Ascend Elements forms joint venture with Elemental Strategic Metals

The US-based battery recycling and material company Ascend Elements has formed a joint venture with Polish Elemental Strategic Metals for recycling of lithium-ion batteries in Poland and Germany. The joint venture, AE Elemental, will own and operate a pre-processing facility in Zawiercie in Poland, which has been built by Elemental Strategic Metals.

The formation of the JV essentially means that Ascend Elements acquires 50% of the plant in Poland which is getting equippmed to discharge, dismantle and process EV batteries. Previous plans for the facility has been an initial capacity of 4,000 tonnes which later can be scaled up to 16,000 tonnes. Elemental's plan has also been to recover lithium, nickel, cobalt and manganese in the plant at a facility which also will recover PGM materials from catalysts and precious metals from e-waste.

In the recent communication this plant is however not mentioned. Instead the joint venture is set to set up a plant in Germany for processing of 25,000 tonnes of batteries, estimated to 18,000 tonnes on cell level. This plant will have a similar set up with dismantling, discharging and shredding.

As a next step the joint venture will extract lithium at the facility in Poland. Recovery of nickel and cobalt is not within the scope of the EV at this moment but if lithium will be recovered a likely solution would either be an nickel cobalt MHP or a nickel cobalt sulphate. That will be processed in subsequent steps, for instance at Ascend Elements.

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With the rapidly increasing capacity for recycling in the whole world a consolidation is inevitable. There is simply not material enough to satisfy the demand for all planned recycling facilities, something that will affect both margins and volumes.

Ascend Elements announced already in 2022 plans to open both pre-processing and material recovery plants in the EU and UK. Despite signficant financing rounds this has since then been delayed. One important reason for this is the Inflation Reducation Act which incentised an a shift of resources to the US, also increasing the scale from initially 60,000 tonnes to an estimated 200,000 tonnes of infeed capacity (cell equivalent). We still expect Ascend Elements to establish operation in UK, not least due to its ties to JLR, which is an early investor in the company. Now with this investment the company has fulfilled already one important part of its original business plan.

While the deal may seem logical with Ascend getting hold of pre-processing capacity and a well funded partner for furtner investments in the region there are several aspects that set the two companies apart. The most obvious one is technology where Ascend Elements is pushing its coprecipitation technology turning leached material directly into precursors. Elmental on their side did plan for and electrowinning technology producing nickel and cobalt metal, manganese oxide and lithium carbonate. Another difference is the sourcing strategy where Ascend has been pushing partnerships with auto OEMs and not least battery manufacturers having SK Ecoplant as one of its owners and partners and SK On in Georgia as one of its first customers. Elemental did from the beginning rarther target all hard-to-recycle material such as portable batteries and batteries contained in E-waste, leveraging its strong global network. All in all it seems there is a big shift in strategy from Elemental Strategic Metal's side.

It also means that now all but two of the recycling companies that have received signficant funding in the US: Li-Cycle, Redwood Material and Ascend Elements now, will have pre-processing operations in Europe while their planned material recovery operations at least by now are mainly located in the US. It is only Cirba Solutions and Critical Mineral Recovery that don't operate facilities outside North America. Recycled materials as such has different kind of value in Europe and North America. The European Battery Regulation will require recycled content in batteries placed on the European market. However it doesn't require that materials neither will be originating in Europe, nor be processed there. In contrast the IRA incentivise the actual processing in the US as batteries with materials recycled in the US are compliant with the $7,500 tax credit for electric cars.

Worth mentioning is that both of the companies have received signficant funding, not least from public and semi-public sources. Elemental has received loan from European Bank for Reconstruction and Development, EBRD of €25M in 2021 and €52M in 2022 and an equity investment of €290M from EBRD, IFC (the World Bank) and PFR (the Polish Development Fund) while Ascend Elements have received grants of €480M in grants from US Department of Energy.