[SMM Analysis] US Imposes Emergency Restrictions on Lithium Battery Black Mass Exports, Locking in Critical Recycling Raw Materials with Regulations

Aug 6, 2026

Against the backdrop of the US expediting its domestic battery supply chain yet remaining reliant on critical minerals imports, the Bureau of Industry and Security (BIS) of the US Department of Commerce issued an interim final rule on Aug 5, 2026, imposing export controls on certain recycled battery materials. The most impactful measure was the temporary export restriction on black mass—an intermediate product in lithium battery recycling. Rather than a blanket ban on lithium battery-related material exports, this move precisely targets recycled intermediate products rich in lithium, cobalt, and nickel, aiming to cut off at the source the rapidly growing domestic pool of retired batteries.

The legal basis of this interim final rule is Section 101 of the Defense Production Act of 1950, activated via a presidential determination. Under the DPAS framework, BIS issued a directive allocation order requiring that sales of the relevant materials must first prioritize US domestic demand. Per the rule's definition, "black mass" covers the powdery mixture rich in lithium, cobalt, nickel and other metals obtained after discharging, crushing, and sorting end-of-life batteries, as well as recycled intermediate materials that have undergone preliminary physical processing but have not yet entered the chemical refining stage. Fully assembled new batteries, battery modules, and end-of-life batteries not in this intermediate state are not directly subject to this control measure.

This interim final rule, published in the Federal Register on Aug 6, 2026, will take effect 21 days later, i.e., restriction measures will be fully enforced from Aug 27, 2026. The rule remains valid until Aug 27, 2027.

Currently, global crushing and pretreatment capacity for lithium battery recycling in 2026 stands at approximately 3.42 million mt/year, with China's capacity accounting for around 70%. Recycling enterprises in China are widely distributed and have large capacities, while North America accounts for roughly 7% of global crushing and pretreatment capacity. In the hydrometallurgy recycling segment, China's hydrometallurgy capacity accounts for 80% or more. Moreover, in the Interim Administrative Measures for the Recycling and Comprehensive Utilization of Retired New Energy Vehicle Power Batteries, issued on Apr 1, 2026, recycling efficiency requirements are clearly stipulated: a comprehensive recovery rate of no less than 98% for Ni-Co-Mn and no less than 85% for lithium. At present, the capacity of recycled lithium carbonate in 2025 is 556,000 mt, nickel sulphate 184,000 mt in metal content, and cobalt sulphate 82,000 mt in metal content. Most enterprises achieve a lithium recovery rate above 85%, and nickel and cobalt recovery rates around 97%. China is at the forefront in overall capacity and recovery rates for back-end hydrometallurgy smelting of lithium battery recycling. Although Europe and North America also have hydrometallurgy smelting capacity, most plants are in the trial production stage.

Consequently, in these regions, end-of-life batteries are pre-processed into black mass and sold as an intermediate product to downstream refiners or directly exported to Asia for hydrometallurgical extraction. After the ban takes effect, any black mass without an export license will be unable to leave US customs territory, directly freezing short-term export channels for some recyclers.

SMM believes this temporary export restriction is triggering chain reactions in the lithium battery recycling sector. In the short term, some recycling enterprises that rely on exporting black mass for cash flow face raw material backlogs and risks of defaulting on existing contracts, which may force them to cut capacity and adjust production. In the medium term, this move could accelerate the establishment of integrated capacity for black mass refining, precursors, and cathode materials in North America, pushing recyclers to sign long-term volume commitment agreements with refiners and battery manufacturers, thereby reshaping the logistics and business model of the US lithium battery recycling industry chain.

SMM New Energy Research Team

Wang Cong 021-51666838

Ma Rui 021-51595780

Feng Disheng 021-51666714

Lv Yanlin 021-20707875