Industry history and context
In the past 30 years, since their commercialization, lithium-ion (li-ion) batteries have been used in an increasingly diverse range of products, starting from early generation handheld electronics to now powering cars and buses. Additionally, these batteries are increasingly sought-after for utilization in energy storage applications and are often paired with renewable energy generation. The continued decline in battery prices combined with the global trend toward energy grids being powered by renewable energy sources is predicted to increase the world’s cumulative energy storage capacity to 2,857 GWh by 2040, a substantial increase from the current capacity of ~545 MWh, according to recent estimates by Bloomberg New Energy Finance in the chart below.
Furthermore, by 2040 it is estimated that 33% of all the cars on earth will be electrified, representing 559 million cars in total. These staggering projections paint a vivid picture about the sheer level of growth that is expected for the li-ion battery industry and demonstrates the role li-ion batteries play in our world, as a core part of the ongoing transition toward clean energy and transportation.
As a result, the industry has attracted substantial attention and financial resources from corporations across the lithium-ion supply chain focused on scaling li-ion battery production to meet ever-growing demand. The increase in the installed global capacity of li-ion batteries will be funded by investments projected to exceed $620 billion over the next 21 years. This funding spans projects across the li-ion supply chain, from extraction and refining of battery materials (e.g. lithium, cobalt) through to battery cell and pack production, and finally to end of lifecycle solutions.
Li-ion battery production is currently dominated by a handful of major players in the international market including LG Chem, CATL, BYD, Panasonic, and Tesla, all of whom own and operate some of the world’s largest li-ion battery cell production sites. These locations provide the battery cells used to power the world’s cell phones, laptops, and electric cars – in fact, both Tesla and BYD have built their battery production facilities in an effort to vertically integrate their vehicle production lines. The chart below, developed by Benchmark Mineral Intelligence, provides a side by side comparison of the production capacity in GWh of the top 5 li-ion battery cell manufacturers in the world.
Despite the publicity, Tesla generated with the launch of Gigafactory I in Nevada, the production of li-ion batteries has largely been concentrated in Asia. Specifically, the total Li-ion production generated in China comprises ~60% of the total global output as of 2018, and that percentage is predicted to rise in the next 5 years. Almost all of the major players listed in the chart above and may other li-ion battery manufacturers have planned the construction of additional li-ion battery ‘megafactories’ in China. The table below shows the current li-ion battery production per region, as well as the projected increases in production capacity in the coming decade, with a predicted global increase of 500% in a single decade.
These figures underscore the degree to which li-ion battery production is predicted to rise in response to the skyrocketing demand primarily in the electric vehicle and energy storage sectors. This has enormous implications for the demand of metals used in the production of li-ion batteries, particularly cobalt for example. Global Energy Metals estimates that by 2020, 60% of all cobalt demand will be driven by li-ion battery consumption, 1/5 of which go towards electric vehicles. Given the uncertainty surrounding the cobalt supply chain (for more information, please see Li-Cycle’s blog post regarding the cobalt supply chain), battery producers are seeking long term solutions to securing cobalt supply to insulate themselves from fluctuating conditions in the cobalt market. BMW recently announced its plan to buy cobalt directly from miners in Australia and Morocco as part of this ongoing trend, and it can be expected that major automotive original equipment manufacturers (OEMs) will continue to take a proactive interest in procurement of raw materials well into the future. One potential solution is to reuse the battery metals contained in end-of-lifecycle li-ion batteries, but this option is only feasible if global li-ion recycling capacity increases in proportion to the increase in global production and output of li-ion batteries.
Industry investment to date
How does the li-ion recycling industry stack up compared with the current and projected scale of li-ion production? Benchmark Mineral Intelligence has compiled data on the total investments made in various industries related to the li-ion supply chain to date, per the data presented below. This chart has been adapted slightly by Li-Cycle to also include a relative measure of investment into recycling and second life capacity (i.e. any end-of-lifecycle solution) for li-ion batteries. Once again, these results highlight the amount of resources that have been directed into electric vehicles (EVs) as major automotive OEMs have responded to a changing regulatory and competitive environment in favor of electrified transport.
However, another fact emphasized by this graph is the significant blind spot within the industry in terms of the attention given to creating sustainable end-of-lifecycle pathways for li-ion batteries. There are already an estimated >11 million tonnes of li-ion batteries that will reach the end of their useful lifecycle by 2030 globally (on a cumulative basis), and the quantity in need of recycling is increasing each year. This means it is an absolute necessity for the world to be prepared to address the rapidly growing volumes of spent li-ion batteries in a manner that is not only safe and environmentally friendly but also recovers the critical energy metals (i.e. cobalt, lithium, nickel) contained within the batteries. It is our collective responsibility to ensure that the batteries being used to electrify our world and support prominent clean tech solutions such as renewable energy sources and electric vehicles do not have a detrimental impact on our planet when they reach the end of their useful lifecycle.
Lithium-ion battery resource recovery
Li-Cycle Technology™ provides a closed-loop solution that is scalable to meet the growing demand for li-ion resource recovery/recycling and provides critical battery grade materials back into the li-ion supply chain. By utilizing an innovative and proprietary process that combines mechanical safe size reduction and hydrometallurgical (wet chemistry) processing, Li-Cycle’s validated resource recovery solution can achieve industry-leading recovery rates of >80-100% of all battery constituent materials. This supports the long-term viability and profitability of the li-ion industry by providing an end-of-lifecycle pathway for li-ion batteries that is economically viable, thus diminishing the burden on both producers and consumers. In turn, these factors boost the long-term economic prospects of the industry while protecting the environment by reducing the effects of climate change and supporting the global shift toward clean energy and electrified transport.