Battery Metals

As the world shifts up a gear in its transition to electric vehicles, the demand for batteries has skyrocketed in major automotive markets in Europe and the United States. Automotive and battery manufacturers face a difficult period of uncertainty in the battery supply chain, and many are turning to building their own battery gigafactories or forming joint ventures to address squeezed supply.

The demand is expected to grow by around 30 percent, nearing 4,500 gigawatt-hours (GWh) a year globally by 2030, and the battery value chain is expected to increase by as much as ten times between 2020 and 2030 to reach annual revenue as high as $410 billion.1 In 2030, 40 percent of demand for lithium-ion batteries is expected to come from China (Exhibit 1). The forecast points to an even split between the two most common chemistries: lithium iron phosphate (LFP) and lithium nickel manganese cobalt oxide (NMC). Approximately 90 percent of the demand will come from mobility applications—most importantly, electric vehicles (EVs). Overall, the growth has catalyzed an unprecedented level of investment that battery manufacturers must get right to stay competitive while other industries pursue the same scarce resources.

This speed of scaling new technology leads to notable challenges: shortages of labor and materials, delays in the construction of gigafactories to produce batteries at scale, and competition for resources in the supply chain, among others. In fact, the battery supply chain risks facing a situation similar to the current semiconductor chip shortage, where demand growth has outstripped capital investment in new supply. Furthermore, environ­mental, social, and governance (ESG) factors will play a more significant role—raising another set of issues that companies need to address.

The situation is difficult and novel. Yet it presents significant opportunities for growth across the value chain for those who choose to address the issues at hand and accelerate their move into the EV battery market. These players are of three primary types: incumbent battery manufacturers expanding their operations, auto OEMs entering the space to support their EV ambitions, and smaller new entrants using disruptive technologies.

This article focuses on three key measures for preventing or responding to EV battery shortages: industrialization and scale-up of gigafactories, strategies to find and retain talent, and establishment of a robust and efficient supply chain.

Cost-effective scale-up of gigafactories

Most OEMs and battery manufacturers have built or are planning to build gigafactories to produce lithium-ion batteries at scale, either independently or through joint ventures, yet developing giga­factories is challenging. Even the most experienced battery manufacturers commonly encounter start-of-production delays of nine months or more. This has a significant effect on the economics of a project. For example, each day of lost production for a 50 GWh facility has an immediate cost impact of around $4 million. A one-month production loss can reduce profits by approximately $120 million, lowering the annual first-year margin by 2.5 percentage points—a $220 impact per vehicle.

Once facilities come online, first-year yields are often only around 60 percent of nameplate capacity, with losses split evenly between higher-than-expected yield losses and machine downtime. Quality issues during battery manufacturing also present a challenge in terms of both reputation and finance; for example, recalling batteries for 100,000 vehicles could turn a 5 percent profit into a net loss of more than 150 percent, due to lost sales and reimbursement costs.

Best practice for facing these challenges focuses on three critical building blocks: factory design, construction schedule optimization, and governance and performance management structures.

Factory design

To build in flexibility, companies could consider factory designs that are as modularized as possible, including prefabricated complex factory components. Companies could also adjust standard factory design in line with local battery plant design standards and optimize for space (such as clean-room volume) and cost.

Factory layout based on simple process flow, combined with a serious reduction of material conveyance, could further reduce operating expenses and production time. Reconsidering the different production processes not as separate areas but as pieces that fit together seamlessly could also help drive design efficiency. Allowing enough room for additional capacity would avoid extensive factory redesign down the line.

Construction schedule

Once a design is finalized, a robust, fully optimized construction schedule needs to be developed for the factory to be built without delays and extra expenses. A fundamental role of the construction or project delivery team is to avoid hindering the critical paths of equipment production; compared with conventional manufacturing environments, battery production equipment is vastly more complex to deliver and ramp up. Labor demand could be forecast by project stage against local supply to predict shortages and adjust the schedule accordingly, thereby limiting the degree and impact of reduced labor supply. Cutting-edge and AI-driven scheduling software could help determine optimal paths, such as the load-balancing capacity of different trades on the construction site, and could schedule updates as soon as new information becomes available.

Coordination between factory design engineers and base construction workers—using an integrated digital twin of the factory to support ideation and action—is the key to effective construction planning. Critical-path lengths could be reduced by running as many construction steps in parallel as possible, while digital and lean construction tools could be leveraged to improve the productivity of inexperienced workers.

