3 Best Battery Recycling Stocks: Why Invest in Lithium-Ion Battery Recycling?

Lithium-ion batteries power electric cars, consumer electronics, and energy storage. Recycling these batteries is key, both to reduce waste and to recover expensive battery metals. Learn what your investment options are.

SustainFi   Updated February 23rd, 2022

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Why invest in lithium-ion battery recycling? 

  • The amount of spent EV batteries is growing every year
  • But only 5% of them are recycled
  • EV batteries contain expensive battery metals like cobalt and nickel that can and should be reused
  • Battery recycling solves the problem

According to Li-Cycle, a battery recycling company, 460,000 tons of lithium-ion batteries are reaching their end of life each year. Li-Cycle estimates that 1.7 million tons of batteries reached their end of life by 2020. That number will grow to 15 million tons by 2030 as electric carmakers ramp up production.

But, even though there is a glut of useless batteries, demand for battery metals is growing. BloombergNEF projects that the need for “green metals” will grow by almost 6x by 2030. In fact, we already have a shortage of battery metals like lithium. And 5-10% of lithium-ion battery volumes are lost or rejected as scrap by manufacturers.

Unfortunately, few lithium-ion batteries are recycled. Some estimates suggest that less than 5% of spent batteries are recycled today. Most of them end up in landfills, where they can poison soil or water, despite containing valuable metals that can be reused.

To be sustainable, we need to reuse what we already have. Lithium-ion batteries, which contain hard-to-source, expensive “green metals” like cobalt and nickel, are the prime candidates for recycling. Recycling will make more battery metals available and reduce the reliance on countries like the Democratic Republic of Congo (DRC).

Mining in places like the DRC, the main source of cobalt, Indonesia, the world’s largest nickel producer, and Chile, a major source of lithium, has raised environmental and ethical concerns. For example, some DRC mines allegedly use child labor. Graphite is mostly mined and refined in China. The U.S., the second-largest market for EVs, produces just 1% of global battery materials, relying on other countries for supply.

However, recycling flammable lithium-ion batteries needs to be handled carefully. Most batteries are recycled by smelting, which subjects them to high temperatures and releases toxic fumes. Traditional recycling can only recover half of the material, and the smelting process is energy-intensive on top of that. However, several startups are developing safer technologies that can recover more battery metals.

Lithium-ion battery recycling stocks

There are several publicly traded battery recyclers:

  • Li-Cycle Holdings (LICY)
  • Umicore Group (UMICY)
  • American Battery Technology Company (ABML)

Private battery recycling leaders include Nevada-based Redwood Materials. The company was co-founded by Tesla co-founder and CTO J.B. Straubel. Redwood Materials is not publicly traded, but its stock is available on pre-IPO platforms (if you are an accredited investor.)

Learn more about the battery recycling companies you can invest in.

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Li-Cycle Holdings (LICY)

  • Market capitalization: $1.1 billion

Founded in Canada in 2016, Li-Cycle recycles lithium-ion batteries. The largest lithium-ion battery recycler in North America went public through a SPAC merger in August 2021. Li-Cycle collects lithium-ion batteries from around 85 sources, recycles them safely, and resells the battery metals. The green metals they collect include lithium carbonate, nickel, manganese, graphite, and cobalt.

End-of-life batteries are sourced from battery makers, electric car and energy storage manufacturers, and consumer electronics recyclers. Li-Cycle says that their technologies can recover as much as 95% of battery metals.

Li-Cycle has received a $100 million investment from Koch Strategic Platforms and partnered with top battery-makers like LG Chem and LG Energy. LG Chem and LG Energy will invest another $50 million if commercial milestones are met.

The company has an inventive Hub and Spoke business model. Spokes are battery recycling facilities located close to customer sources like battery manufacturers. Hubs are centralized facilities that will take broken down batteries from Spokes and produce battery-grade metals. Li-Cycle then sells the metals back to battery producers. Li-Cycle plans to have over 100,000 tons in annual capacity at its Spokes and over 200,000 at its Hubs by 2025.

Right now, Li-Cycle operates Hubs in Kingston, Canada and Rochester, New York. They are constructing more hubs in Arizona, Alabama, and Ohio in the U.S. and in Germany and Norway in Europe. Norway is a leading European EV market where electric cars have a 75% market share. The Norway hub will be 100% powered by clean energy.

In 2021, Li-Cycle processed 1,880 tons of “black mass,” an intermediate-stage product that contains nickel, cobalt, and lithium. This was an 8x increase over 2020 production. For 2022, they are targeting 6,500-7,500 tons.

But beware, LICY generated only $7.4 million in 2021 sales, and the business is far from profitable. However, they have ended 2021 with nearly $600 million in cash, which gives them some runway.

Umicore Group (UMICY)

  • Market capitalization: €9 billion

Umicore is a lot less speculative compared to Li-Cycle, but it’s also not a lithium-ion recycling pure-play.

The Belgian company is a diversified materials technology and recycling group. Although they generate over 50% of profits from recycling, they also have large businesses in emission control catalysts for cars and EV battery materials. Besides, recycling lithium-ion batteries is a small part of the recycling segment. They also refine and recycle precious metals, industrial metals, and jewelry.

Umicore is large (€3.9 billion in 2021 revenues), profitable (€1.25 billion in EBITDA), and pays a dividend. But it is also not the best way of betting on EV battery recycling.

American Battery Technology Company (ABML)

  • Market capitalization: $575 million

Nevada-based ABML extracts and recycles battery metals like lithium. Its CEO and CTO, Ryan Melsert, is a former Tesla Gigafactory engineer. ABML’s technology avoids high-temperature processing. This ensures over 90% battery material recovery rates, all without toxic waste.

ABML is building a pilot non-thermal battery recycling plant in Nevada. The plant should process 20,000 tons annually, and ABML says it will start generating revenue in Q2 2022. Going forward, ABML sees 120,000 tons in annual capacity in 2024 and 220,000 tons in 2025.

So far, though, ABML is a small-cap stock with no revenues.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

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