【SMM Analysis】Analysis of China's Lithium Battery Recycling Process and the Current Situation of the Black Powder Market

Current situation of lithium batteries:

With the booming development of the electric vehicle industry and the surging demand for renewable energy storage, the global production and disposal volume of lithium recycling batteries have witnessed explosive growth. As the world's largest electric vehicle market, China is facing dual challenges: it must properly handle the increasing number of retired batteries while reducing its dependence on mineral resources by recycling strategic metals such as lithium, cobalt, and nickel. Secondly, China currently dominates the global lithium battery recycling field, with over 70% of the recycling capacity, covering the entire industrial chain from battery disassembly and crushing to hydrometallurgical purification. Due to the tight supply of recycling raw materials at this stage, market pricing power is mainly in the hands of upstream suppliers. The industry anticipates that once the import and export policies for black powder are officially liberalized, China is highly likely to transform into the world's major importer of lithium-ion battery black powder. Meanwhile, the state has also announced that it will implement the opening of imports of recycled black powder raw materials for lithium-ion batteries and recycled steel on August 1, 2025, but these must not be classified as solid waste and cannot be mixed with other types of recycled raw materials.

Lithium battery recycling process flow:

Understanding the lithium battery recycling process flow is crucial, as this process mainly consists of three core steps: pre-treatment, hydrometallurgy, and material regeneration. During the pre-treatment stage, batteries need to undergo discharge treatment (usually by soaking in brine or using professional discharge equipment) to eliminate safety hazards. Subsequently, they are mechanically crushed and decomposed into components such as black powder, metals, and plastics, and refined separation is carried out using various techniques such as magnetic separation, air separation, and eddy current separation. The purity of the black powder must reach over 92% to proceed to the next stage. In the metal extraction stage, there are currently two main process routes: the hydrometallurgical process dissolves the black powder through acid leaching, then uses solvent extraction technology to selectively separate valuable metals such as cobalt and nickel, and finally obtains lithium carbonate through precipitation. The entire process achieves zero wastewater discharge and has a relatively high collection rate; the pyrometallurgical process extracts metals through high-temperature smelting. Although it has a significant effect on nickel and cobalt recovery, the lithium collection rate is relatively low. Regardless of the process used, the extracted metal materials need to undergo deep purification to meet industry standards and ensure a smooth return to the production cycle system. Currently, the mainstream in the industry is a combined process of crushing and sorting and hydrometallurgy, with a comprehensive metal collection rate exceeding 95%. Although direct regeneration technology, which can reduce energy consumption by 30%, has emerged, it is currently only applicable to electrode materials with intact structures.

Current situation of the black powder market:

Chinese black powder uses a salt-based pricing system for pricing. It should be noted that black powder contains three metal components: lithium, nickel, and cobalt. Each metal content corresponds to a specific benchmark price, and 1% of the metal content is converted into the actual price according to different conversion ratios. The specific conversion ratios are: lithium 18.79%, nickel 22%, and cobalt 20.5%. Taking nickel as an example, the nickel content in NCM black powder needs to be based on the market price of nickel sulfate, first divided by the 22% nickel conversion ratio, and then multiplied by the corresponding discount factor and content; the value calculation of lithium and cobalt also follows the same method. The final total value of black powder is the cumulative sum of the respective benchmark prices of the three metal components divided by the conversion ratio and then multiplied by the discount factor. SMM analyse the recent increase in the price of black powder is mainly due to the simultaneous increase in the prices of raw materials, which has led to price fluctuations. Currently, the overall market situation has not changed much.