Governance and performance management structures

Detailed governance procedures and performance management are essential to successful construction and to meeting planned start-of-production dates. Companies could create the necessary capability and performance management systems, such as scrapping-rate KPIs, at the head office and local level. They could also consider working with engineering or design firms to set up centers of competency to ensure that labor is used effectively with any available engineering, procurement, and construction management (EPCM) systems. Thereafter, a coordination model between the local facility, head office, and center of competence could be established to ensure closed-loop communication and synchronization between stakeholders.

All employees would need to be trained as early as possible, leveraging company and industry experts. Having leadership present can avoid bottlenecks in decision making. Principles such as ownership and flexibility to pivot on decisions can provide the basis for training and company culture.

Effective talent and labor retention strategy

A successful gigafactory project needs a highly competent and productive workforce, both during construction and in the subsequent operation of the factory. One of the most important practices here is to make the local labor market a key factor in site selection to ensure a sufficient supply of needed skill sets relative to industry activity in the area. Decision factors could include available construction and operations labor, the attractive­ness of the region within a reasonable commuting radius, and regional labor pools that could be tapped into—for example, for trades with limited local capacity. Another best practice is to invest in local infrastructure to facilitate a localized cell component supply base.

Companies could consider offering training to local supervisors at existing facilities to transfer best practices and navigate cultural differences. They also may need to look beyond the local labor market to fulfill the demand for technicians and battery technical specialists.

Robust and efficient supply chains

To avoid delays and cost overruns, companies need to consider sourcing—particularly battery manufacturing equipment and raw materials—during construction and production operations. All aspects of the battery value chain are expected to grow rapidly through 2030, with cell production and material extraction being the largest markets (Exhibit 2). That growth will likely create ongoing supply chain challenges.

Battery manufacturing equipment

For battery-specific equipment, lead times of one and a half years from ordering to commissioning are common because of the rapid growth in gigafactory construction. In fact, some OEMs are starting to secure critical equipment now for construction planned for 2025.

To secure the supply of battery manufacturing equipment, companies can choose from four approaches. The ideal scenario is to secure supply from equipment suppliers that have existing battery expertise; the next best option would be to find ones with similar expertise. A few OEMs might also leverage their own equipment expertise from other industries to revolutionize the production of battery manufacturing equipment or—in the most disruptive scenario—redesign the cell manufacturing process through technological innovation.

Raw materials

Developing a robust strategy for procuring raw materials can help companies control costs and secure factory ramp-up. Raw materials come from either newly extracted and refined metals or recycled end-of-life batteries or production scrap.

Newly extracted materials present challenges. They are expected to represent the vast majority of total supply through 2030, so battery manufacturers are highly dependent on commodity material prices. And recent supply chain disruptions have significantly increased the price of key materials by more than 20 percent, which caused the costs of lithium-ion batteries to increase in 2021—the first time in many years.

In the longer term, geopolitical and labor constraints will likely constrain material supplies. For example, while lithium is widely abundant, about 70 percent of current global production is in Australia and Chile, so these countries have an outsize impact on supply. Similarly, the majority of global cobalt production is in the Democratic Republic of the Congo, where its extraction has been a source of controversy.

Further upward pressure on raw-material prices is likely to come from significant increases in demand. For instance, the battery industry’s demand for lithium is expected to grow at an annual compound growth rate of 25 percent from 2020 to 2030, while demand for nickel could multiply as battery demand shifts to nickel-rich products.

As of this writing, nickel appears to be at the greatest risk of shortages, caused by competition from other industries and long lead times for new sources. Approximately 65 percent of the demand for class 1 nickel (containing a minimum of 99.8 percent nickel) comes from other industries, particularly stainless steel. These industries are expected to continue to account for a high percentage of global demand for class 1 nickel in 2030.

Strengthening the supply of raw materials. In the short term, battery manufacturers could consider signing multiyear supply contracts with mining companies to limit the effect of price fluctuations. In the longer term, as more batteries reach end of life, battery recycling could provide materials both from the manufacturers’ own batteries and from other sources. Manufacturers could include a recycling agreement in the original battery sale, which would further expand the potential supply. Larger manufacturers might also consider investing directly in raw-material extraction and refining to secure supply and gain exposure to the rapidly expanding value pool of materials.

