The profitability of lithium-ion battery recycling is subject to the prices of both waste battery and battery materials. And this report will guide you over the cost and profit of LFP battery hydrometallurgical recycling.
LFP battery hydrometallurgical recycling is to recover primarily lithium carbonate and iron phosphate from battery black mass. Among them, the recovered iron phosphate is applied to low-end products, without extensive commercial use. In other words, the recovered iron phosphate usually brings little profit to the hydrometallurgical plants. Instead, lithium carbonate is where the hydrometallurgical plants make profit.
The cost analysis is usually based on industrial grade lithium carbonate since the plants present great differences in cost when purifying industrial grade lithium carbonate to obtain battery grade lithium carbonate.
Source: Mysteel
It can be seen from the above charts that, the prices of LFP black mass and industrial grade lithium carbonate are positively correlated. But the fact is that the hydrometallurgical plants mostly source the black mass from the traders, which are more sensitive to the market changes and comparatively sentimental.
Collectively, the traders will usually over-react to the price changes. That is, the traders will significantly raise the black mass prices and overdraw the momentum when the lithium carbonate prices rise rapidly, or hold the prices firm and await the price pivot when the lithium carbonate prices slump suddenly.
The theoretical profit margin of LFP hydrometallurgical recycling is based on industrial grade lithium carbonate market price minus black mass purchasing price.
Source: Mysteel
When Mysteel industrial grade lithium carbonate and LFP black mass (Li 3.8%) market price reported Yuan 109,000/tonne and Yuan 4,800/mtu respectively, the real-time profit margin stood at -19% or Yuan -3,470/tonne, based on a lithium recovery rate of 90% and the processing cost of Yuan 28,000/tonne.
Apart from the market prices, the hydrometallurgical plants could improve their profitability by controlling the processing cost, which usually consists of equipment depreciation, labor cost, auxiliary materials, financial management, etc.
While the auxiliary materials and financial management cost hardly changes, the cost control is possible by reducing the expenses on labor and logistics, which, however, is unlikely to significantly bring down the total cost.
As such, some hydrometallurgical plants resort to hedging tools for risk control.
Written by Aggie Hu, huchenying@mysteel.com
