New business opportunities opening with lithium battery recycling

As the market grows for lithium ion batteries over nickel metal hydride ones, Vancouver, British Columbia-based financial services firm Canaccord Adams is taking a look at new opportunities expected to arise for lithium battery recycling and which companies are poised to take advantage of it.

Canaccord Research Equity Analyst Eric Glover told the Cleantech Group today that the market’s growth could be tied to potential and substantial lithium price increases, depending on the growth of the hybrid and electric vehicle market.

“The main issue is there’s no main infrastructure in place for recycling these batteries,” he said, referring to the lack of designated U.S. recycling facilities for lithium batteries used in hybrid and electric vehicles.

Glover, one of the authors of a report Canaccord released this week on the topic, said it’s the first time the firm has looked at potential growth of the lithium battery recycling market.

Most hybrid and electric vehicles on the road today used nickel metal hydride batteries, such as the Toyota Prius. But with technology advances, lithium batteries are becoming the preferred choice by the auto industry because they can be smaller, lighter and offer more energy and power potential.

There’s currently little market for lithium battery recycling, with most consumer electronic devices using very small lithium batteries today. It’s also not currently an expensive metal, selling for a few dollars a pound, according to Canaccord.

“It’s a market that’s in its infancy,” he said.

As the auto industry migrates to lithium technology, its recycling is likely to become more favorable and present new business opportunities.

“People think going with hybrid and electric vehicles is a greener alternative. But at the end of the car’s life, there’s a toxic battery that has to be landfilled,” he said.

Canaccord predicts there’s also going to be recycling opportunities for nickel and cobalt metals, which are used in lithium batteries.

Canaccord’s research was sparked by news that Anaheim, Calif.-based battery recycler Toxco was recently granted $9.5 million by the U.S. Department of Energy to construct what is expected to be America’s first lithium battery recycling plant. Toxco’s existing lithium battery recycling operation is in British Columbia.

Last month, Toxco said it plans to build and operate the plant at its existing Lancaster, Ohio site. The facility currently processes lead acid batteries and nickel metal hydride batteries used in hybrid and electric vehicles.

Glover said companies such as Tesla Motors are already recycling lithium ion batteries with Toxco. Tesla has advertised its battery pack to last seven years or 100,000 miles under normal use (see Tesla Motors on an upswing?).

Belgium’s Umicore is recycling a limited number of lithium ion batteries at a plant in Sweden on a pilot basis. And two Japanese companies, Nippon Mining & Metals and GS Yuasa, plan to start collecting lithium ion batteries from scrapped hybrid and electric vehicles to recycle their aluminum.

In July, GS Yuasa (TYO:6674) said it was looking to raise ¥36.7 billion ($397 million) on the public market to invest in lithium ion battery production equipment (see GS Yuasa to raise $397M for Li-ion battery development).

Glover said Canaccord has also been in discussion with Johnson Controls, which is the world’s leading lead acid battery producer. The company recently started making lithium batteries for hybrids and has received government funding to produce nickel-cobalt-metal battery cells and packs (see Johnson Controls scores $299M from DOE for auto batteries).

Johnson Controls hasn’t decided yet whether it would recycle lithium batteries in-house as the market grows, or whether it would outsource to companies such as Toxco, Glover said.

Canaccord said approximately 97 percent of all lead acid batteries are recycled each year.

Glover said recycling requirements for lithium batteries would likely come from state authorities, similar to what’s in place for e-waste recycling. He said states would also need to provide grants and incentives to encourage companies to recycle lithium batteries.

A whole host of companies that make car batteries as well as auto manufacturers would have to comply with such regulations, including Johnson Controls, LG Chem, Panasonic and A123Systems, which went public yesterday on the Nasdaq Stock Market (see A123Systems up and climbing after Nasdaq debut and Will A123Systems revive the IPO market?).

A123 (Nasdaq:AONE) makes advanced lithium ion batteries and battery systems for the transportation, electric grid and portable power markets. A123 has said it expects the market for hybrid and electric vehicle to grow from $700 million today to $5 billion by 2012.

Cleantech developments making news in the past 24 hours

• Metabolix, ADM to open new bioplastics factory
• Rockwool nears construction on Indian insulation factory
• Two Israeli wastewater firms to locate in Michigan
• Al Gore: Super grid is critical to combating the climate crisis
• A quest for CO2 and O2 optimal management with biofuel from algae

View the last week of cleantech developments here | Subscribe to full feed