Power battery recycling, a "hot" gold mine

Produced by Radar Finance and | Li Yihui, ed. | Deep Sea

The new energy automobile industry is hot, and the power battery after decommissioning has also become a sought-after commodity.

It is understood that due to the recent sharp rise in the price of raw materials such as lithium, cobalt and nickel, the price of power battery recycling has also soared. Some insiders revealed that power battery recycling is now very hot, one price a day. In more extreme cases, the discount coefficient of recycling even appears upside down.

According to the data, the service life of the general power battery is about 5 years, combined with the first batch of promotion and application of China's new energy automobile industry after 2013-2014, the first batch of power batteries has reached the retirement age. The agency conservatively predicts that the power battery recycling market is expected to exceed the scale of 100 billion yuan in 2030.

With the expectation of heating up, head companies such as Ningde Times, BYD and Grimme have laid out their layouts and card slots in advance. Among them, CATL announced on October 12 last year that it would invest 32 billion yuan in industrial park projects involving the recycling of waste battery materials.

However, behind the expectation of the rapid development of the entire industry, there are also problems such as high secondary use costs of decommissioned batteries, and the "regular army" of recycling resources cannot beat the "black workshop".

The price of power battery recycling has skyrocketed

"The rising trend of raw material prices is rapid, China's cobalt, nickel, manganese foreign dependence of more than 90%, the future of the entire power battery production will increase, is bound to need to make up for the shortage of front-end resources through the recycling of batteries." At an industry conference held in October last year, Wang Pan, director of China Automobile Data Co., Ltd., said that the intensification of the contradiction between supply and demand of upstream raw materials has triggered the attention of upstream and downstream of the industrial chain to the recycling of power batteries.

According to public information, in the past year, the upstream raw materials of power batteries, nickel, cobalt, lithium and other metals prices have been in an upward channel, of which the average price of battery-grade lithium carbonate has risen from 50,000 yuan / ton in early 2021 to a recent price of more than 300,000 yuan / ton.

According to business agency data, since October 2021, the price of cobalt has risen from 398,200 yuan / ton to 498,000 yuan / ton, and the unit price in the fourth quarter has increased by about 25.06%, hitting a new high in the past three years.

According to the China Association of Automobile Manufacturers, the final sales of new energy vehicles in China are expected to reach 3.4 million in 2021, and the overall sales of automobiles will reach 25.8 million. If calculated according to this data, the annual penetration rate of China's new energy vehicle market is expected to reach more than 13% for the first time.

The China Automobile Association expects that China's new energy vehicle sales are expected to reach 5 million in 2022, an increase of 47% year-on-year.

With the boom in the production and sales of new energy vehicles, the price of superimposed raw materials has risen sharply, and it has become profitable to recover power batteries to obtain related metal materials. And the higher the price of metal, the higher the price of decommissioned battery recycling.

"Everyone is very hot, one price a day." The relevant personnel of Xiamen Tungsten Holding Subsidiary told the Daily Economic News that some manufacturers expect to increase prices later and will report the prices in the next few days in advance.

It is reported that in the past, under normal circumstances, the profits of recycled enterprises remained in the range of 8-10 points. But now, in order to win a certain number of orders, some merchants in 2-3 points of profit, as long as they do not lose money to compete. What's more, some front-end manufacturers still post money to recycle when the discount coefficient exceeds 100% to obtain the resource utilization of the materials.

The so-called discount coefficient refers to the pricing method when the power battery recycling enterprise purchases decommissioned batteries. When recycling, enterprises must first value the metal elements contained in the battery according to the market price of the metal, and then price it at a discount according to the valuation. For example, the market price of cobalt in East China is 400,000 / ton, and when the enterprise recycles, it will use this price as the benchmark to estimate the metal in the battery, and then multiply it by a discount coefficient of 70% or 80%.

Some recyclers revealed that the discount coefficient is upside down, and manufacturers are willing to pay for recovery, on the one hand, it is expected that the price of nickel and cobalt will rise, on the other hand, in the case of insufficient supply of upstream raw materials, reflecting the market's great desire for supply.

