In the battery industry, the business of "core mineral recycling" is in full swing. Core mineral recycling refers to recovering core minerals such as lithium, cobalt, and rare earths from waste resources like spent batteries, waste electronics, and waste permanent magnets, and resupplying them as industrial raw materials. Profitability can suffer if prices for core minerals plunge, but the business is expected to play an important role if mineral prices rise again or if China moves to restrict rare earth exports.
On the 15th, according to the battery industry, SK Innovation, which has SK On as a subsidiary, said it recently published lithium iron phosphate (LFP) battery recycling technology in an international chemical engineering journal.
Core minerals such as rare earths are essential materials not only for the energy transition but also for aerospace, defense, and advanced industries. Core minerals pose geopolitical risks because reserves and refining capacity are concentrated in certain countries, including China. Countries are responding by diversifying supply chains and stockpiling minerals. In particular, from Korea's perspective as a "resource-poor nation," recycling is cited as one of the most promising ways to independently address resource shortages.
SK On signed a memorandum of understanding (MOU) with EcoPro in Aug. to build a battery circular ecosystem. SK On plans to supply EcoPro with high-purity black powder made from scrap (defective products) generated at its U.S. manufacturing subsidiary, SK Battery America. Black powder is a black powder produced by crushing secondary battery scrap and spent batteries. It contains lithium, nickel, cobalt, and manganese. EcoPro plans to use the black powder to make cathode materials and sell them back to SK Battery America.
LG Energy Solution is partnering with Japan's Toyota Tsusho to establish a battery recycling joint venture in the United States called GMBI (Green Metals Battery Innovations, LLC). GMBI is a specialized plant that crushes and pulverizes spent batteries and scrap to produce black powder. Its annual processing capacity is expected to reach up to 13,500 tons. That capacity can handle spent batteries and scrap from more than 40,000 electric vehicles per year. The goal is to begin operations in 2026.
LG Energy Solution also established a battery recycling joint venture in Apr. with French metal recycling company Derichebourg (DBG). The two companies are preparing to build a plant. They plan to begin operations in 2027 with the capacity to process more than 20,000 tons of used batteries and scrap annually.
EcoPro, a battery materials company, is also active in core mineral recycling. EcoPro CNG, an EcoPro affiliate, purchases defects and other byproducts generated during processes from domestic and overseas secondary battery manufacturers and extracts lithium, nickel, cobalt, and manganese, which are key raw materials for cathode materials.
The business prospects for core mineral recycling are not always rosy. This is because prices for major minerals often fluctuate sharply.
Prices for core minerals such as neodymium and dysprosium, both rare earths, surged in 2010 after China imposed a rare earth export ban on Japan. In 2011, the price of neodymium soared from $15,000 per ton to $250,000. Dysprosium also rose from $109,000 per ton to $1,508,000.
However, after the price spike, prices gradually fell as demand decreased and efforts to find suppliers outside China intensified. Since 2021, prices rose again as demand for permanent magnets surged in sectors such as electric vehicles and wind power. As of December, neodymium is around $149,300 per ton and dysprosium is around $453,900 per ton.
Despite the high business volatility, core mineral recycling is expected to play an important role in strengthening resource security. In particular, with the government actively expanding clean energy such as electric vehicles, solar power, and wind power, Korea is expected to need more core minerals going forward.
Manufacturing an electric vehicle requires about six times more minerals than a gasoline vehicle. Wind power requires about nine times more minerals than a liquefied natural gas (LNG) thermal power plant. The International Energy Agency (IEA) has projected that demand for core minerals will need to increase by more than about 3.5 times the current level to achieve carbon neutrality by 2050.
According to a report released by the Korea Energy Economics Institute (KEEI) in 2022, if Korea's recycling rate for spent EV batteries is assumed to be 100%, it could secure 22% of the lithium, 28% of the nickel, 9% of the manganese, and 36% of the cobalt needed in 2040.
However, there are not yet enough spent batteries for recycling. The battery industry views 2017, when Tesla released the Model 3, as an important inflection point. Considering that the service life of EV batteries is 8 to 10 years, it means a wave of spent batteries is likely to start flowing out as early as the end of this year through 2027.
An EcoPro official said, "We see the period when a large volume of spent batteries comes out and the recycling market expands on a large scale as being after the end of 2026," and added, "When the market opens, if we do not have recycling-related technology and equipment in place, we may miss the opportunity, so we are responding preemptively."
The government has also rolled up its sleeves. Through the National Resource Security Special Act, which took effect in Feb., the government laid the groundwork for fostering the recycling industry. In Mar., it released the "promotion plan to vitalize core mineral recycling" and said it would raise the recycling rate of the 10 strategic core minerals to 20% by 2030. Next year, it plans to implement, for the first time, a subsidy program to build recycling facilities.
An official at the Ministry of Trade, Industry and Energy said, "There are about 200 corporations in Korea capable of recycling, and we are assessing their investment scale and demand," adding, "We are also reviewing institutional support, such as simplifying permits for importing waste resources and extending permit periods."