Five battery recycling projects among EU's first Strategic Projects – comment and analysis

The European Commission has unveiled 47 Strategic Projects aimed at strengthening the EU’s supply of critical raw materials. Among the selected projects, 10 focus on recycling, with five dedicated specifically to battery materials recovery.

The battery recycling projects are:

• Hydrometallurgy (France) – Led by Orano, this project aims to recycles lithium, cobalt, nickel, manganese, and graphite.

• NorthCYCLE (Sweden) – Led by Northvolt Revolt AB’s with focus on recovering manganese, lithium, graphite, nickel, and cobalt.

• POLVOLT (Poland) – Promoted by Elemental Battery Metals, this project aims to extract nickel, copper, cobalt, lithium, and platinum group metals.

• Portovesme CRM Hub (Italy) – Managed by Glencore's subsidiary Portovesme s.r.l., this project prioritizes lithium and manganese recovery.

• Project Fortum Hydromet (Finland) – Fortum Battery Recycling Oy is developing methods to recycle lithium, graphite, copper, nickel, and cobalt.

Being selected as a Strategic Project means according to the EU commission to benefit from streamlined permitting and from enabling conditions for access to finance. In total the 47 projects require €22 billion in financing to become operationals.

The commission says that streamlined procedures do not imply lower standards on environmental assessment or reduced involvement of the public. Those aspects are decided by Member States and are not the object of the streamlined permitting procedure.

For the financing component the Strategic Projects will be presented and discussed within the financing sub-group of the Critical Raw Materials Board. This sub-group brings together relevant national promotional banks, the European Investment Bank, the European Bank for Reconstruction and Development, and private financial institutions, among others. The sub-group will soon meet to discuss how each Strategic Project can be financially supported. 

CES Comment

Besides the rather astonishing fact that one of the project beneficiaries has entered administration (Revolt AB) what's maybe most striking is how vague the actual benefits actually are and how several of the projects already have uncertain futures.

While Revolt, the recycling company that has been set to support Northvolts battery manufacturing might be one of the first assets in Northvolt's administration state that could be sold on to new owners it's still not known which these owners are and what they intend to do with the company or facility in Skellefteå, Sweden.

Orano's recycling project is still in the plans of the nuclear waste processor. It is however tightly connected to the group's investment in cathode and precursor production, something that the group aims to operate in two joint ventures with the Chinese cathode manufacturer XTC under the name Neomat. A decision on cathode material will be taken in 2025 while the construction of a recycling plant could start in 2027.

Fortum which today is recovering a mixed NMC sulphate from waste batteries aims to be able to recover also lithium and graphite. The situation of the company is however not clear as it is the only recycling company left in the energy company's portfolio, which has declared its intention to focus on its energy business only. This casts doubts on the willingness to invest alongside any credit institute or equity investor.

The Polvolt project run by Elemental in Poland can be barely be called a stranger to permits or public funding. The project, which originally included a now commissioned pre-processing plant, has already received at least €367M in debt and equity funding from EBRD, IFC (the World Bank) and the Polish Development Fund. While the funding indeed gives the project necessary capabilities to succeed the questions is only what difference the status as Strategic Project might make.

Glencore's Portovesme project was restarted by the end of 2024 after having been suspended due to a lengthy permitting process and the financial difficulties of Li-Cycle, Glencore's previous JV partner in the project. This is a brownfield project which obviously could benefit from the status of a Strategic Project. It does however require significant bandwidth of Glencore as the company also is pursuing an acquisition of Li-Cycle and an ability to take over the DOE loan financing for a hydrometallurgical plant in Rochester, New York.

The Commission opened the first call for applications for Strategic Projects from 23 May 2024 to 22 August 2024. It then took seven months to evaluate the projects which at least on the recycling side were well known and in some cases already far in the making. Still it does not seem to be clear what the status of a Strategic Project actually will mean, at least not for financing. It is therefore difficult to see the game-changing effect of today's announcement. Moreover, the processing projects which were the awarded the Strategic Project status along side the recycling side are all focused mainly on primary materials doing little to create a European downstream market for recycled materials. As long as there is no precursor capacity in Europe the market for nickel and cobalt salts will still remain outside the region. On the other hand this makes it easier to reach the CRMA goal of 25% of EU's annual raw material consumption from recycling as the consumption will remain at low levels, although this was surely not the intention of the act.

In our report on the European Material Recovery market we let a door open for the result of the strategic projects, while we still believed it would be difficult for pure recycling projects to succeed if its not supported by more ambitious midstream processing capacity. We can't really see that today's project awards make a significant difference or would change the conclusions in the report.