Battery Recycling Boom: Capitalizing on the EV Revolution’s Next Big Commodity
Electric vehicles (EVs) are taking North America by storm, fueling a voracious appetite for battery materials like lithium, cobalt, and nickel. The surge in demand for these critical minerals has turned used batteries and scrap into a treasure trove – the next big commodity of the EV revolution. In the United States, Canada, and Mexico, a battery recycling boom is underway as companies and governments race to secure these valuable materials. Midas Peak, as a leading commodity brokerage, keenly understands this emerging market for recycled battery metals and its transformative impact on the supply chain. In this post, we delve into the factors driving the battery recycling boom, the key developments in North America, and how this trend is reshaping commodity markets.
EV Revolution Drives Critical Mineral Demand Surge
The clean energy and EV boom has unleashed unprecedented demand for critical battery minerals. Global EV adoption is accelerating rapidly – the International Energy Agency projects that by 2040, demand for lithium for EVs and energy storage could soar over 40 times current levels, with cobalt and nickel demand growing by 20–25 times. In North America, EV sales are climbing each year, and both the U.S. and Canada have set ambitious targets for electric car adoption. By 2030, Canada anticipates annual zero-emission vehicle sales of 1.2 million, about 16% of all vehicles – up from just 5.6% in 2021. The U.S. has similarly targeted 50% of new car sales to be electric by 2030, signaling a massive upcoming fleet of EVs.
Each electric vehicle battery pack contains significant amounts of lithium, cobalt, nickel, and other materials. For example, a typical EV battery (roughly 60 kWh) may require around 6 kg of lithium, 11 kg of cobalt, 30 kg of nickel, and 10 kg of manganese. Supplying these minerals at such scale is a major challenge. Traditional mining and refining can barely keep up – in fact, the U.S. currently mines and processes almost 0% of the battery minerals it needs, while China dominates the refining of lithium, cobalt, and nickel. This imbalance has led to volatile commodity prices. Lithium, for instance, saw a 13-fold price spike from about $6,000 per ton in 2020 to over $78,000 per ton in 2022 amid a supply crunch. Although prices have fluctuated since, the long-term trajectory points upward as EV production expands. Cobalt and nickel have similarly experienced supply-driven price swings.
Facing a potential critical minerals shortage, policymakers and industry leaders are calling these materials “not a sideshow… but part of the main event” in the clean energy transition. The quest for lithium and other battery metals has been likened to a modern gold rush. Yet building new mines is slow – it takes an average of 29 years for a U.S. mine to move from discovery to production. This is where battery recycling comes in as a game-changing solution. By reclaiming metals from used batteries, North America can supplement mined supply, reduce dependence on overseas sources, and ease the strain on raw material markets.
Battery Recycling Emerges as North America’s New Goldmine
Once considered waste, end-of-life lithium-ion batteries are now viewed as urban mines rich in valuable commodities. Recycling these batteries can recover critical elements like lithium, nickel, and cobalt, which can be reintroduced into the supply chain. This creates a sustainable loop that both cuts down on hazardous waste and provides a crucial new source of materials for the EV industry. Importantly, recycling uses far less time and energy than mining virgin material – it avoids the lengthy mine development cycle and can dramatically reduce environmental impacts. With proper technology, more than 95% of a lithium-ion battery’s metals can be recovered. One recycling firm even claims to reclaim 98% of battery material through advanced shredding and chemical processes.
North America’s battery recycling industry is still in its early stages but is scaling up rapidly. In the United States alone, planned recycling facilities are set to triple output within a few years. An estimated additional 76,000 tons of annual recycling capacity is under development, which would boost U.S. recycling output to about 111,000 tons per year – enough to handle a six-figure number of EV battery packs each year. To put current efforts in perspective, U.S. processors already reclaimed roughly 175,000 tons of battery materials in 2023, and an extra 198,000 tons of capacity is expected to come online in the next few years. Much of this comes from recycling manufacturing scrap and consumer batteries, but as more EVs reach end-of-life in the late 2020s, recyclers will see a flood of used battery packs available for material recovery.
Government policy is also driving this boom. Europe has enacted new rules requiring that 25% of battery material demand be met by recycled sources by 2030, and North America is following suit with its own incentives. Automakers are partnering with recycling startups to “close the loop” on battery materials, turning spent batteries into a domestic source of lithium, cobalt, and other commodities. As one industry observer noted, extracting valuable metals from old batteries is often “easier than mining” them from the ground. In short, a battery recycling boom is underway, and it is positioning North America as a major supplier of recycled critical minerals – effectively a new goldmine built on yesterday’s batteries.
