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Narada Power Formally Enters The Lithium Battery Recycling Industry to Cope with The "Responsibility Extension" Policy

After several years of development, the power battery recycling period has come. Calculated based on the number of power lithium batteries used by commercial vehicles (3-year battery life) and passenger vehicles (5-year battery life), the capacity of scrapped power batteries in China is expected to reach 11.8Gwh by 2018.

Zhejiang Narada Power Source Co., Ltd. (Narada Power) announced on November 7 that it intends to set up the wholly-owned subsidiary Anhui Narada Huabo New Material and Technology Co., Ltd. (Narada Huabo New Material) with its own funds of RMB 100 million to carry out lithium recycling and new materials business and integrate the lithium battery industry chain.

Since 2016, the Ministry of Industry and Information Technology (MIIT) has issued 3 documents: the Electric Vehicle Power Battery Recycling Technology Policy (2015 Edition), Standards and Conditions for the Comprehensive Utilization Industry of Waste Power Batteries for New Energy Vehicles and Interim Measures for the Management of Announcements about Meeting the Standards for the Comprehensive Utilization Industry of Waste Power Batteries for New Energy Vehicles to specify the main parties responsible for the recycling of waste batteries and strengthen industry management and recycling supervision.

However, the overall operation model of the domestic automotive power lithium battery recycling industry is still in the groping stage. As the recycling cost is high and the profitability is unclear, some enterprises engaged in lithium battery recycling are out of consideration for future qualifications and "responsibility extension".

Narada Power already has the lead-acid battery recycling experience. In June 2015, the company acquired 51% equity in Anhui Huabo Renewable Resources Technology Co., Ltd. (Huabo Technology) at a price of RMB 316 million to formally enter the lead recycling industry. An integrated industry chain pattern characterized by "lead recycling - lead regeneration - lead smelting - lead acid battery" has been created.

In April 2017, Narada Power acquired the remaining 49% equity in Huabo Technology at a total price of RMB 1.96 billion through non-public offering of shares and cash payment, establishing a presence throughout the entire battery industry chain from upstream materials, midstream batteries, to downstream system integration, solutions and operation services.

At that time, Huabo Technology had included lithium battery recycling into its strategic development plan and with its successful experience in the lead-acid battery recycling sector, it had gradually entered the lithium battery recycling-related sectors.

Narada Power said that its technology, marketing and channel resources in the battery recycling and comprehensive resource utilization sector can be quickly applied and transferred to the lithium-ion battery recycling and new materials business, which will help the company to quickly create a complete lithium battery industrial chain characterized by "products and systems - operation services - recycling and reuse - new materials".

Meanwhile, based on its original waste battery recycling system and its technical, capacity and marketing advantages in the environmental resource reuse industry, Narada Power has carried out lithium battery recycling business, which will help the company to create an industrial platform of circular economy and lay the foundation for the company to shift to the system integration and operation services strategy.

Narada Power told the reporter in a written interview that its recycling business is not limited to the batteries it produces and sells, and that Narada Huabo New Material has open recycling channels.

Regarding the operation model, Narada Power is mainly engaged in the collection and recycling of waste nonferrous metals, primarily waste lithium-ion batteries. In the meantime, the company boasts channel and business advantages in cascade utilization and can detect, classify, dismantle and reassemble waste lithium-ion batteries.

Like Narada Power, some other battery enterprises are also extending their industrial chain to the recycling industry. For example, Contemporary Amperex Technology Limited (CATL) acquired Brunp Recycling Technology, China Aviation Lithium Battery built a lithium-iron phosphate power battery recycling and trial production workshop, and the upstream materials enterprise Xiamen Tungsten held shares in Ganzhou Highpower.

Third-party recycling enterprises such as GEM are also increasing investments.

An officer of China Aviation Lithium Battery told the reporter that the next step is to make lithium batteries greener than they naturally are.

"Maybe after a period of time, if battery factories lack recycling ability, the batteries they produce may be unable to gain certification or enter some special areas. We have done the work in advance. Besides, battery recycling can contribute to overall business decision-making and minimize the cost of customers." said the officer.

It's learned that although waste lithium-iron phosphate batteries don't contain high-priced rare metals such as cobalt and nickel, their lithium content is far higher than that of lithium ores.

Li Boyang, Deputy Director of the Institute of Industrial Energy Conservation and Environmental Protection, SADI Institute of Industry and Information Technology, pointed out that battery recycling has a cost advantage over lithium mining.

But this is on condition that the recycling technology has met certain standards. Despite a high lithium content of waste batteries, the lithium battery recycling cost takes a large proportion in the total cost. As for the traditional recycling of electronic and electrical devices, in addition to a high recycling cost, transportation and collection costs shall also be considered. It's uncertain whether the latter has an advantage.

"Lithium batteries can be more easily recycled than traditional electronic and electrical devices as they are less dispersed. Scrapped lithium batteries can be naturally recycled by automakers and battery factories by way of replacement." said Li.

At present, battery recycling is divided into two steps: cascade utilization, dismantling and recycling, which actually involves two industries: energy storage and recycling.

Generally speaking, power batteries cannot meet the requirements of power vehicles and need to be replaced when their capacity is lower than 80%. But they can still be used as a power storage system.

As one of the first enterprises to develop new energy vehicles, BYD has started power battery recycling since the marketing of new energy vehicles. Currently, BYD recycles waste power batteries mainly through its authorized dealers. After testing, these batteries will continue to be applied in household energy storage or standby power for base stations and other fields. If these batteries cannot be reused, they will be dismantled and recycled through a wet recycling process.

This is actually implementing the producer responsibility extension system. The producer responsibility extension system is an important environmental policy that extends the producer's responsibility throughout the whole life cycle of its products, especially the recycling and reuse stages after product consumption.

The Implementation Plan of Producer Responsibility Extension System issued in this January is the first policy to implement the producer responsibility extension system on 4 categories of products, including electronic and electrical devices, automobiles, lead-acid batteries and packaging products.

"It's still in the pilot stage. Next, lithium batteries should be included." Li said.

On the afternoon of November 2, Miao Wei, Minister of the MIIT, said the next step is to fully implement the producer responsibility extension system. In a meeting on November 1, the MIIT discussed about the management of power batteries and decided to establish a producer responsibility extension system for the recycling of new energy vehicle power batteries. Specifically, vehicle manufacturers shall be responsible for recycling the batteries of new energy vehicles they sell.

Li Boyang pointed out that the producer responsibility extension system for lithium batteries is both a challenge and an opportunity for enterprises. "At first, it will increase costs and responsibility. And it is a challenge for enterprises in terms of recycling technology and recycling management methods. But given the trend of circular development, enterprises can easily develop advantages in materials and technology, which will play a role in future competition." In the near future, the Automotive Power Battery Recycling and Dismantling Standards will come into effect as of December 1, 2017. The Automotive Power Battery Recycling and Residual Energy Testing has gained approval and is expected to be issued and take effect in 2018.

Li suggested that the government guide and encourage enterprises to implement the system, but unnecessarily make it mandatory because lithium batteries are not as harmful to the environment as waste electronics and lead-acid batteries.

Regarding the current high cost of lithium battery recycling, Li believed that although it puts a pressure on enterprises, the government should minimize subsidies in the implementation process.

"Subsidies may be beneficial to a small number of companies at their early growth stage, but are actually harmful to the industry as a whole. A better solution is that the government invests in the R&D of recycling technology. Once a breakthrough is made, the new technology is transferred to enterprises for industrialization at a cheap price."