Localizing the supply chain. While significant investments across the battery value chain are expected globally, there is an increasing trend toward localizing battery manufacturing near EV manufacturing facilities. That said, the supply chain for battery manufacturing has not yet coalesced around this trend.

For example, more than 70 percent of the key equipment suppliers, for both coating and general cell assembly equipment, are based in Asia, with the remainder evenly split between North American and Europe. Consequently, companies in North America and Europe may need to consider developing strong international sourcing relationships.

Similarly, battery raw-material refining takes place primarily in Asia, with potentially fewer prospects for localization than battery and equipment manufacturing. Since unrefined raw materials typically have lower fractions of the target material, refining facilities are preferentially based near the sources of raw materials, rather than their end markets. A further complication is that metal refining is an energy-intensive process, making energy cost-competitiveness another critical factor when selecting refinery locations.

Buying batteries from other suppliers. The challenges outlined above, as well as the large capital cost of gigafactories, leave some EV players buying batteries from larger suppliers rather than investing in their own gigafactories. This is often a tactically defensible decision for smaller players that are planning only a limited entry into the EV space, as well as for companies wanting to maintain strategic flexibility. For instance, start-ups may lack the assets required to build a gigafactory or the time to wait until construction is complete.

Larger companies entering the more nascent subsectors within EV markets—such as electric trucks or buses—may consider buying batteries because of the low demand expected for these specialized applications in the foreseeable future. And companies that prefer to be fast followers may choose to buy batteries initially as a way to learn about which technologies will become dominant and to ascertain their anticipated battery needs before making large capital investments.

Recycling and life cycle strategies for end-of-life batteries

As the industry grows and matures, battery recycling and reuse will become vital for both supply chain and ESG responsibility. Three potential end-of-life pathways have emerged to address this challenge, each with a different processing step. Probably the most conceptually straightforward is repairing battery packs for use in EVs, stretching their lifespans. A second option, reusing batteries in other second-life applications (such as grid storage), could provide significant benefits both for utilities and power users. Finally, using recycled battery materials as inputs for new battery manufacturing would ease demand pressures on major commodities and reduce batteries’ resource footprints.

The transition to EVs is bringing about a rapid acceleration in battery manufacturing, raising significant growth opportunities across the value chain. However, acting on the opportunity will require large investments and will create risk for manufacturers’ core business. Battery and automotive industry players that act on three key areas can seize the moment to expand their revenues and profitability while serving vehicle owners’ demand for EVs.

Researchers from MSU and Skoltech have transmuted a pesky poisonous weed into high-grade anode material for sodium-ion batteries. These are an emerging cheaper alternative to lithium-ion batteries for uses where compact size is not crucial, such as on solar and wind farms. The study was published in Batteries.

“We thought, wouldn’t it be fun to take something as nasty and objectionable as hogweed and make something useful out of it,” study co-author Zoya Bobyleva of Lomonosov Moscow State University commented. “The thing about hard carbon materials, used in sodium-ion battery anodes, is you can make them from biomass of virtually any origin. No one has considered hogweed before. But it turned out pretty well.”

Sosnowsky’s hogweed is an invasive plant that causes severe skin burns. Originally imported to central Russia from Caucasus as an experimental forage crop, it quickly got out of control and, according to forecasts by Skoltech researchers, is threatening to spread over the entire European part of the country by the mid-21st century.

Sodium-ion batteries are an alternative technology for power storage that avoids using lithium, which is largely concentrated in a select few countries, is becoming increasingly expensive, and is not environmentally friendly in production. If a battery uses sodium ions instead of lithium ions, however, completely different materials have to be used in the cathode and anode. Not long ago, Skoltech researchers proposed a cathode material with outstanding properties. This time, another research group based at the Institute and MSU, came up with a high-quality anode material derived from a fairly unlikely source.

“As of today, hard carbon offers the best combination of properties for a sodium-ion battery anode. It’s an amorphous form of carbon that does not transform into graphite even when exposed to very high temperatures. Unlike graphite, its structure can accommodate sodium ions and release them over many cycles, which is crucial for battery operation, and it does not significantly expand in size upon charge-up. It is also cheap, reasonably easy to synthesize and dispose of, and does not create significant fire hazards. The two key figures of merit here are Coulombic efficiency and energy storage capacity,” the study’s principal investigator, Professor Evgeny Antipov of Skoltech and MSU, said.

