The battery recycling market generated its highest level of foreign direct investment (FDI) in 2021 as automotive companies look for alternatives to an otherwise very saturated market for electric vehicles' (EVs) batteries.
Battery recycling companies announced seven FDI projects worth $637m in 2021, from four projects worth $69.4m in the previous year, according to figures from foreign investment monitor fDi Markets.
Battery recycling is in high demand as automotive companies look for alternatives to a heavily saturated battery market, where supply is constrained by lack of capacity and bottlenecks along the whole value chain.
“A battery is the best mine of lithium [and] cobalt,” Rachid Yazami, the president of KVI Holdings, a developer of battery technology, said at the New Materials for a Zero-carbon world session of the EBRD annual meeting and business forum on May 11.
The market has experienced significant growth since 2019. Overall, the battery recycling market has generated 29 FDI projects worth $1bn in the past 10 years, according to the fDi Markets data.
Geographically, North America was the most attractive destination and source market region both to investors in the past 10 years.
The home countries of battery recycling companies investing abroad were Canada ($574m), where Li-cycle contributed entirely, followed by India ($73.7m) and South Korea ($57.6m) in the last 10 years.
Li-cycle, a Canadian company which specialises in lithium-ion battery recycling, was by far the biggest investor in EV battery recycling, making $574m of investments since 2020.
The company’s $485m investment in building a battery recycling facility in Rochester, in the US, last December was the largest investment in the battery recycling market to date. Alongside, it invested $19.5m and $46m in FDI projects to develop its new recycling facilities in the US last year.
The company also signed a commercial agreement to become the ‘preferred battery recycling partner’ of LG Energy Solution, a South Korean battery manufacturing company. It also signed a deal with Glencore, an Anglo-Swiss producer of natural resources, to secure the supply of manufacturing scrap and end-of-life lithium batteries to Li-Cycle’s facilities. The company announced both agreements in May.
US battery recycling company Redwood Materials is also hitting the headlines. In February, the firm said in a statement that production of EVs powered by recycled batteries is the only way for creating a sustainable and secure supply chain. It also said it would use its $700m of external funding to establish new facilities in North America and in Europe, according to investor signals tracked by fDi Markets.
Companies across the Atlantic ocean are also eyeing battery recycling technologies.
Northvolt, a Swedish battery developer, and Norsk Hydro, a Norwegian Aluminium producer, will take their battery recycling joint venture, Hydrovolt, to continental Europe later this year.
Hydrovolt has commenced operation on its first plant in Norway, according to Northvolt's statement published on May 15.
“We want to move to Europe, and we will take decisions this year. It’s important for us to build trust in the recycling of electric batteries from cars, it’s important that used batteries do not travel all around Europe,” Arvid Moss, head of Hydro Energy, told the Financial Times.