LFP battery waste surges, but recycling poses dilemma as dismantling costs outweigh returns

③ Focusing on boosting recovery rates

Spent batteries, which contain large amounts of core metals such as lithium, nickel, cobalt, and manganese, are "resources" in themselves. Competition among companies is intensifying to secure a foothold in the future resource market in preparation for a massive influx of spent batteries as electric vehicle battery replacement cycles come due.

According to industry sources on the 19th, Samsung SDI is building a circular system that recovers core minerals from spent batteries and reinvests them in battery production. Centered on its "Lisa Ecling Research Lab," it is working to increase material recovery rates and develop eco-friendly recovery technologies.

LG Energy Solution recently launched a demonstration project with Hyundai Motor and Kia to repurpose electric vehicle spent batteries as energy storage systems (ESS). Hyundai Motor and Kia are developing reuse technologies and business models, while LG Energy Solution manufactures UBESS (Used Battery-based ESS) using these batteries to verify performance and safety.

The materials industry has moved to build a value chain covering everything from securing spent batteries to producing core materials. JHC, a subsidiary of L&F, obtained comprehensive recycling permits for waste batteries last year and set up a pretreatment line, followed by adding discharge and disassembly lines this year. This covers the entire process from receiving spent batteries to producing black mass, a key intermediate material, with an annual processing capacity reaching 15,000 tons.

LG Chem completed and began operating a spent battery recycling pilot facility at its Cheongju plant in Chungcheongbuk-do province in the first half of this year, and plans to establish a Yangsan system by around 2028. EcoPro is also building a "closed-loop system" that connects raw material procurement to precursor and cathode material production and recycling, led by its affiliate EcoPro CNG.

However, there are limits to growing the market simply because companies are rushing to secure technology and equipment. It is not easy to stably secure spent batteries for recycling. According to data submitted by the Ministry of Climate, Environment and Energy to Democratic Party of Korea lawmaker Park Jeong, the recovery rate of mandatory return electric vehicle spent batteries from 2021 through the end of August this year was only 65.9%.

In particular, industry voices point out that black mass (black powder containing core minerals such as lithium, nickel, cobalt, and manganese) generated domestically must be prevented from flowing overseas to China and other countries. China accounts for more than two-thirds of the world's black mass production and consumption capacity. The United States also restricted black mass exports for one year in response to China's weaponization of resources.

There are also opinions that regulations on overseas raw material procurement should be eased. Industry sources explain that importing black mass from Europe into Korea requires an import permit under the Basel Convention, which is a burden because its validity period is only one year.

As the importance of spent battery recycling grows globally, the government is also stepping up to refine regulations. A representative example is promoting regulatory sandboxes and revising related notices to allow spent batteries to be easily recognized as circular resources. The Ministry of Climate has signed a memorandum of understanding with EcoPro CNG, Seongil Hitech, and others for a "Battery Regenerated Raw Material Production Certification System Pilot Project" and is conducting demonstrations.

An industry official said, "From the perspective of creating an ecosystem for the domestic Lisa Ecling industry and resource security, virtuous circulation of resources within the country is paramount," adding, "It is necessary to strengthen policy and institutional foundations so that battery resources can be reinvested in the domestic industry."

④ Challenges in LFP recycling

"Even if we recycle and sell lithium iron phosphate (LFP) batteries, it is not a situation where we can recover processing costs."

A battery industry official recently met explained the reason why battery manufacturers are reluctant to jump into LFP recycling businesses. LFP batteries do not use high-priced metals such as nickel and cobalt in the initial production stage, allowing for lower raw material costs. However, the problem when recycling spent batteries is that there are few valuable metals that can be recovered.

Price indicators show a clear difference compared to NCM (ternary). According to Korea Resource Information Service, the average price of lithium last year was $9.59 per kilogram. Iron, another main material used in LFP batteries, has a price of less than $1 per kilogram, so even if recovered and sold, its contribution to revenue is limited.

In contrast, the average prices of cobalt and nickel last year were $34.21 and $15.2 per kilogram, respectively. Ternary batteries allow for the recovery of not only lithium but also nickel and cobalt, whereas LFP batteries are essentially sustained by revenue from lithium alone.

However, the adoption of LFP batteries is growing rapidly. According to SNE Research, LFP's share in the global electric vehicle battery cathode material market exceeded 65% from January to August this year. LFP has also established itself as a key product in the energy storage system (ESS) market. Even if the profitability of recycling businesses is low for now, it is a structure where the amount of spent batteries that must be processed will inevitably surge in the medium to long term.

Domestic companies are also accelerating related technology development in preparation for future increased demand for processing spent LFP batteries. POSCO Holdings is conducting separate technology development related to LFP recycling at its Future Strategy Research Institute. L&F, which is strengthening its LFP cathode material business, is also focusing on securing recycling technology capabilities.

SK Innovation, the parent company of SK On, is promoting technology development to reduce costs and environmental burdens in the recycling process. In fact, Busan water and wastewater are generated during the battery recycling process, which can increase treatment costs.

Accordingly, SK Innovation developed an eco-friendly process that selectively recovers lithium carbonate from LFP batteries using only water, carbon dioxide, and hydrogen peroxide. It is currently collaborating with domestic recycling companies to explore commercialization possibilities.

Chinese companies are also expanding their businesses into the recycling sector after securing a foothold in the LFP battery market. Chinese battery company BYD is promoting LFP battery recycling businesses in cooperation with domestic and foreign companies. Brunp Recycling, a subsidiary of CATL, is moving forward with spent LFP battery recycling and expansion of large-scale processing facilities.

Voices are emerging in the industry that institutional support is needed to grow the LFP battery recycling market. This is from the perspective that securing stable sales channels through measures such as mandatory use of recycled metals can increase corporate investment incentives.

There are also points noting that discussion is needed on who will bear the treatment costs of spent batteries with low economic viability. An industry official said, "If LFP battery adoption becomes widespread, we cannot just leave them to be discarded, right?" adding, "We need to consider policy-wise who should bear the treatment costs."