Turning End‑of‑Life EV Batteries into a Competitive Refining Industry
Europe’s EV transition is transforming end-of-life batteries and manufacturing scrap into a strategic “urban mine” of critical raw materials — but Europe still lacks the refining capacity needed to capture this value domestically. As Asian players continue to dominate black mass refining, the continent faces a growing challenge around competitiveness, industrial sovereignty and supply chain resilience.
Summary
- Europe is structurally short on primary critical raw materials (Ni, Co, Li), yet sits on a growing urban mine of electric vehicle (EV) batteries and production scrap circulating on its roads and in its gigafactories.
- Refining these materials into recycled metals (which will ultimately feed into new EV batteries) is a critical step within the recycling chain but it is still immature in Europe. Most European black mass (feedstock for the refining process) is exported and ultimately refined in Asia, particularly China.
- This reflects a structural competitiveness gap: European projects face capital expenditures and operational expenses roughly 2.5–3 times higher than Chinese plants, leading to lower payability for suppliers and structurally weaker margins.
- The EU Battery Regulation will create mandatory demand for recycled content from 2031, and upcoming export restrictions on black mass to non-OECD countries will curb the most direct leakage routes. Yet the regulation still does not require this content to be refined in Europe — leaving significant loopholes that allow European feedstock to flow offshore.
- Left unaddressed, Europe’s competitiveness gap will entrench a costly dependency on Asian refining capacity, making it essential to combine trade protection, secured domestic offtake and targeted subsidies to attract investment, enable technology transfer and build genuine European refining sovereignty.
Europe’s hidden mine – and the refining bottleneck
The EU Battery Regulation is reshaping the EV value chain by mandating minimum levels of recycled content in new batteries by 2031 and 2036, while the EU Automotive Package targets a 90% reduction in automotive CO₂ emissions by 2035. Together, these policies are accelerating EV adoption and turning Europe’s EV fleet into a fast‑growing secondary source of critical battery metals. By 2028, end‑of‑first‑life batteries are expected to overtake manufacturing scrap as the main feedstock for recycling, positioning “black mass” as a strategic resource in Europe.
Europe has already built significant capabilities in EV battery discharging, dismantling and shredding, and several players can now produce black mass at industrial scale. However, the high‑value refining step remains underdeveloped, with most projects still at pilot or early industrial stage and well below the scale of Asian plants. As a result, a large share of European black mass is exported—often via other OECD countries to China—for refining into high‑value recycled salts. This situation is strategically risky for Europe, which loses both the economic value of refining and control over critical materials, while EU OEMs and cell makers become increasingly dependent on Asian recyclers that already meet or exceed the EU’s 2031 recycled content targets, often at lower cost.
Overview of refining projects in Europe (publicly announced refining capacity in kt of black mass, at current and at full-scale ~2030)
State of play: refining capacity and economics in Europe
Europe’s ambitions for battery circularity are running up against an immature and economically fragile refining ecosystem. Despite strong policy momentum and a looming surge in black mass volumes, the refining landscape remains fragmented, sub‑scale and structurally more expensive than in Asia. Most European projects are still at pilot or early industrial stage, with relatively small announced capacities and several flagship initiatives slowed, downsized or postponed. The lack of a large local pCAM/CAM1 manufacturing base further limits outlets for refined battery‑grade salts and weakens the business case for large‑scale investment.
Against this backdrop, the economics of refining in Europe are under pressure. Capital intensity is high, operating costs are elevated due to energy, reagents and labour, and typical margins quickly erode once depreciation is included, leaving many projects hovering around breakeven and highly exposed to metal price cycles. Business models are also shifting: traditional “recycling fee” approaches are giving way to trading models where recyclers must pay for black mass and absorb commodity risk. In response, tolling arrangements with OEMs and cell manufacturers are gaining traction, as they allow recyclers to earn processing fees while clients retain ownership of materials and price exposure, helping to stabilize returns over time.
High-level P&L of a European refining plant, in k€ per ton of black mass per year, 15-30 kt capacity plant, under a trading and tolling models2
Frequently asked questions
Samuel Galbois
Guillaume Crunelle