United States: Incentives Fueling a Recycling Industry
The United States has recognized that onshore battery recycling is essential for both economic and strategic reasons. The Biden Administration has emphasized that expanding domestic EV battery recycling capacity is crucial for supply chain resilience and reaching clean energy goals. To catalyze this industry, a suite of policies and investments have been unleashed in recent years. The landmark Inflation Reduction Act (IRA) of 2022 is a game-changer: it not only provides consumer EV tax credits but also contains powerful incentives for the battery supply chain. Notably, the IRA’s Clean Vehicle Credit requires automakers to use a certain percentage of battery minerals sourced from the U.S. or free-trade partners, or recycled in North America – starting at 40% in 2023 and rising in subsequent years. This means using recycled lithium, cobalt, or nickel from U.S./Canada/Mexico counts toward qualifying an EV for a $7,500 tax credit, a strong motivator for manufacturers to incorporate recycled material.
Multiple federal programs and funding initiatives are now in place to boost U.S. battery recycling, including:
Advanced Energy Project Credits & Grants: Generous tax credits (e.g. 48C) and grants support companies establishing recycling facilities or upgrading equipment . For instance, the Department of Energy (DOE) awarded $2 billion in loan support to Redwood Materials – a leading recycler – to build a massive battery materials campus in Nevada. This facility will produce critical battery components (like copper foil anodes and nickel-rich cathode material) by recycling end-of-life batteries and scrap, ultimately supplying material for about 100 GWh of new batteries annually. Such projects directly feed back into EV production, creating a closed-loop supply on U.S. soil.
Clean Vehicle Credit (IRA): As mentioned, new EVs must contain increasing levels of North American-sourced or recycled minerals to qualify for the full credit. Starting at 40% and ramping up to 80% by 2027, this requirement has effectively created a built-in market for recycled battery material. Automakers are forging supply contracts with recyclers to secure domestically processed lithium, nickel, and cobalt needed to meet these thresholds.
R&D and Collection Programs: The federal government launched research initiatives like the Battery Recycling R&D Center and grant programs for battery collection and recycling innovation. These efforts fund new technologies (for example, advanced hydrometallurgical processes to extract metals more efficiently) and help set up nationwide systems for collecting used batteries from consumers and dealerships. By improving technology and logistics, the U.S. aims to make battery recycling more economical and widespread.
Thanks to these incentives, the U.S. recycling industry is gathering momentum. A wave of startups and facilities – Redwood Materials, Li-Cycle, Ascend Elements, and others – are scaling up operations across the country. They are clustering near new battery gigafactories to recycle manufacturing scrap and prepping to intake the first big wave of retired EV packs by the late 2020s. By one estimate, U.S. recyclers will have capacity to process 1.3 million EV batteries per year, far exceeding the ~341,000 batteries expected to reach end-of-life domestically by 2030. In the short term, this means competition for feedstock (and the need to source batteries that might otherwise be exported as used vehicles ). But in the longer term, this excess capacity positions the U.S. to handle the coming surge of spent batteries. It’s a strategic bet: build it now so we’re ready to harvest the “black gold” (often called black mass once batteries are shredded) from millions of EVs in the future.
The U.S. is effectively creating a new domestic commodity stream. Recycled lithium carbonate, nickel sulfate, and cobalt compounds from these facilities will enter the market, lessening reliance on overseas raw materials. This not only strengthens energy security but could help stabilize commodity prices over time. As an expert in commodity brokerage, Midas Peak recognizes that U.S.-sourced recycled battery metals are fast becoming a valuable class of tradable commodities – one with supply and demand fundamentals driven by technology adoption and policy, rather than traditional mining alone.
Canada: Critical Minerals Strategy and Recycling Leadership
Canada, rich in natural resources, is positioning itself as a key player in both mining and recycling of battery materials. In December 2022, the Canadian government introduced Canada’s Critical Minerals Strategy, an ambitious blueprint to grow domestic expertise across the entire battery supply chain – “from mining to manufacturing to recycling”. The strategy underscores that “there is no energy transition without critical minerals,” and that Canada aims to develop capabilities at every stage, including recovery of value from waste and end-of-life products . By investing in recycling, Canada not only manages waste from used electronics and EV batteries, but also lessens the need for new mines to meet growing demand.