The hard carbon produced by the MSU-Skoltech team exhibited a Coulombic efficiency of 87%, which is on par with the best reported results for hard carbons synthesized from other raw materials. That characteristic reflects how well a material stores energy without wasting it on unwanted irreversible secondary processes that actually harm the battery. As for the energy storage capacity, at about 260 mAh/g, the material falls short of the best results reported elsewhere—around 300 mAh/g—but is still reasonably good.

“In fact, we considered both winter hogweed, which is safe for harvesting, and the nasty summer hogweed in full bloom. Hate to tell you, but the specimens gathered in the summer proved better in terms of the Coulombic efficiency of the end product, which is the characteristic we emphasized in this study, because it tends to be the weak spot of hard carbon anodes. As for the energy storage capacity, there are ways we can probably improve it later on,” Bobyleva added.

The team tested three popular approaches to hard carbon synthesis. First, there’s direct carbonization: heating the biomass to 1,300 degrees Celsius in an atmosphere without oxygen. Alternatively, you can treat the biomass with an acid to remove metallic and other impurities prior to carbonization. This approach resulted in a significantly higher Coulombic efficiency. Or you can boil the hogweed biomass in water in a closed reactor—this produces very small carbon-containing spheres. While all three approaches led to comparable energy storage capacity, heat treatment with prior impurity removal resulted in the best Coulombic efficiency.

“The demand for rechargeable accumulators will continue to grow. And when it comes to stationary batteries deployed at industrial facilities and in the production of renewable energy to even out fluctuations in available sunlight or wind power, the sodium-ion technology appears very promising. These batteries will be much cheaper, and while they might be heavier and bulkier, it won’t be much of a problem for the relevant applications,” study co-author Professor Artem Abakumov said; he heads the Center for Energy Science and Technology at Skoltech.

A large reason people were hesitant about the most current version of US electric vehicle subsidies was that it wouldn’t provide funding to vehicle makers who rely on China for minerals used in batteries.

Some argued that if we only used battery materials from friendly countries, it would either lead to a slower EV adoption rate or more sales of PHEVs. If we needed a large battery for an electric car, the criteria to meet this demand would be difficult, but not impossible. Automakers may just end up installing tiny $1,000 or $2,000 batteries into cars instead and receive a substantial $7,500 discount.

Other people noted that the future of EVs is uncertain because they require rare minerals, many of which are controlled by China. This gives Beijing significant power over not just the electric vehicle market, but also global economic security. For example, we know all too well the consequences that come with oil market disruption; oil being a resource pumped and refined in various countries. However, when China has 100% control over battery-grade synthetic graphite, 73% control of cobalt, 68% control of nickel, and 59% control over lithium, it presents a much larger problem.

But, a recent announcement from GM, combined with another story we did recently, shows us that manufacturers are taking future supplies from friendly countries seriously, and just might prove the naysayers wrong.

GM has found a new, cost-competitive source of nickel and cobalt for Ultium battery cells after investing in Queensland Pacific Metals of Australia. The nickel laterite ore will be processed using a proprietary process that reduces waste with no requirement of a tailings dam. As part of the agreement, GM is expected to invest up to $69 million in Queensland Pacific Metals for the development of its proposed Townsville Energy Chemicals Hub (TECH) Project located Northern Australia.

Queensland Pacific Metals’ nickel and cobalt will assist in powering a diverse fleet of trucks, SUVs, vans, and luxury vehicles from GM — such as the Chevrolet Silverado EV, GMC HUMMER EV Pickup and SUV, Cadillac LYRIQ, Chevrolet Blazer EV, and Chevrolet Equinox EV. The last one is particularly important, as it’s a big part of GM’s strategy of providing affordable EVs to catch up to Tesla.

“The collaboration with Queensland Pacific Metals will provide GM with a secure, cost-competitive and long-term supply of nickel and cobalt from a free-trade agreement partner to help support our fast-growing EV production needs,” said Jeff Morrison, GM vice president, Global Purchasing and Supply Chain. “Importantly, the agreement demonstrates our commitment to building strong supplier relationships and is aligned with our approach to responsible sourcing and supply chain management.”

If all goes according to plan, Queensland Pacific Metals’ proposed TECH Project will become one of the leading suppliers of high-grade battery materials. The company is developing a sustainable and environmentally friendly refinery that can produce large quantities of pure nickel and cobalt — two minerals essential for electric vehicle batteries.

