Copper and other critical metals are already highly sought after as an EV demand boom prompts automakers to build electric vehicle battery supply chains. Newly passed federal legislation is making them even hotter commodities.
Certain tax credit qualifications in the Inflation Reduction Act contain domestic sourcing requirements for battery materials that even some proponents believe are overly ambitious in the stated timeframes. But recycling critical metals from existing EV batteries and other sources is expected to fill some supply gaps.
For their vehicles to qualify for the tax credits, starting next year automakers must source at least 40% of their EV battery components — by value, not mass — in the United States or countries with which the U.S. has a free trade agreement. That bumps up to 50% starting in 2024, 80% in 2027 and 100% by 2029.
“That’s really hard because most of the minerals we use come from outside the U.S.,” said Jennifer Dunn, associate professor of chemical and biological engineering at Northwestern University and director of its Center for Engineering Sustainability and Resilience. The Inflation Reduction Act “really brought to the forefront” thinking about metals procurement.
Dunn, whose research centers on lifecycle assessments of energy systems, including energy storage systems, says the U.S. “is far behind other nations — even Europe, but especially China — in manufacturing batteries.” Improvement requires “taking a holistic viewpoint” and “being careful about not making some things worse by trying to decarbonize.”
As battery manufacturing ramps up, so should recycling of existing batteries to recover valuable materials, but “that’s just a ton of scale-up of lots of activities,” Dunn said. It’s also challenging because lithium-ion battery recycling is a relatively new industry still finding its footing.
Even so, “we can’t mine our way out of this,” said Billy Johnson, chief lobbyist at the Institute of Scrap Recycling Industries. “We don’t have enough mines online, and they’re not producing enough to take care of this demand ... Recycling is going to be an integral part of picking up the difference and getting these materials into the manufacturing supply chain.”
Battery recyclers expect the Inflation Reduction Act to generate short-term and longer-term business opportunities and positive impacts.
“It's already generating increased demand for what we do, which is manufacture critical battery materials … from recycled feedstock,” said Roger Lin, vice president of global marketing and government relations at Ascend Elements. “We're looking at things like the PTC within the IRA, which is the production tax credit for electroactive materials, which gives 10% credit towards production costs.”
Earlier this month, SK ecoplant invested $50 million in Ascend Elements, and last week Ascend provided an inside look at its first commercial-scale EV battery recycling facility that is slated to open this year in Georgia. Investments and planned facility expansions are occurring across the battery recycling industry, including at Li-Cycle and Electra Battery Materials.
“It’s all hands on deck for anyone involved in the industry,” Trent Mell, CEO of Electra Battery Materials, said via email. The Inflation Reduction Act, he said, creates a “fantastic opportunity to change the tone of the industry and instill a shift in the onshoring process.”
A material issue
While a variety of metals like lithium, cobalt, manganese and nickel are fundamental elements in most EV batteries, copper has become the metal du jour. Its ability to conduct electricity well puts it in high demand not just for EV batteries, but electronics in general. Commodity analysts are raising red flags about an impending shortage.
S&P Global predicts “looming copper supply shortfalls” as global demand nearly doubles over the next decade, from 25 million metric tons now to 50 million metric tons in 2035. They attribute the projected surge to the rapid scale-up in demand for clean energy and decarbonization technologies containing copper, such as electric vehicles, batteries, charging infrastructure, solar panels, wind turbines and new transmission lines. Decarbonization goals “will be short-circuited and remain out of reach” unless significant new copper supplies quickly emerge, S&P Global suggests.
At the same time demand is skyrocketing for these newer and growing markets, demand is holding steady or growing for copper in conventional applications such as pipes and wiring. S&P Global points to a decade of “massive underinvestment” in expanding existing copper mines or creating new ones as another factor fueling a supply crunch. New mines often take 15 to 20 years to come online, and permitting alone can take a decade.
“This will potentially drive the prices of copper up,” Johnson said. “The recycling side of that is going to play even more of a role if the prices go up ... A lot of this is going to depend on economics.”
Higher prices motivate recyclers to recover sometimes overlooked, lower-grade or harder-to-recover metal supplies, Johnson said. For example, higher copper prices might prompt end-of-life auto recyclers to make a greater effort to recover copper fines — tiny shreds or granules created during auto shredding — that they usually would pass over in favor of higher-value, more easily accessed materials.
“There's going to be an extra effort to try to get the fines out because recyclers understand the value,” Johnson said. “And there will probably be a lot more investment in the technologies to get them out downstream.”
Besides recycling existing EV batteries, harvesting critical elements from other electronics is a leading growth market, sources say.
“There is definitely a stock of e-waste out there that contains some of these metals,” Dunn said.
A plethora of devices — including laptops, cell phones and electric bicycles — contain critical minerals that could be reused in new batteries. But again, supply is an obstacle.
“Right now I think it still would be tough to have the volume of electronics that you would need for, let's say a couple million new batteries in 2026 to meet the demand for cars,” Dunn said. Still, “we should be doing everything we can to recycle anyway, because the environmental effects of metals mining blows my mind.”
Scrap supply ‘coming on full blast’
The supply and demand imbalance for critical metals isn’t likely to recalibrate any time soon.
Electric vehicles haven’t been on the market long and are far from mainstream in North America, therefore the supply of EV batteries available to recycle is still small. But experts anticipate that changing in the coming years.
“We do expect to see increased volumes of batteries in the U.S. because of this,” Lin said. “The more batteries that are manufactured, the more scrap that gets made.”
While typical battery and vehicle life cycles suggest increased volumes could take 10 to 15 years to materialize, the Inflation Reduction Act is expected to have an accelerating effect.
“The hose is on a drip right now, but pretty soon it’s going to be coming on full blast” when the EVs currently in the market reach end-of-life and their batteries become available for recycling, Johnson said. But he cautions that “this all is not going to happen overnight.”