A relevant person from Bangpu Company, which is engaged in battery recycling business under CATL, said: "Recycling is generally based on the price of cobalt, and copper and lithium are not priced. Now the inversion is mainly due to the high price of lithium, everyone is still based on nickel and cobalt, not counting copper and lithium, upside down is normal."

In addition, the decommissioned power battery has become sought-after and related to the improvement of its resource utilization rate.

Generally speaking, when the power battery in new energy vehicles is greater than 20%, it cannot meet the requirements of car driving and needs to be "retired". For decommissioned batteries with an attenuation range of 20%-40%, it can meet the cascade utilization of secondary use, such as in communication base stations, solar street lights, UPS power supplies and other small energy storage fields.

If the attenuation exceeds 40%, the power battery can generally only be disassembled for resource utilization, which has become the second business model of the power battery recycling market. Under the market of doubling and rising raw materials, it is far more cost-effective to directly extract the lithium, cobalt and nickel elements in the battery and utilize them for resource utilization.

Under the amplification of the economic benefits of recycling, many people in the industry also believe that considering the high standard of cascade utilization, the current battery resource utilization is more in line with the actual situation.

Giants have come down to nuggets

Relevant statistics show that power batteries are being regarded as the next outlet, and the market dividend has also made all parties enthusiastic.

According to data from SNE, a South Korean market research institute, as of 2020, China's power battery decommissioning volume will reach about 25GWh, and by 2025, China's power battery decommissioning volume will reach 90GWh.

According to data from the China Automotive Technology and Research Center, the cumulative decommissioning of the domestic power battery market will reach 10 billion yuan in 2020. The agency expects that based on conservative assumptions, if the price of various materials increases by 2% per year on the basis of 2021 in the future, the total scale of power battery recycling in 2030 will reach 107.43 billion yuan.

According to the analysis of China Merchants Securities Research Report, if measured according to the service life of the power battery of 4-6 years, the power battery produced in 2014 began to enter the decommissioning period in batches in 2018, and it is expected that from 2021 onwards, China will usher in the first batch of power battery retirement peak period.

If based on the 4-6-year service life of power batteries and the current sales growth rate of new energy vehicles, the industry expects that after 2025, the annual growth of the number of decommissioned batteries will exceed one million. In March last year, "accelerating the construction of a power battery recycling system" appeared in the 2021 government work report, which was the first time that the topic of "power battery recycling" appeared in the government work report.

Driven by both policy and market prospects, a large number of companies have poured into the battery recycling industry. The data shows that 2020 is the peak period for the registration of power battery recycling enterprises, with 2579 new companies in the whole year, an increase of 253.3% year-on-year; in the first half of 2021, 9435 new registrations were registered, an increase of 2611.2% year-on-year.

However, the main players in the current market are still close to the giants of the new energy industry chain. Among them, Grammy, BYD and Bamp of CATL have become major players in the recycling market.

Grammy, which takes waste cobalt, nickel and tungsten resources and the recycling of electronic waste as its main business, is the absolute leader in domestic battery recycling. The company has started the waste battery recycling business since 2003, and currently has a complete large-scale recycling and recycling industry chain.

On January 4, the company revealed on the interactive platform that the power battery recycling business grew rapidly in the first half of 2021, achieving operating income of 54.737 million yuan, an increase of 75.90% year-on-year. The company said that power battery recycling is the next revenue outlet of the new energy industry, which is an opportunity that only exists in a hundred years.

According to the plan, by 2025, the total recycling of Grimme power batteries will exceed 250,000 tons, and it is planned to cooperate with the upstream and downstream of the world to build power battery recycling bases in Indonesia and Europe.

As a leading enterprise in domestic new energy OEMs, BYD also laid out earlier in the power battery recycling business. At present, more than 40 power battery recycling outlets have been set up across the country, and three steps of fine dismantling, material recycling, and activation and comprehensive utilization have been taken to maximize economic benefits.