“We are absolutely delighted to collaborate with General Motors,” said Stephen Grocott, CEO, Queensland Pacific Metals. “GM’s strategic direction, company values and focus on sustainability in its pursuit of making electric vehicles for all is a perfect fit for Queensland Pacific Metals and our TECH Project. GM’s investment in our company and the associated offtake brings us one step closer towards construction of the TECH Project where we will one day aim to deliver the world’s cleanest produced nickel and cobalt. We thank GM for their belief in our TECH Project and look forward to becoming part of the GM sustainably sourced raw material supply chain.”

Queensland Pacific Metals will use a patented refining and recycling process called the DNi Process to import high-grade nickel laterite ore from New Caledonia for processing at the TECH facility. The environmentally sound methods employed in this technology extract nickel, cobalt, and other precious metals from laterite without causing any damage to the environment.

Queensland Pacific Metals now has the rights to use the DNi Process from Altilium Group, which boasts a more than 98% nitric acid recycling rate and no tailings dam requirements. Plus, it produces less waste overall than traditional extraction processes. All of this is slated to start in 2023.

“GM already has binding agreements securing all battery raw material supporting our goal of 1 million units of annual capacity in North America by the end of 2025,” said Morrison. “This new collaboration builds on those commitments as we look to secure supply through the end of the decade, while also helping continue to expand the EV market.”

GM’s Not The Only One Reaching For Battery Minerals In Australia

As we pointed out in another recent story, Stellantis is doing the same thing: going to the land down under to get access to battery minerals that would qualify for U.S. rebates and tax credits, and give better geopolitical stability.

Stellantis and GME Resources Limited have finalized their binding agreement to sell quantities of battery grade nickel and cobalt sulphate products from the NiWest Nickel-Cobalt Project in Western Australia.

The NiWest project is a nickel-cobalt development enterprise that will produce close to 90,000 tpa of battery-grade nickel and cobalt sulphate for the burgeoning electric vehicle market. So far, more than AU$30 million has been invested into drilling, metallurgical test work, and development studies. A proposed location of the processing facility for NiWest is within approximately 30 kilometers of the Glencore-owned Murrin Murrin operation — currently one of the largest nickel-cobalt operations in Australia.

This isn’t the only supplier they’ve made deals with. Stellantis has also obtained a significant supply of low-carbon lithium hydroxide from Vulcan Energy and Controlled Thermal Resources in Europe and North America, respectively. So it’s clear that getting materials that qualify for tax credits is important to them.

Could These Efforts Make The Tax Credits Workable For BEVs?

These deals alone aren’t enough for U.S. manufacturers to build all of the BEVs we need in order to overcome dependence on China and take advantage of the full tax credit going forward. But it shows that automakers are scrambling to secure compliant supplies, and with more deals like this, they might cover the shortfalls.

Hopefully both mining companies and auto manufactures keep this up and make it possible to sell enough EVs for everyone at prices they can afford after tax credits.

Featured image provided by GM.

The last twelve months proved turbulent for the electrical products market. This is true whether you’re a raw material miner, refiner, manufacturer, or end user. Indeed, ongoing issues with battery metal prices and supply security affected millions. After demand rose dramatically, Chinese battery makers began snapping up resources left and right. This left major automakers scrambling to shore up supply agreements for raw materials and the associated downstream battery supply chains. Both cost and security of supply have become significant concerns across both commercial and defense industries. In fact, these worries have made it all the way to the White House. As with rare earth metals, the reliance on overseas supply sources leaves the supply chain dangerously exposed. That’s why this week was the perfect time to catch up with David Klanecky. He is the CEO of North America’s largest and arguably most professional battery recycling company, Cirba Solutions.

Driving the Recycling of Battery Metal and Components

Cirba Solutions currently operates six processing facilities across the USA. In September, they announced a seventh, which the company intends to construct in Arizona. By 2026, they hope to have at least 13 fully operational facilities. Above all, Cirba Solutions recognizes that both the availability and demand for recycled battery materials need to expand rapidly over the next decade. In fact, this is driving a more than $200 million investment in an existing facility in Ohio. “The need for critical minerals is heightened with a focus on the electrification movement in transportation and will continue to accelerate,” says Klanecky. “Over the next five years, there will be more attention on recycled content and domestic supply.” What’s more, the company sees a closed-loop domestic recycling industry as critical. This is not only for self-sufficiency, but for environmental reasons. Without an adequate recycling industry, electronic components like batteries will only continue to end up in landfills.