Government support in Canada has ramped up for projects that strengthen the critical minerals loop. In March 2025, the federal government welcomed a proposal by Electra Battery Materials to build a cobalt sulfate refinery in Ontario – a move to domestically refine battery-grade cobalt needed by EV manufacturers. Announcing the project, Canada’s industry minister stated that “Canada has everything it takes to be a leading force in critical minerals processing, manufacturing and recycling”, reinforcing the country’s commitment to battery material recycling as part of its economic strategy. Indeed, Canada’s leaders view the growing demand for critical minerals as a generational opportunity to anchor supply chains in Canada and create jobs in the green economy.
Several Canadian companies are at the forefront of battery recycling innovation. Li-Cycle, founded in Canada, has developed a breakthrough method to safely process lithium-ion batteries into a recyclable black mass and then refine it into battery-grade lithium, nickel, and cobalt. The company has established recycling “spoke” facilities in Ontario and other provinces, as well as in multiple U.S. states, and is building a major hub facility in New York (with support from a $375 million U.S. DOE loan) to produce lithium carbonate and nickel sulfate from recycled materials. Canada is also leveraging partnerships; for instance, it is coordinating with the U.S. on cross-border critical mineral supply through agreements like the USMCA trade pact and specific bilateral initiatives. This means minerals recycled in Canada can count toward U.S. EV battery content requirements, making Canadian recycling an integral part of the North American ecosystem.
On the policy front, Canada is exploring extended producer responsibility and other regulations to ensure batteries are collected and recycled at end-of-life. The government has signaled support for establishing a “battery passport” system to track minerals through their lifecycle and ensure responsible sourcing (including recycling content). Moreover, Canada’s zero-emission vehicle mandates – which require an increasing percentage of sales to be electric – imply that by the 2030s and 2040s, a huge wave of used batteries will be coming to recycling streams. By one projection, Canada could have 4.6 million EVs on the road by 2030; many of these will need recycling in subsequent decades. Thanks to early investments and its critical minerals strategy, Canada is well-placed to handle this future influx and turn it into a commodity advantage. In sum, Canada views recycled battery materials as a strategic resource, complementing its mineral mining, and Midas Peak observes that the country is building a reputation as a reliable supplier of both freshly mined and sustainably recycled battery commodities.
Mexico: National Lithium Policy and Early Recycling Opportunities
Mexico is the third piece of North America’s battery materials puzzle, with a unique approach rooted in its resource nationalism and emerging industrial base. On one hand, Mexico holds significant lithium reserves – an estimated 1.7 million tonnes of lithium, chiefly in the northern state of Sonora. In 2022, Mexico made bold moves to nationalize its lithium resources. President Andrés Manuel López Obrador’s government passed a reform to the mining law in April 2022 declaring lithium a strategic mineral reserved for the nation, and by August 2022 had created a state-owned company, Litio para México (LitioMx), to oversee all lithium exploration, mining, and refining in the country. In early 2023, a decree established a 234,855-hectare lithium mining reserve in Sonora – effectively securing a large zone for state-led lithium development. These steps aim to ensure Mexico retains control over “white gold” and uses it to benefit domestic industry, rather than simply exporting raw lithium. For Mexico, the EV revolution offers a chance to climb the value chain, and lithium policy is a centerpiece of that ambition.
At the same time, Mexico is embracing battery recycling and circular economy principles, recognizing that reclaimed materials can supplement mined lithium and support a local supply chain. The country’s growing automotive manufacturing sector (one of the largest in the world) is rapidly gearing up for EV production – major automakers, including U.S. and German companies, are retooling plants in Mexico to build electric cars. This means in coming years, Mexico will not only produce EVs but also generate battery manufacturing scrap and, eventually, used batteries from those vehicles. Two factors make Mexico an attractive place to develop recycling, according to experts: first, Mexico already generates about 1.5 million tonnes of electronic waste annually (more than the rest of Central America combined), yet recycles only ~3.5% of it – indicating a large untapped feedstock of lithium-ion batteries from electronics and vehicles. Second, with EV production ramping up, a domestic recycling industry could both manage waste and supply material back to new battery makers in Mexico.
