Commodity trader and mining group aims to extend its business to take advantage of big demand for EVs
Glencore has plans to build Europe’s largest battery recycling plant as it seeks to grow its natural resources business on the back of the switch to electric cars.
The Swiss-based company, one of the world’s largest diversified natural resources groups with commodity trading and mining arms, is launching a joint study with Canada’s Li-Cycle into building the facility in Italy by 2027.
The London listed company, which has a 10 per cent stake in Li-Cycle, aims to repurpose its zinc and lead smelter in Sardinia to produce lithium, nickel and cobalt, key metals used to make batteries for electric cars.
Converting the 94-year-old site would extend Glencore’s control over the supply of critical raw materials needed by carmakers.
It would also give it a leading role in battery recycling, while bolstering its portfolio of copper, nickel and cobalt mines. It has already established itself as one of the world’s largest metal recyclers.
Glencore chief executive Gary Nagle has said that recycling already contributes $200-250mn of the company’s earnings before interest, taxes, depreciation and amortisation, which was $34.1bn in total in 2022.
He added that the unit’s growth is expected to be “exponential” because tens of millions of EVs worldwide will be due for recycling in anywhere between eight to 15 years time.
Tim Johnston, co-founder and chair of Li-Cycle, said: “This is a landmark project for Europe’s battery recycling industry.” He added: “These assets are needed soon.”
The plans at the Sardinia site involve recycling disused portable electronics, scrap from battery manufacturing and old EV batteries to create lithium, nickel and cobalt supplies.
The plant will be capable of processing up to 50,000 to 70,000 tonnes of black mass, shredded batteries that would undergo hydrometallurgical processes to extract the raw materials.
That would be enough to recycle batteries from 600,000 used electric cars.
Recycling is set to play an important role in easing the demand for primary raw materials from mines, especially given Europe’s lack of domestic mining supply.
Battery recycling firm Li-Cycle predicts that 10 per cent of Europe’s lithium demand will be satisfied by recycled supply by 2030.
EU legislators have proposed that batteries in EVs must contain above a certain threshold of recycled raw materials from 2030, rising to 20 per cent for cobalt, 10 per cent for lithium and 12 per cent for nickel five years later, as well as setting recycling recovery rate targets.
Kunal Sinha, head of recycling at Glencore, said the group intended to meet growing demand from automakers for circular metal supplies.
“We will do a study and then could subsequently develop the largest battery recycling hub in Europe,” he said.
However, recycling is fraught with risk because it is difficult to predict when large volumes of EV batteries can be processed because of difficulties in forecasting their lifespan in EVs and second use in industries such as energy storage.
In North America, Li-Cycle has built a large black mass processing hub in Rochester near New York. The site is half the size of the planned facility in Sardinia and cost $485mn.
While the cost of the Sardinia plant is yet to be fixed, the two companies said it is less capital intensive than Rochester because they can use existing infrastructure in Italy to help keep prices down.
The site marks a key expansion in Europe for Li-Cycle. It has a shredding site in Germany set to open in mid-2023 with further sites to follow in Norway and France.
Under an expected 50-50 joint venture agreement, Glencore would provide low-cost capital to Li-Cycle, which would take the lead on the engineering of the plant and repay its Swiss partner through the asset’s cash flows.
The feasibility study is due for completion in mid-2024 with operations set to begin at the end of 2026 or early 2027, if a final investment decision is taken.