Battery Metals: Full Range of Services

Klanecky explains, “In the circular battery supply chain, we do everything from collection, safe packaging, transportation, and storage to the end point of processing them and seeing those materials to be used again. We’re doing this with a focus on sustainability and safety while also generating profits for our shareholders.” However, the lithium-ion and nickel-cadmium battery recycling industries are still in their infancy. Cirba Solutions is a market leader in all battery chemistries, including lithium-ion and lead acid battery recycling. They can confirm that the US recycles around 99% of lead acid batteries. Moreover, around 95% of the lead will be recovered and reused. But in the case of consumer electronics, recycling rates are only around 10%. We all share responsibility for that. After all, how many old phones, speakers, and portable chargers do each of us have lying in drawers? Many of us would be quite embarrassed to answer.

A Proven Recycling Model in Need of Infrastructure

Fortunately, that upside potential gives the growing recycling industry a considerable target market. Unlike rare earths, which struggle for profitability amidst mining, refining, and recycling, battery metal recycling companies like Cirba Solutions have been profitable for years. Even better, they provide battery makers with refined salts (such as the sulfates of nickel, cobalt, and manganese), lithium carbonate, and graphite at prices and purity levels competitive with those for imported products. More often than not, the latter come from China and are the direct result of resource mining. That said, the technology involved remains both sophisticated and capital-intensive. It involves mechanical separation, chemical extraction, and refining. Therefore, it necessitates specialist facilities depending on the product inputs. For instance, lead acid products require a different process from nickel, cadmium, or lithium-ion batteries. Also, the nationwide collection and safe transport of these materials are key to growing the industry. After all, some of these items are potentially hazardous, and need to be treated with the utmost care. Therefore, an organizational infrastructure that can accommodate all battery types is critical to successfully rolling out an end-to-end closed-loop system. “We’re doing that work right now,” says Klanecky. “We pride ourselves on collection, packaging, and logistics.  Our expansive footprint for our services is a differentiator that has taken years to develop, and it’s something our customers appreciate having access to.”

We Need a Vision For Better Battery Metal Recycling

In reality, it’s often much easier to create collection agreements for EV batteries. This is mainly due to their mass and focused end-of-life options like auto dealers and specialist breaker’s yards. In fact, Toyota has had such a system in place for its Prius batteries for over a decade. However, when it comes to consumer electronics, it would take much more complex collection arrangements covering multiple channels. Without that, it would be hard to make any serious in-roads towards exploiting the opportunity to recycle all products. Fortunately, there is a working precedent in Cirba Solutions’ existing structure, even if recycling rates have only reached 10% thus far. Still, it would take a paradigm shift in consumer attitudes to achieve the levels of recycling seen in lead acid or EV batteries. One thing we can prove is that some consumers are willing to actively recycle items, even when there’s a relatively low financial return for them. And with economies of scale come new opportunities to offer modest financial incentives in return for increased recycling rates. On the other hand, there remains a significant potential to exploit its other natural resource – recycled batteries and devices. If we make the right investments now, the US recycling industry could become a crucial part of the supply chain in the years ahead.

THE CATHODE IS a marvel of molecular choreography. How much power a battery holds, and how long it lasts, depends on its lattice of metallic atoms—how well it can catch and release lithium ions. For decades, engineers have fiddled with designs that help this movement along. And they’ve gotten pretty good, if the electrical vehicles and phones of today are any barometer. But the cathode is also the place where things inside the battery typically go wrong. This immaculate structure, so artfully arranged, starts to lose its integrity. Ions run loose, or clog up. Just like that, your battery life goes kaput.

But even as the structure fails, the atoms inside of the cathode haven’t changed. This is why, in theory, it should be possible to reuse them. “A metal atom is a metal atom,” says Alan Nelson, senior vice president for battery materials at Redwood Materials, a company that specializes in recycling. “That element doesn’t know if it was previously in a battery or if it was in a mine.” This is potentially a good thing, because many of those atoms, including metals like cobalt and nickel, are in short supply and only found in major volumes in places where mining them entails major ecological and human costs. Today, Nelson’s company released the results of tests at Argonne National Lab comparing recycled materials to virgin ones. These suggest it’s true that an atom is an atom; the performance of the two materials was almost exactly the same.

