EDITOR: | July 26th, 2015 | 3 Comments

Lifton on rare earth recycling the right way

| July 26, 2015 | 3 Comments
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lithium-recyclingIn 2007 I represented SQA, the world’s (now) second largest producer of lithium from brines, to the US OEM automotive industry. And the last meeting I attended between GM and SQA was what is called a “teachable moment” for the case of recycling lithium-ion batteries for automotive propulsion systems.

I never for a moment believed in 2007 that General Motors had an interest in buying lithium carbonate from SQA for its (GM’s) own use, but I knew that the then purchasing director of the corporation had an interest in buying commodity metals and chemicals and then consigning them to tier one suppliers so that GM could control the cost of the raw materials and pay only “service” fees for transforming them into OEM automotive components. GM at that time was doing that for copper wire for Delphi for wiring harness produced by Delphi even though it had spun off Delphi 8 years earlier. The control of the prices and flow of the critical raw materials program had continued even through the “independence” of Delphi. It was an excellent program, and although I do not believe it exists today at GM it is well ensconced at Boeing, which uses this not only to stabilize the price of titanium for its Tier Ones but even buys back their floor scraps at a predetermined price.

But back to lithium. The GM/SQA meeting fell apart on a simple issue that surprised me. GM asked that SQA take back end-of-life lithium-ion batteries manufactured with its raw materials for “recycling” or “lawful disposal.” SQA adamantly refused to consider that aspect of the sourcing proposal. At that point I suggested a coffee break, and I took the SQA sales manager aside and asked him to please explain to me their intransigence. He told me that the production of new lithium was much cheaper than any recycling method known to SQA and that therefore unless they raised their prices to accommodate the increased cost of “recycling” it would be uneconomical and make them immediately non-competitive.

I gave him a simple solution. I said that GM, and any other OEM in its situation, was constrained by US law to ensure cradle-to-grave management of potentially hazardous materials knowingly used by them in production. Therefore if SQA would simply agree to “landfill” or otherwise “dispose” of the scrap batteries. And I emphasized that this would be not only a deal maker but if not done a deal breaker.

Alas, my client, continued his intransigence, and that point became an obvious deal breaker.

What has happened in the last eight years to change the response that SQA gave GM that day? Basically SQA’s case for not recycling is stronger today than it was in 2007.

However GM’s situation on cradle-to-grave responsibility is also stronger.

The solution to the “problem” is a careful review of the situational economics with particular attention to the need to capitalize the environmental safety issue.

Not all lithium-ion batteries are prone to overheating, but the most efficient of the currently manufactured chemistries, lithium-cobalt, is unfortunately also the most likely to overheat due to manufacturing defects, which with mass production become almost unavoidable.

During the past decade there have been quite a few start-ups and continue-ons attempting to recycle lithium-ion batteries primarily the ones slowly, but increasingly, used in electric and hybrid vehicle powertrains. I am not aware that any of these recycling ventures is profitable as a free-standing business. The ideal recycler, of course, would always be a subsidiary of a primary producer who could simply add “scrap” to his primary process stream or dispose of unworkable scrap in his tailings. If anyone knows of someone doing this please tell me.

The bad economics of battery recycling are not limited to lithium-ion types.

The first time I heard of nickel metal hydride (NiMH) automotive batteries (mainly from the Toyota Prius) being “recycled” it was in 2005 when I was told that Inco, Sudbury, was adding them to its primary nickel feeds as (relatively) high grade “ore.” The rare earth values were not being separated but would report in the nickel or the cobalt as traces due to the large volumes. So long as those traces did not modify the metallurgical properties of the nickel and cobalt they were ignored, I was told.