In addition, BYD has also reached a strategic cooperation with China Tower Company, a major power battery recycler, to jointly build a shared recycling network and realize the large-scale utilization of decommissioned batteries.

In 2015, CATL acquired Guangdong Bangpu. At present, Bangpu has formed three major industrial sectors of "battery cycle, carrier cycle and cycle service", specializing in digital battery and power battery recycling and utilization, gradient energy storage and utilization.

On October 12 last year, CATL announced that it would invest 32 billion yuan in industrial park projects involving the recycling of waste battery materials, mainly to build intensive and large-scale production bases with waste battery material recycling, lithium iron phosphate and ternary precursors, lithium iron phosphate, lithium cobalt oxide and ternary cathode materials, graphite, phosphoric acid, etc., which are planned to be implemented by ningbo Bangpu, a subsidiary of Guangdong Bangpu and its holding subsidiary.

The latest data show that Bangpu annual treatment of waste batteries total of more than 6000 tons, the annual production of nickel, cobalt, manganese hydroxide 4500 tons, the total yield of more than 98.58%, recycling scale and resource recycling capacity ranked first in the industry.

In addition to the above enterprises, in the second half of 2021, LG Energy, SK Innovation, Samsung SDI, Tesla, Guoxuan Hi-Tech, Yiwei Lithium Energy and other companies have entered the market, and power battery recycling has become another wrestling field for giants.

There are still industry problems to be solved urgently

However, under the favorable policies and industries, there are also various problems and restrictions in the promising power battery recycling market.

In the two recycling processes of batteries, the main problem of cascade utilization is the evaluation of the remaining life and performance of the battery.

Since 2018, the Ministry of Industry and Information Technology has announced three batches of 47 enterprises to enter the list of "new energy vehicle waste power battery comprehensive utilization industry specification conditions", commonly known as "white list enterprises" in the industry.

For these whitelisted companies, recycling must meet certain safety and environmental standards. For the received battery, it is first necessary to diagnose how much energy is left, what losses are in the process of use, etc., in order to formulate its reuse plan. In practice, the power battery manufacturers' restrictions on the confidentiality of battery technical information make it difficult for recycling companies to read key technical information such as power management systems and communication protocols, and cannot effectively define battery life.

And even if the same brand is the same batch, each battery is in different condition after decommissioning, which makes it more difficult to reuse.

The technology of resource reuse is relatively mature, but the lack of evaluation criteria and systems has led to an imperfect pricing mechanism. At the same time, the requirements of pollution control and minimum extraction rate in the process of precious metal extraction require mature technology and equipment to deal with, but this means paying a higher cost.

And those "small workshops" outside the white list, because they are outside of effective supervision, they do not have the cost and burden of this. Therefore, the phenomenon that formal recycling companies are not competing for small workshops often occur in the market, and a large number of decommissioned batteries flow to informal recycling channels with higher bids.

For the problems in the utilization of the ladder, some insiders suggest that car companies sign intellectual property confidentiality agreements with recycling enterprises, or establish a joint operation model, open up some data to facilitate recycling companies to more quickly identify the life cycle of decommissioned batteries, battery performance and other aspects of information, and reduce the cost of ladder utilization.

The chaos of dismantling and recycling needs to be solved through technical means. WM Motors has revealed that it is trying to establish power battery traceability coding rules, using unified battery coding to ensure that every power battery has traces to follow.

Car companies such as SAIC and Weilai, which have laid out the power exchange business, completed the detection of batteries during the power exchange, and introduced batteries that meet the decommissioning standards to qualified enterprises to deal with, which also solved the circulation problem of scrapped batteries to a certain extent.

Some points out that in the current new energy vehicle market, mainly lithium iron phosphate and ternary lithium battery two types of materials, only to solve the recycling and reuse of this last closed loop, will not let sodium-ion batteries, hydrogen-powered batteries easily replaced.

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