【SMM analysis】US Imposes Temporary Export Controls on Lithium Battery Black Mass to Secure Domestic Supply Chain

SMM August 7 News:

Against the backdrop of the United States accelerating the build-out of its domestic battery supply chain while continuing to depend on foreign sources for critical minerals, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued an interim final rule on August 5, 2026, imposing export controls on certain recycled battery materials. The most impactful measure is a temporary export restriction on black mass — an intermediate product of lithium battery recycling. This move does not constitute a blanket cutoff of all lithium battery material exports; rather, it precisely targets recycled-stage intermediates rich in lithium, cobalt, and nickel, with the intent of intercepting at the source the rapidly growing domestic pool of end-of-life battery resources.

The legal basis for this interim final rule is Section 101 of the Defense Production Act of 1950 (DPA), activated by a Presidential Determination. Acting through the BIS under the Defense Priorities and Allocations System (DPAS) framework, the Department of Commerce issued a directive rating order requiring that sales of the relevant materials be prioritized to satisfy U.S. domestic demand. Under the rule's definition, "black mass" encompasses the powder mixture rich in lithium, cobalt, nickel, and other metals obtained after end-of-life batteries undergo discharging, shredding, and sorting, as well as recycled intermediates that have undergone preliminary physical processing but have not yet entered the chemical refining stage. Finished new batteries, battery modules, and end-of-life batteries not in this intermediate state are not directly subject to this control.

This interim final rule takes effect from the date of its publication in the Federal Register on August 6, 2026, with the restriction measures fully enforced 21 days thereafter — i.e., from August 27, 2026. The rule remains in effect until August 27, 2027.

Currently, global black mass production capacity in 2026 stands at approximately 3.42 million tonnes per year, of which China accounts for roughly 70%, with a widely distributed base of lithium battery recycling enterprises and substantial capacity. North America, by contrast, accounts for approximately 7% of global black mass pre-processing capacity. On the hydrometallurgical recycling side, China's share of hydrometallurgical capacity reaches 80% or above. Furthermore, the Interim Measures for the Administration of Recycling and Comprehensive Utilization of End-of-Life New Energy Vehicle Power Batteries, published on April 1, 2026, explicitly mandates recovery rate requirements: the comprehensive recovery rate for nickel, cobalt, and manganese shall not be less than 98%, and the lithium recovery rate shall not be less than 85%. At present, the 2025 production capacity for recovered lithium carbonate is 556,000 tonnes, for nickel sulfate 184,000 metal tonnes, and for cobalt sulfate 82,000 metal tonnes. Moreover, most enterprises achieve lithium recovery rates above 85% and nickel-cobalt recovery rates of approximately 97%. China holds a leading position globally in terms of both capacity and recovery rates in the back-end hydrometallurgical refining of lithium battery recycling. Although Europe and North America also possess some hydrometallurgical refining capacity, most of it remains at the pilot or trial-production stage.

Consequently, in those regions there has been a practice of pre-processing end-of-life batteries into black mass and selling it as an intermediate product to downstream refiners, or directly exporting it to Asia for hydrometallurgical extraction. Following the entry into force of this restriction, any black mass without an export license will be unable to leave the U.S. customs territory, directly causing the short-term freezing of export channels for certain recyclers.

SMM believes that this temporary export restriction will trigger a chain reaction across the lithium battery recycling sector. In the short term, some recycling enterprises that rely on black mass exports for cash flow face risks of feedstock accumulation and contract default, and may be forced to reduce or adjust capacity. In the medium term, this move is likely to accelerate the deployment of integrated black mass refining, precursor, and cathode material capacity in North America, compelling recyclers to enter into long-term volume-locking agreements with refiners and battery manufacturers, thereby reshaping the logistics and business models of the U.S. lithium battery recycling supply chain.