Redwood is one of a number of companies trying to turn a supply of old batteries into materials for new ones. That’s low-hanging fruit, in the sense that it involves using up waste and could ease some of the pressure on new mines. But last year, the company, which originally sold its recycled raw materials to other suppliers, took the unusual step of announcing plans to produce its own cathode materials, and later selected a site outside of Reno, Nevada, where it would spend $3.5 billion over 10 years on a new plant. The company says it plans to produce enough cathode material (as well as copper anode foil) for 100 GWh worth of battery cells by 2025—roughly equivalent to what CATL, the dominant battery maker in China, produced last year.

That’s something of a departure for the US battery industry. Despite a flurry of manufacturing announcements, bolstered in part by infrastructure spending and the climate provisions in the Inflation Reduction Act, most have been focused on the steps closest to automakers and consumers, like assembling battery cells and packs. The US has meanwhile struggled to build up industries that lie deeper in the supply chain—from the mining that digs up key minerals such as lithium and cobalt to the extensive processing that turns them into components like the cathode. Most of that is done elsewhere. According to Benchmark Mineral Intelligence, a group that studies the battery supply chain, China currently makes 78 percent of the world’s cathode materials, and that share is poised to grow to 90 percent by 2030, despite efforts in the US to invest in domestic battery supply chains.

One reason Chinese firms remain so dominant is that they have a closed loop of battery production, says Hans Eric Melin, founder of Circular Energy Storage, a consultancy that tracks battery recycling. Having battery cell production at home means it’s possible to break down scrap materials and quickly put the valuable metals back into production. The complex supply chain that refines the raw metals into that perfect crystalline cathode structure is also localized, centralizing expertise and reducing transportation costs.

Redwood is among the companies trying to pull the US manufacturing loop a little tighter. The tests, which were performed by independent researchers at Argonne National Lab, are an early step in a qualification process to reassure battery makers of the quality of these hand-me-down materials. The process begins by taking the battery apart and breaking its components down with heat and acids into metal sulfate compounds, composed of elements like cobalt, manganese, and nickel.

Once those metals have been separated, the next step is putting them together again. The design tested by the Argonne researchers is what’s known as NMC-811: 80 percent nickel, 10 percent manganese, and 10 percent cobalt. These nickel-rich cathodes have been prioritized by automakers like Tesla because they rely less on cobalt while retaining the driving range EV owners have come to expect from their new cars. The researchers took two sets of precursor materials—recycled metal sulfates provided by Redwood and sulfates made with raw material—and ran them through a series of steps that intimately mix the elements together and then layer in rows of lithium. The result is a cathode material that could be stuck into battery cells and run through a set of standard tests.

Those tests are meant to capture measures like capacity, cycle life, and rate capability, which relates to a battery’s power. The researchers found the two types of cathodes—recycled and virgin—to be nearly identical by these measures. (In some cases the recycled versions tested better, though the team cautioned that this couldn’t be tracked back to recycling.) “Honestly, it’s a pretty boring result,” says Jason Croy, a battery scientist at Argonne National Laboratory who led the research. But it wasn’t a given, he says. While an atom is an atom, there was no guarantee that recycling would produce a totally pure metal product, instead of one with irregularities or extra gunk that would mess up the final cathode design. Next, Redwood is working to scale up production and have its material tested by battery and EV makers.

What’s likely to be even trickier for Redwood is obtaining enough recycled atoms to reduce demands for mined ones. Few electric vehicles are old enough to be recycled—and those that are getting up there in years are lasting longer on the road than analysts expected. In the meantime, Redwood and other recycling startups are competing to secure a diverse array of battery sources, including from hybrid cars (a good source of nickel), power tools (which commonly use lithium manganese oxide batteries), and small devices like phones that, despite their tiny batteries, often contain a high ratio of cobalt. “We still feel very comfortable that, based on our feedstock, we’ll be able to source 30 percent recycled nickel and 30 percent recycled lithium,” Nelson says. Due to declining demand for cobalt in newer battery designs, he expects recycling to cover all of Redwood’s needs for the metal.

Still, the company will also need to source plenty of new material for its cathodes, just like battery makers everywhere. “I think it’s important to look at Redwood more as a materials company than as a recycler,” says Melin. He points out that the company currently sources about half of its material from scrap discarded by battery makers—which, while good to reuse locally, isn’t actually material that’s getting its second run in a battery cell. That’s likely to remain the case for some time, he says, as the flow of dying batteries remains a trickle relative to demand for new ones. In the meantime, he adds, the world will need many more mines.