I keep reading about Japanese car companies recycling rare earth metals from batteries (or magnets) in places like Vietnam as an example of “recycling ventures,” but in fact these “ventures” just prove my point that such recycling is done profitably only by a company that distributes its operational costs over a supply chain in which some parts are not profitable as free-standing businesses. I note that the “joint ventures” in Viet Nam for recycling batteries and magnets involve entities such as Japan’s ShinEtsu, the second largest rare earth permanent magnet maker in Japan which is uniquely vertically integrated. ShinEtsu sources the necessary rare earths’ concentrates as widely as possible. For example soon from Alkane. It separates them either by tolling or at its own operations in VIETNAM. Rare Earth Metals and Alloys are then produced by tolling in China and Japan as well as in its Viet Nam works. Magnets are then made in Japan and China by ShinEtsu. So when we read that Toyota is recycling batteries in Viet Nam we are most likely reading that Toyota is taking care of its cradle to grave responsibilities for NiMH batteries in the same operation that ShinEtsu has set up to process its factory floor scraps. The ShinEtsu “operation” in Viet Nam, by the way, only is run when sufficient materials, new and/or scrap have been accumulated for a specified batch size. All of this complexity seems to be what low/no information journalists call rare earth “recycling.”

Chinese magnet makers have been recycling, by the way, floor scraps and end-of-life magnets along with any processing waste they can get for many years. It is a big business in China, but again it is ancillary to the production of new magnets (and, I suspect, batteries).

Lead-acid starter and batteries used for starting internal combustion engines and as back-up power for off-grid applications have always been “recycled” in the USA and recycled material constitutes the bulk of lead, and I believe, of antimony, used in new battery production in the USA.

Lead/antimony recycling in the USA is a freestanding profitable business.

The economics of recycling are quite simple. The production of metals from mined ores is both logistically and also energy intensive. The capital costs of mines, refineries, and fabrication facilities are, in the case, for example, of structural metals, such as iron and aluminum, huge. The operating costs for all aspects of a metals supply chain including logistics, labor, regulatory compliance, etc. is gigantic. So, whenever there is an accessible stream of scrap and it can be cheaply processed so as to be able to be re-entered into the “raw material” stream without the cost of the original production energy and logistics it will be eagerly purchased by the operators of that supply chain so long as it is cheaper than “new” material.

This is not to say that politics does not sometimes capitalize environmental management in such a way as to even favor “scrap” feed over new feed as particularly in the case of lead. But in the end it is always simple economics that determines whether or not a recycling project exists.

As I have pointed out in other essays on this site the US scrap stream has contained significant rare earth permanent magnet end-of-life and manufacturing scrap since the year 2000 or even before. In addition rare earth containing NiMH battery scrap is now significant. But no one has yet worked out a way to integrate the recycling of such scraps into a domestic supply chain.

At this point in time a domestic supply chain anchored partially on scrap processed in the USA is do-able. The challenge is to make it a profitable venture.


Jack Lifton

Editor:

Jack Lifton is the Sr. Editor for InvestorIntel Corp. and is the CEO for Jack Lifton, LLC. He is also a consultant, author, and lecturer ... <Read more about Jack Lifton>


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Comments

  • NGS

    Hi,
    Lead battery recycling is enabled not only by direct economics, but also by societal incentives. In many, if not all, US jurisdictions it is illegal to discard an automobile battery as trash. Lead, of course, is an environmental toxin, hence the regulation. Further, many states attach a fee (return incentive fee) to the purchase of an automobole battery. That fee is waived if an old battery is returned to the seller. That fee is, I believe, $ 5 in New York and $ 3 in Texas.
    In addition, Pb recycling from batteries is relatively simple. Pb metal (as opposed to oxide or other compound) comprises perhaps 70-75% of the mass (weight) of the battery. That’s a rich “ore.” And it’s almost all in the metallic zero-valent state.

    July 26, 2015 - 3:13 PM

  • Todd Coy

    Hi Jack. A google search would have turned up a company called Retriev Technologies (formerly Toxco). Retriev has been successfully recycling lithium ion batteries at their BC Canada facility for years. They are also just going through startup of a multi million dollar expansion at their Lancaster Ohio facility for a dedicated facility that will process end of life hybrid and electric vehicle batteries. This will be the only facility in the U.S. doing this activity.

    RTI has also developed a system to segregate out the Anode materials of a NiMh battery for the rare earth content. We have chosen not to pursue that activity at this time, and instead developed a process for alkaline batteries and work with Energizer on getting recycled content into batteries. We would be happy to discuss our activities in the field of advanced battery recycling should you wish. Have a nice day.

    July 26, 2015 - 6:23 PM

  • Jack Lifton

    Todd,

    I would like to have the discussions you suggest. My email address is on line. Please contact me. I am in the suburban Detroit area.

    Jack Lifton

    July 26, 2015 - 7:35 PM

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