Glencore plans to build Europe’s largest battery recycling plant as it looks to grow its natural resource business in the wake of the switch to electric cars.
The Switzerland-based company, one of the world’s largest diversified natural resources groups with trading commodities and mining arms, is initiating a joint study with Canada’s Li-Cycle to build the facility in Italy by 2027.
The London-listed company, which has a 10% stake in Li-Cycleaims to repurpose its lead-zinc smelter in Sardinia to produce lithium, nickel and cobalt, key metals used to make batteries for electric cars.
The conversion of the 94-year-old site would extend Glencore’s control over the supply of essential raw materials needed by automakers.
It would also give him a leading role battery recycling, while strengthening its portfolio of copper, nickel and cobalt mines. It has already established itself as one of the largest metal recyclers in the world.
Glencore Chief Executive Officer Gary Nagle said recycling already contributes $200-250 million in company earnings before interest, taxes, depreciation and amortization, for a total of $34.1 billion in 2022.
He added that the unit’s growth is expected to be “exponential” because tens of millions of electric vehicles worldwide will need to be recycled in eight to 15 years.
Tim Johnston, co-founder and president of Li-Cycle, said: “This is a key project for the European battery recycling industry.” He added: “These goods are needed soon.”
Plans at the Sardinia site call for the recycling of disused portable electronic devices, scrap from battery manufacturing and old electric vehicle batteries to create supplies of lithium, nickel and cobalt.
The plant will be able to process 50,000 to 70,000 tons of black mass, crushed batteries that would undergo hydrometallurgical processes to extract the raw materials.
It would be enough to recycle the batteries of 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 the lack of domestic mining supply in Europe.
Battery recycling company Li-Cycle predicts that by 2030, 10% of European lithium demand will be met from recycled supply.
EU lawmakers have proposed that electric vehicle batteries should contain above a certain threshold of recycled raw materials from 2030, which will rise to 20% for cobalt, 10% for lithium and 12% for nickel five years later, in addition to establishing the recovery of recycling tariff targets.
Kunal Sinha, head of recycling at Glencore, said the group intends to meet the growing demand from automakers for circular metal supplies.
“We will do a study and later we could develop the largest battery recycling center in Europe,” he said.
However, recycling is fraught with risks because it is difficult to predict when large volumes of EV batteries can be processed due to difficulties predicting 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 center in Rochester near New York. The site is half the size of the planned facility in Sardinia and cost $485 million.
While the cost of the plant in Sardinia has yet to be finalized, the two companies said it is less capital intensive than in Rochester because they can use existing infrastructure in Italy to keep prices down.
The site marks a key expansion in Europe for Li-Cycle. It has a shredding site in Germany due to open in mid-2023 with more sites to follow in Norway and France.
Under a planned 50-50 joint venture agreement, Glencore would provide low-cost capital to Li-Cycle, which would take the lead in engineering the plant and pay its Swiss partner back through the business’s cash flows.
The feasibility study is expected to be completed in mid-2024 with operations commencing in late 2026 or early 2027, if a final investment decision is made.
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