India's black powder problem with battery recycling

Saad (0:01)

Hello, folks, you're tuned in to Finshots Daily. I'm Saad. If you're new here, welcome. If you're returning, welcome back. In today's episode, we talk about the black mass, the problem standing in the way of India's efforts to recover critical minerals from recycled batteries.

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Last year, China tightened exports of rare earth elements and many technologies and equipment used in lithium ion batteries or LIBs. That became a problem for India because we are still heavily dependent on imports of critical minerals for clean energy and electronics.

In fact, it was China that supplied more than 85% of India's permanent magnet imports by quantity between FY23 and 25 But as you know, minerals like lithium, cobalt, nickel, copper and graphite are essential for electric vehicles, batteries, renewable energy and power grids. That makes them important for India's energy security, especially as the country wants to achieve 500 gigawatts of non-fossil fuel capacity and 50% of its energy capacity from renewables by 2030 So since one door sort of closed, India had to find another way.

The government basically thought we depend on other countries for critical minerals that we need for our renewable energy expansion plans. But if imports become uncertain, we need another source. Building new mines or acquiring mineral assets will take yours. So for the short term, why not recover the minerals we already have in old batteries, e-waste and other scrap? And that's why the government rolled out a 1500 crore rupee incentive scheme. The idea was to recover critical minerals from secondary sources such as LIB scrap. The scheme would run from now until FY 31

It offers a 20% capital expenditure or capex subsidy for the plant and machinery needed for recycling. And also an operating expenditure or opex incentive based on additional sales over the base year. That means a company could receive financial support of about 25 crore rupees if it is a smaller entity, and up to 50 crore rupees if it is a larger one. But there's a catch. This incentive will only go to plants that actually extract critical minerals, not those that only produce black mass. What's that, you ask? Well, you see, LIBs contain valuable materials such as lithium, copper, manganese, cobalt and nickel. Once a battery reaches the end of its life, it can be collected, fully discharged and then shredded. The useful minerals are separated from the rest, and what remains is a black powder called black mass. It contains valuable materials such as lithium, nickel, cobalt, manganese, copper and graphite. But they still need to be separated and refined before they can be used again. Black mass makes up roughly 40 to 50% of total weight of a EV battery, and it's called by this name because it contains a lot of graphite, which is naturally dark. And last week, this black mass became a part of a discussion during a national seminar on critical minerals recycling in India organized by the Ministry of Mines. That's because the last year, the government temporarily banned black mass exports because it wanted to retain as much of it at home as possible and build a stronger domestic ecosystem for battery recycling and refining. And yet, it found that black mass was still being exported by some shredding companies by using incorrect labels so that it could get through export checks. That's despite countries across the world, including several African ones, moving towards restricting the export of minerals without beneficiation.

Beneficiation simply means processing something to increase its usefulness and value. Suppose you dig up a rock containing some small amount of nickel. You don't want to export the entire rock and let someone else extract the useful material from it. You want to process it first and recover the nickel. The same applies to battery recycling. You don't just want to shred a used battery, produce black mass and send it abroad. You ideally want to extract the useful minerals in India itself. That's what the government is concerned about. But here's the thing, despite its concerns, maybe the government should also see why shredding companies are doing this in the first place. You see, India can currently recycle more than 60,000 tons of LIBs every year. This can produce around 30,000 tons of black mass. The minerals you also get from black mass depend on the type of battery it comes from. Two common types are LFP, lithium, iron, and phosphate, and NMC, nickel, manganese, and cobalt batteries. India mainly uses LFP batteries because they are cheaper than NMC batteries. So depending on the battery, Indian black mass can contain different amounts of lithium, iron, copper, and graphite. The problem is that India does not yet have enough facilities to process this black mass and extract the minerals from it. So instead of recovering the valuable minerals in India, recyclers often export the black mass to foreign refineries where those minerals are extracted. Then there's also another problem. Refiners in China and South Korea operate at such a huge scale and can often pay more for black mass. They may also settle payments faster as opposed to Indian refineries who may offer a lower price and take longer to pay up. So Indian shredding and recycling companies are sometimes willing to take the regulatory risk of exporting black mass under a different export code, because they can make a little more money while selling it abroad. What this does is provide less raw material or feedstock to refineries in India. Companies like Rubamin in Gujarat and Atero in Uttar Pradesh need black mass to extract critical minerals that can be eventually used in making new batteries.