its Sierra ARC facility, which will be the first in North America to provide a truly sustainable recycling solution for lithium batteries. By utilizing a less polluting, more efficient recycling process powered by electricity, the company intends to produce battery-grade metals without the environmental downsides of current recycling methods. Aqua Metals’ approach will address a gap in the recycling market by offering a cleaner alternative as the demand for critical metals grows.
“The recycling of critical minerals such as lithium, cobalt and nickel has a minimal impact on the metals industry due to the low rates of recycling globally,” Cotton said. “However, as the industry shifts toward increasing the rate of recycled content, we anticipate significant positive changes. Recycling these materials will lead to a substantial reduction in emissions compared to mining. The process of mining not only produces a greater volume of waste and carbon pollution, it is also time-intensive and it can take seven to 10 years to establish a new mine for resources like lithium and nickel.”
In contrast, Cotton said setting up new recycling facilities can be achieved within one to two years, making recycling a more immediate solution to supply chain challenges.
“This rapid deployment capability positions recycling as a primary source of domestically produced critical minerals in the near term, contributing to the U.S. goals for a domestic battery economy and enhancing supply chain resilience,” Cotton said. “As recycling rates increase, we will see an expansion of a domestic supply chain for these materials, decreasing our reliance on mined resources and fostering a more sustainable metals industry overall. This shift not only aligns with environmental goals but also with economic and strategic objectives, offering a cleaner, faster, and more efficient way to meet the growing demand for critical minerals in technology and renewable energy sectors.”
Morgan Kerrissey, president of Garfield Refining, said that demand for platinum group metals (PGMs) has fallen off substantially due to do weak industrial and automotive sectors. However, questions around electric vehicle adoption, China’s fragile economy, and a persistent high rate environment has put a lot of downward price pressure on PGMs and made things much harder for recyclers of platinum and palladium.
Historically, as Kerrissey explained, price run-ups drive growth in the precious metals recycling market. Favorable prices drive metal into the recycling market, which then encourages recyclers to expand sales teams and CapEx investment.
“Media attention during price runs can amplify the narrative, which tempts new entrants into the recycling space,” Kerrissey said. For example, skyrocketing PGM prices in 2022 led to significant investment and buildout in auto catalyst refining. “Since then, PGM prices have fallen hard, making operation much more difficult for PGM recyclers. Moreover, global demand for electric cars, particularly in China, has further depressed the PGM outlook,” he said.
Poised For Growth
There is indication that the metals recycling market is on the brink of substantial expansion, driven by the urgent need for an increased supply of critical minerals essential for the clean energy transition. In fact, according to ISRI, “recycled ferrous metal consumption is projected to rise in the coming years amid significant EAF capacity expansion plans in the U.S. and abroad”. According to data from the U.S. Geological Survey2 (USGS) and ISRI estimates, “the United States recovered nearly 9 million metric tons of nonferrous metals in 2022.”
As Cotton pointed out, this growth is underpinned by the recognition that relying only on mining to meet the burgeoning demand for materials like lithium, cobalt, and nickel is neither sustainable nor efficient.
“We’d just be trading endlessly digging up oil for endlessly digging up metals. Instead, it is essential to fulfilling the promise of the clean energy economy that we recycle these materials, which not only reduces the environmental footprint but also shortens the supply chain from years to potentially just months,” Cotton said.
Sustainable recycling methods, in particular, also are poised for rapid growth. According to Cotton, traditional recycling techniques, such as pyrometallurgy and hydrometallurgy, are becoming less favorable due to their high environmental costs, including significant carbon emissions and waste production. In contrast, newer, more sustainable recycling methods are gaining traction, buoyed by regulatory incentives and market pressures to minimize environmental impact.
“These methods promise not only to reduce emissions and waste but also to enhance supply chain resilience by providing a domestic source of critical minerals,” Cotton said. “This shift towards sustainable recycling is essential not just for environmental reasons but also for economic and strategic ones. It aligns with global efforts to combat climate change and positions the recycling sector as a critical player in building a cleaner, more sustainable economy. As such, the metals recycling market is not just poised for growth; it is at the forefront of the transition to a more sustainable and resilient clean energy economy.”
The Biggest Drivers
The electric vehicle (EV) industry is currently the most significant driver of demand for recycled metals, particularly for lithium, cobalt and nickel, which are critical for lithium-ion batteries. As Cotton explained, this surge in demand extends beyond the automotive sector, influencing the production of a wide range of technologies, from smartphones and portable electronics to electric power tools and energy storage solutions. The push for advanced battery technologies in these areas underscores the critical role of recycling in meeting the raw material needs of these industries.
“Government incentives and regulatory requirements for domestic and recycled content are significantly shaping the landscape. In the U.S. and globally, policies are being crafted to encourage the use of recycled materials in manufacturing processes, particularly for EV batteries,” Cotton said. “These initiatives aim to reduce dependency on newly mined materials, decrease environmental impact, and bolster domestic supply chains for critical minerals.” As these regulations become more stringent, Cotton said the certainty they provide is spurring investment in the metals recycling industry. Automakers and technology companies are increasingly motivated to incorporate recycled metals into their products to comply with these standards and to appeal to environmentally conscious consumers.
“This trend is expected to continue, if not accelerate, in the future, ensuring that industries reliant on advanced battery technologies remain at the forefront of the demand for recycled metals,” Cotton said. “This regulatory and market environment creates a robust demand for recycled metals, positioning the recycling industry for sustained growth as it plays a pivotal role in the global transition to a cleaner, more sustainable economy.”
Kerrissey further added that one of the biggest black-eyes in metal recycling comes from recyclers who prioritize growth at the expense of legal and regulatory compliance. He’s seen big disruptions when recyclers accept material from questionable origins, prompting legal and regulatory crackdowns.
“When precious metal prices are high, new and inexperienced entrants to the recycling industry often, unwittingly, become bad actors,” Kerrissey said. “This has been a big issue in PGM markets and autocat recycling over the past few years. The automotive industry has an outsized impact on PGM prices, and it will continue to hold global prices down until there is more certainty around electric vehicle adoption, Chinese consumers, and interest rates in the US.”