Initial steps are underway. Notably, China’s Ganfeng Lithium – one of the world’s top lithium producers – announced plans to build a lithium-ion battery recycling plant in Mexico to complement its investment in the Sonora lithium mine. Together, the new mine and recycling facility would form a major node in the regional supply of lithium, edging closer to the ideal of a closed-loop production system where materials from old batteries are fed back into new ones. Ganfeng’s CEO noted that Tesla has been selling EVs in Mexico for years now, and fleets of Chinese-made electric buses operate across Latin America – all these batteries will eventually need recycling, and Mexico can serve as a recycling hub. Separately, an initiative supported by the German development agency GIZ has been working with a Costa Rican company, Fortech, to establish battery recycling operations in Mexico. Fortech, which already runs the first lithium-ion recycling plant in Central America, plans to build a second plant in Mexico and has demonstrated technology to shred batteries and extract a concentrated “black mass” of metals. The Mexican government, with GIZ’s advice, is formulating regulations to support a proper recycling ecosystem nationwide. These early efforts indicate that Mexico is keen to not be left behind in the recycling boom.
Mexico’s push is also driven by practical future concerns. Studies by the University of California project that as EV adoption grows, Mexico could see the total mass of deregistered EV batteries skyrocket from just 1,942 tons in 2035 to over 1.2 million tons in 2050. In other words, by mid-century, Mexico will have a colossal volume of end-of-life EV batteries to deal with – either a looming waste crisis or a valuable resource stream, depending on the actions taken now. Establishing recycling capacity and cross-border recycling programs (potentially in partnership with the U.S. and Canada) is viewed as essential to handle this wave responsibly. The good news is that Mexico’s lithium nationalization policy could complement recycling: domestically sourced lithium – whether mined or recycled – positions Mexico as a critical minerals supplier within North America’s EV supply chain. By retaining control of lithium and fostering recycling, Mexico can supply material for batteries assembled in-country or exported to the U.S., aligning with the IRA’s North American content requirements.
For Midas Peak and industry watchers, Mexico represents a frontier of opportunity where policy, natural resource, and emerging tech converge. If successful, Mexico will add recycled lithium, cobalt, and other materials to its portfolio of commodities, enhancing North America’s collective security of supply.
A New Commodity Frontier – Midas Peak’s Perspective
The rise of battery recycling in the United States, Canada, and Mexico signals the birth of a new commodity frontier. As the EV revolution accelerates, the materials inside batteries – lithium, cobalt, nickel, and more – are becoming as strategically important as oil has been for decades past. What’s different is that unlike oil, these critical minerals can be reused and circulated in a closed loop. This has profound implications: recycled battery metals are set to become a mainstream source of supply, traded and valued right alongside freshly mined minerals. In fact, the North American battery recycling market was valued around $3.4 billion in recent years and is projected to double to $7.5 billion by 2030. The subset focused just on EV batteries is growing explosively – from a modest ~$60 million in 2023 to an estimated $2.3 billion by 2032. These figures underline that recycled materials are no longer a niche or a mere environmental play; they are the EV revolution’s next big commodity.
From our vantage point at Midas Peak, a brokerage with deep expertise in commodity markets, we recognize that navigating this evolving landscape requires authoritative insight and foresight. Recycled lithium and cobalt salts, nickel-bearing alloys, and even graphite recovered from old cells are becoming tradable assets with their own supply-demand dynamics. We have already seen how policy incentives, technological breakthroughs, and corporate investments are aligning to create a robust market for recycled battery materials in North America. This integrated North American approach – U.S. innovation and funding, Canadian strategy and resources, Mexican initiatives – is creating a reliable regional supply chain that can weather global shocks. It also offers savvy investors and companies a chance to capitalize on a sustainable commodities boom at its inception.
In summary, the battery recycling boom is turning what once was scrap into strategic stock. It satisfies a growing demand for critical minerals, reduces environmental footprint, and anchors a new industry on North American soil. For businesses involved in EVs, energy storage, or raw materials, staying ahead in this domain is crucial. Midas Peak stands at the forefront of these developments, leveraging our deep understanding of recycled materials markets to guide clients and partners. We are closely tracking trends from the latest regulatory incentives to the output of new recycling facilities, ensuring that we can connect producers of recycled commodities with the manufacturers who need them. The EV revolution is not just about electrifying transportation – it’s also about forging a circular supply chain for the materials that make it possible. The boom in battery recycling is here, and with it comes a wealth of opportunity to be seized by those with the expertise to navigate the next big commodity of the clean energy era.